The Corporate Director of
Finance, Governance and Property introduced the report and began by
stating that COVID-19 had both direct and indirect financial
implications for the Council. He commented that the direct affect
was on the Council’s expenditure on COVID-19 related issues,
and the indirect implications stemmed from loss of income, such as
through fees and charges. He stated that Thurrock were working
closely with central government, but COVID-19 would have financial
implications that affected next year’s budget. He added that
the report made numerous assumptions, but due to the pandemic,
officers could not predict what was going to happen in the future.
He stated that officers were currently working on a 4 month
position, and were looking towards the gradual easing of lockdown
and government restrictions.
The Corporate Director of Finance, Governance and Property went on to say that COVID-19 would have an approximate financial impact of £9.7million on the Council, although £9.2million of this should be funded by central government. He highlighted that the longer the pandemic continued, the bigger the financial impact would be. He clarified that £6million had been added to the resilience reserves, in addition to the general fund budget and the current financial position could be maintained in the short-term. He mentioned that the government had set-out £9.2million for Thurrock in financial assistance, although other money was being received from central government in support, such as through hardship grants, and money towards care home cleanliness. He added that government had also deferred payment of business rates, but these would have to be paid at some point in the future.
The Corporate Director of Finance, Governance and Property stated that Thurrock had received £12.3million from central government in grant support to small businesses and those in sectors such as leisure and hospitality, and the first tranche of those payments had been made last week. He added that central government had also given Thurrock £1.237millon for a second, discretionary scheme. He clarified that this year 2401 businesses would not be paying any business rates, and currently 1600 businesses had received grants.
The Corporate Director of Finance, Governance and Property stated that there were currently pressures in Adult Social Care as care homes had lost income due to people not moving in because of COVID-19 fears, and they had had to increase expenditure on areas such as PPE for staff. He added that Council expenditure had also increased to set up Thurrock Coronavirus Community Action (TCCA) to ensure that those residents who were shielding or vulnerable received the necessary support. He commented that the Council were now renting High House Production Park as a base for TCCA operations, and were helping to support nearly 10,000 residents in a number of ways, for example delivery of food parcels or emotional support. The Corporate Director of Finance, Governance and Property added that financial pressures had also arisen in Children’s Services and Environment, due to a fall in the number of placements and closure of household waste and recycling centres respectively.
The Corporate Director of Finance, Governance and Property moved onto discuss point 3.2.2 of the report and highlighted that the Council were not currently saving any more money than pre-COVID19 as contracts still had to be fulfilled, such as home to school transport, to ensure that businesses survived and could be utilised after lockdown finished. He clarified that the loss of revenue from council tax this year, would only start to affect the Council’s budget next year due to accounting procedures. He mentioned that as Thurrock’s current income from council tax was approximately £70million, and even a 1% rate of non-payment could affect the budget.
The Corporate Director of Finance, Governance and Property added that the Housing Revenue Account was beginning to see arrears, as some residents were now struggling to make rent payments. He added that some elements of the capital programme had also been delayed due to contractors stopping work because of social distancing. He stated that officers were currently considering what aspects of the capital programme were deemed to be urgent, and what could be deferred, although these discussions were still in a very early phase. The Corporate Director Finance and Governance summarised and stated that these figures were estimations, as the situation was very fast-moving and relied on central government’s policy towards lockdown and social distancing.
The Chair thanked officers for the early report, and felt it was good for the Committee to see early estimations of potential pressures. He felt that the report presented a sobering view of the current outlook, and the financial impact the pandemic could have on the Council for years to come. The Chair asked what government support would be provided to meet the gap in Council COVID-19 expenditure, and if Thurrock had made a request at central government level for more funding. The Corporate Director Finance Governance and Property responded that Thurrock reported to the Ministry of Housing, Communities and Local Governments (MHCLG) on a monthly basis, which outlined the financial pressures faced. He added that some pressures would only become prevalent next financial year, as some pressures would be temporary, and some would be permanent.
The Chair then queried whether COVID-19 had affected any Council investments, and the Corporate Director Finance, Governance and Property replied that the Council had seen no impact on investments at the moment. He added that a detailed report would be going to Standards and Audit Committee in July, but that as the renewable energy sector was not adversely affected by the pandemic, the Council investments had not been affected. He clarified that other Council’s had had issues with their investments, and needed MHCLG support, but this was because they had invested in commercial property, which had seen a downturn during the lockdown. The Chair highlighted 2.6 of the report, and asked what was considered non-essential spending, as this had been frozen during the pandemic. The Corporate Director Finance, Governance and Property replied that some non-essential recruitment had been frozen for posts that did not directly support COVID-19, but that this had been decided at directorate level.
The Chair highlighted point 3.24 of the report and queried what proportion of Thurrock Regeneration Limited (TRL) over-spend had been COVID-19 related, and which projects had been behind before lockdown began. The Corporate Director of Finance, Governance and Property responded that TRL had overspent by £1.3million last year, but this had risen to £2.4million because of COVID-19.
Councillor Duffin thanked the Corporate Director of Finance, Governance and Property, and the finance team, for the report and felt it was good to see reserves had been increased. He asked if the Council Spending Review was still taking place during lockdown, and what the surplus on investments would be. The Corporate Director of Finance, Governance and Property responded that no new investments were currently being advanced due to COVID-19, but the Investment Strategy remained in place and Members would be involved once investments began again. He added that the surplus on investments would be approximately £33.35million.
Councillor Hague felt it was good to see small business grants being given to those that needed it, and queried how these had been marketed to local companies, to ensure that every company was aware of the support that could be accessed. The Corporate Director of Finance, Governance and Property explained that the grants fell into three categories, the first being for the hospitality sector, of which all grants had been sent to those companies that had been interested. He stated that the second category was for rural relief, and these grants had also largely been paid out. He explained that the third category was a discretionary small business rate grant. He stated that the team were currently trying to engage with these businesses through a variety of mediums, but was proving to be difficult in some cases due to businesses being closed for lockdown. The Corporate Director of Finance, Governance and Property explained that the government had provided a grant of £1.237million to set up the discretionary scheme, but no clear government guidance had been provided on distribution. He added that the Council were currently trying to establish how many businesses fit into this category before money could be distributed. He stated that this was being done in two tranches, with the first tranche due to end this week and approximately £1million being allocated to businesses on a pro rata basis. He stated that the first tranche had been running for two weeks and had helped to establish the number of businesses that would need to access the grant. He clarified that the second tranche was for those businesses who had not applied in the first round, and any money left over would be allocated to businesses from both tranches.
Councillor Ralph queried how the reserves had been increased during COVID-19, and the Corporate Director of Finance, Governance and Property replied that some of the reserve increases had come from investments and other services. He added that some Members of Cabinet had also given up their Members allocation to go into the reserve fund. Councillor Rice queried the overspend of the A13, and asked if this would affect the budget in this financial year or the 2021/22 financial year. He also asked how businesses were being identified for the discretionary grant, particularly businesses who were not on the business register but paying service charges to larger companies. The Corporate Director of Finance, Governance and Property answered that any overspend from the A13 project would affect the budget when it was completed. He added that the Council continued to seek grant funding from sources such as South East Local Enterprise Partnership (SELEP), but if these could not be found, then the finance team would look to funding the project through capital receipts or prudential borrowing, both of which would occur in 2022/23. He also replied that hundreds of businesses had applied for the discretionary grant in the first weekend it was opened, but the Council were working hard to identify more businesses that were not on the business register.
The Chair highlighted point 3.10 and 3.11 and asked for a breakdown of costs for the TCCA. The Corporate Director of Finance, Governance and Property replied that he did not have a detailed breakdown, but the majority of costs were on the rental of High House Production Park, the essential food and goods being provided to vulnerable and shielding residents, and the cost of setting up the call centre. The Director of HR, OD and Transformation added that the TCCA dashboard provided weekly expenditures for TCCA, and outlined the services this money provided, such as 500 food boxes delivered, and 3,500 interactions with residents.
The Deputy Leader added that this was a sobering and unprecedented time for Thurrock, as well as the wider UK, and a collaborative approach was needed to ensure the best outcomes for residents. He stated that conversations between all Members, and officers, needed to happen on a regular basis, but it should be recognised that some service reform might be needed and urged for sensitivity to be showed in upcoming conversations. He stated that financial outcomes were currently only projecting for a few months’ rather than years due to COVID-19, but felt it was good to hear the Committee’s discussion, and looked forward to hearing the debate at Standards and Audit Committee, and that members should be factual and accurate with statements made and recognise the commercial nature of the subject. The Chair welcomed the Deputy Leader’s comments and agreed that it was good to receive regular updates regarding the Council’s financial position. He also agreed with the Deputy Leader that the financial position and budget-setting process should be regularly reviewed, with feedback from the Corporate Director of Finance, Governance and Property included.
1. The Committee noted the assumptions and financial implications set out in the report.