Agenda item

Medium Term Financial Strategy Update and Revenue Budget Monitoring - Quarter 1 2020/21 (Decision: 110531)


The Deputy Leader introduced the report and explained that it outlined the economic impact of COVID-19, as Thurrock moved away from a balanced MTFS budget, which had been in place since 2018, and towards a deficit. He stated that some local authorities were having to bring an in-year emergency budget to Council due to their deficits, but Thurrock were not in that position as the Council were better equipped due to reserves and other income sources. He stated that at the beginning of the 2020/21 municipal year, Thurrock had been in a £4million surplus, but due to COVID, that would be used to reduce the new in-year deficit down to £2million. He stated that central government had given Thurrock £10.8million in support, but the Council would experience £6.3million of pressure above this government support, due to a reduction in fees and charges, the cessation of some capital strategy activity, a reduction in council tax and business rate income, and other COVID-related pressures. He added that last municipal year the Council had reversed deficits of £1.5million, and felt that the Council could do it again this municipal year.

The Deputy Leader outlined other pressures that the Council would potentially face in the future, and gave examples such as an increased number of Local Council Tax Scheme (LCTS) claimants, an increase in the number of people presenting as homeless, and a reduction in income from Thameside Theatre. He added that the Ministry of Housing, Communities and Local Government would be outlining potential additional support for local authorities towards the end of 2020, but as this was not confirmed, was not included in future budget plans. He confirmed that investments were still yielding income as the renewable energy sector had not been influenced by the global pandemic. He mentioned that following the pandemic the Council could see a potential deficit of £19million in 2021/22.

The Deputy Leader moved on and outlined pressures to services which would also potentially reduce the level of Council income, but felt that Thurrock would be in a worse position if surpluses had not increased by 131% since 2016. He stated that council tax and business rates were accounted using national working practices, but Thurrock had made representation to the IRRV and LGA to ensure that accounting practices had been relaxed over the summer to ease with problems associated with lack of receipts. He added that the Council would still experience £13million directly related COVID pressures, and that if COVID had not occurred adult social care would be experiencing £50,000 underspend currently; the Place directorate experiencing £0.2million pressure and other teams such as environment and finance would be breaking even. He summarised and stated that the Council would be in a balanced position if COVID had not happened.

The Deputy Leader outlined the need to look at the social care sector’s financial base in a post-COVID world. He stated that Children’s Services were expecting to see increased pressure because of COVID as more unknown and new children entered the system, which would lead to potential additional spend of £0.9million, but Thurrock were committed to ensuring that every child was safe and received a positive outcome. He added that the Council had also lost £1million income from education and care providers due to the closure of schools and nurseries during lockdown. He explained why the environment team were experiencing increased pressures, which included lost income from the closure of Impulse Leisure during lockdown, who had now been trading for three weeks. He added that the environment team had also seen increased pressured due to increased PPE spend; reduction of trade waste income; and reduction of car park fees income. He outlined pressures on the place directorate due to COVID, which included lost income from the closure of Thameside during lockdown and reduction in income from planning fees and charges. He stated that Cabinet had approved £1million of the dedicated growth reserve being spent on the third stage of the Local Plan, as this would help boost the local economy through house and infrastructure building.

The Deputy Leader explained that families were experiencing financial struggle in many ways, and the questions families were asking, were the same questions the council were asking itself. For example, when a family fell into hard financial times they looked to savings to help them. Thurrock also used savings in the form of general reserves and investments, which had been endorsed by Full Council in 2017. He felt that if the Council were prudent with their surpluses then the Council could absorb some COVID pressures, but the current plan was not to let the general fund reserve fall under the 2016 level of £8million. The Deputy Leader added that when a family fell into financial difficulties they tried to increase income, and the Council would need to do the same. He explained that Council tax was modelled as increasing during every year of the MTFS, as it was always modelled, and there were no plans to change that. He added that the Council would also need to consider adopting any future Adult Social Care precept to support sector resilience. He stated that when the market for investments was open, it was the plan to help the Council reform services over the longer-term, and that the Council would need to begin to work towards self-sufficiency from government revenue funding, but was also a Council which was smaller and more rationalised.  He stated that the Council Spending Review would be continued and quickened, and that elements of the capital programme were under review, and like households across the borough, the Council needed to look at what could be done in a few years, rather than what it may have planned to do at the start of the year.

The Deputy Leader summarised and stated that Thurrock were working hard to ensure a balanced budget and an update would be presented at October’s Cabinet meeting.

RESOLVED: That Cabinet:

1. Commented on the MTFS and the forecast outturn position for 2020/21.

Reason for decision: as outlined in the report
This decision is subject to call-in

Supporting documents: