The Corporate Director Finance,
Governance and Property introduced the report and stated that this
was an update from the report that was brought before Committee in
July. He drew Members attention to 3.2-3.4 of the report which
showed additional central government grant support, of which
£0.5billion was not ring-fenced and was for general spending,
and the rest ring-fenced for specific purposes. He highlighted
point 3.6 of the report which outlined the general grant position,
which was £9.2million in July and had increased to
£10.757million since then. The Corporate Director Finance,
Governance and Property outlined point 3.8 of the report which
described £58.3million in business rate relief, and
£23million as part of the discretionary grant scheme that had
been directed out to businesses. He described section 4 of the
report which summarised direct COVID pressures on the council, such
as expenditure on food parcels during the height of lockdown and a
reduction in income. He stated that these pressures equated to
£12.9million, of which £10.7million could be offset
with a central government grant, leading to a deficit of
£2.2million as a result of direct COVID pressures. He stated
that a Cabinet report had been published today which outlined other
The Corporate Director Finance, Governance and Property described section 5 of the report which focussed on council tax, the hardship fund and LCTS. He stated that the collection of council tax was currently holding, but the finance team had seen an increase in the number of LCTS claimants. He added that although council tax was currently stable, the country had not yet seen the peak of economic downturn, so the Council were expecting more redundancies, which would lead to a reduction in council tax collections and a larger increase in LCTS claimants in 2021/22 and 2022/23. He added that the Council’s collection of debt was currently decreased, and the longer people were in arrears, the more likely they were to default on payments. The Corporate Director Finance, Governance and Property outlined section 6 of the report and stated that the figure of £15mn deficit next financial year had been revised since the report was published, and was currently £20mn deficit, with a further £7mn deficit in 2022/23. He stated that the Cabinet report updated Members on the financial outlook for this financial year and next, but did not focus on how to close the deficit. He added that a report on how to close the deficit would be brought before Corporate O&S in November, before going to Cabinet next year.
The Corporate Director Finance, Governance and Property commented on the Housing Revenue Account, which was still balanced due to other housing development income, but the finance team were watching overall rent collection closely, as resident’s inability to pay rent due to COVID was not yet showing. He stated that the Capital Programme was currently being completely reviewed, including capacity and inflationary issues. He added that all non-essential spend and recruitment had been halted for this financial year. He summarised and stated that this report presented a sober financial outlook, particularly in comparison to previous reports which had been in surplus.
The Chair thanked the Corporate Director Finance, Governance and Property and his team for the report. He stated that it appeared the financial impact of COVID would be limited in this financial year with only a £2mn overspend, but the impact would increase in 2021/22. He asked if in-year savings this financial year would improve future budgets and deficits. The Corporate Director Finance, Governance and Property responded that the Council were trying to make current in-year savings, such as freezing non-essential recruitment. He added that there were no current plans for significant closures, but any closures would require a long lead-in time and extensive consultation. He stated that the overspend of £2mn in this financial year and part of the deficit in 2021/22 could be offset by reserve funds, but that the council would consider broader reserves, such as the capital reserves, and this would be included in a report for Corporate O&S in November. The Chair queried what proportion of deficit would stem from COVID, and what proportion would stem from lost income. The Corporate Director Finance, Governance and Property gave a general overview of where the deficit would come from, which included a reduction of council tax collection and business rate payment (although these would only be accounted for in the next financial year, and this deficit could be spread over three years according to central government); a reduction in business growth and house-building as part of the global slowdown; and increase in adult and children’s social care pressures. He added that a review of housing delivery was also being undertaken, as there were currently no Thurrock Regeneration Limited (TRL) schemes being started, and this growth and development had been included in the budget before the pandemic. He added that there would also be no further substantial investments this financial year, and the programme had entered a temporary pause. He added that the Committee had requested increased democratic oversight of this function in January 2020, and the Deputy Leader was organising a meeting next week to discuss the framework for that. He commented that current investments were still sound and paying out, but no new investments were being considered. The Corporate Director Finance, Governance and Property summarised and stated that the Council had also seen a reduction in income from fees and charges, such as car park charges and planning fees.
The Chair queried whether the predicted deficits in 2021/22 and 2022/23 could be reversed and growth could be achieved, or if they were definite. The Corporate Director Finance, Governance and Property responded that these deficits could be reversed but the Council would still be working from a lower base. Councillor Duffin asked how Thurrock’s COVID financial outlook compared to other Councils across the country. The Corporate Director Finance, Governance and Property replied that Thurrock were doing better than some local authorities, as the reserves that had been built-up could be used to counter this financial year’s deficit, and help towards next year’s overspend. He stated that some local authorities were in the position of having to go to back to Full Council with emergency budgets, but Thurrock did not have to do that as it started the financial year with a £4mn surplus, of which £2mn could be used to balance the budget this year, with £2mn still in reserve. He stated that although the Council were in a fairly good financial position there was still lots of pressures and uncertainty.
Councillor Hooper thanked the Corporate Director and his team for their hard work, and asked if the Council would receive any more funding from central government, particularly if there was a second wave. She also queried funding to tackle homelessness and rough-sleeping across the borough, as this had been a priority at the start of the pandemic. Councillor Ralph echoed Councillor Hooper’s point that Thurrock had worked hard at the start of the pandemic to safeguard homeless people across the borough, and hoped to see this continue post-COVID. Councillor Ralph added that if there was a second wave of the pandemic, this could lead to more job losses and business closures, and queried whether the £20mn deficit figure could rise. The Corporate Director responded that tackling rough sleeping had been a very early objective for central government and Thurrock at the beginning of the pandemic, but did not know the precise detail of homelessness funding. He added that Thurrock were hoping for more money from central government, but nothing had been announced yet. He responded to Councillor Ralph’s point that he hoped the £20mn deficit figure did not increase, but the team were currently looking at a number of scenarios. He stated that legally the Council have to balance the budget, but it was difficult to predict future financial trends, as schemes such as furlough were due to end soon, which could affect people financially. He thanked the Strategic Lead Revenues and Benefits for his hard work distributing government grants, as well as wider Council staff for their hard work during the pandemic.
Councillor Rigby questioned if there was a longer-term recovery plan in place. The Corporate Director Finance, Governance and Property replied that the financial situation was currently difficult to assess. He stated that Thurrock produced a five-year Medium Term Financial Strategy (MTFS), but was only legally required to produce a three-year MTFS, and these included built-in growth assumptions from years two and three onwards, although this was now largely unknown. He added that there might be more central government grants and new legislation that could improve the financial outlook and could change the financial recovery plans for Thurrock. He commented that the Council were still looking for growth in certain areas, such as the Local Plan as this would increase the number of people in Thurrock and reduce unemployment, which would help the Council’s income.
The Chair summarised and stated that the next step in the financial process would be the September Cabinet report and November Corporate O&S report, which would provide high-level steering and an approach on how might be best to close the funding gap.
1. The Committee commented on the assumptions and financial implications set out in the report.