Agenda item

Financial Update Quarter 2 2020/21 (Decision: 110538)


Councillor Hebb introduced the report and stated that central government had recently made a top-level announcement regarding government funding for Council’s, but Thurrock were currently waiting for the detail of this to fully understand the Council’s position. He stated that Thurrock were currently in discussions with the Ministry of Housing, Communities and Local Government, and the outcome of these discussions would be known next week. He stated that central government’s spending review would affect Thurrock’s position in a positive way, but would not fix all financial problems currently being faced. He added that the 2% increase limit for Council tax was still in place, as well as the 3% increase limit for the social care precept, which was now more important than ever due to COVID. He highlighted that the Council’s current calculations suggested financial pressures in the budget, and although the COVID vaccine was moving forward, financial pressures due to the pandemic would continue to be felt for years to come.

Councillor Hebb stated that since 2018, the Council had always had a balanced budget for four out the five years on the Medium Term Financial Strategy, but the Council were now in a deficit of £33.6million over the next four years due to COVID. He stated that the next financial year was when the Council would experience the most financial pressure, with a funding gap of £19million. He added that although some Council’s around the country had had to bring an emergency in-year budget to their Full Council meetings, Thurrock were not in that position, although the Council would be setting its budget up until the eleventh hour, which was the case around the country. Councillor Hebb added that Thurrock were working with central government to find ideas to tackle the budget deficit, but highlighted that some ideas would not work. He commented that the Council wished to do whatever was in their control to reduce the deficit without affecting services to residents, or increasing council tax.

Councillor Hebb added that had the pandemic not occurred then Thurrock’s budget would have broken even. Councillor Hebb then outlined current service pressures, such as Children’s directorate which was currently experiencing a pressure of £0.9million, or 2% of their overall total budget. He stated that this was due to an increase in the number of children presenting to the service, and an increase in the number of complex cases. He mentioned that Thurrock were not currently planning any new investments, as there was currently no market for new investments and confidence had decreased. He stated that all Councillors had voted for the investment strategy which had helped maintain the delivery of non-statutory services and reduced the financial burden on residents. He added that for the sixth year running the Council’s audit had been signed-off by external auditors as being within target, and this had also been agreed by the Standards and Audit Committee.

Councillor Hebb then added that the Council were currently experiencing £15m in-year pressure, although Thurrock were receiving SR20 support. He added that Thurrock were also experiencing £4.3m in adult social care pressure, which would increase post-COVID, as well as £2.2m spent on rough sleeping accommodation, which had ensured that those homeless residents in Thurrock had been kept safe during the pandemic.

Councillor Hebb commented that the capital programme had been paused, which would provide £13m in savings, and the capital budgets were also under review. He stated that as of 30 September 2020, Thurrock had borrowed £3bn, and investments had been agreed by all Councillors in 2017, 2018 and 2019. He stated that Thurrock had also recently had discussions with the Public Works Loan Board, but this was not to borrow for new investments. He summarised and stated that although there were ongoing financial pressures from COVID-19, the Council were in a good position due to increased reserves.

Councillor Halden commented and stated that he was proud of the social care team, and thanked the Corporate Director of Adults, Housing and Health; the Corporate Director of Children’s Social Care; and all frontline staff for their hard work throughout the pandemic. He stated that even during this difficult time, the Council were still supporting those in need in the borough, such as through tax cuts for foster carers, the Resiliency Fund, and new housing for the Head Start Housing project. He added that the consultation regarding domiciliary care had ended today, which would help reduce market threats. Councillor Halden added that the social care teams had a difficult challenge ahead, as the economic impacts from COVID affected people’s social situations, and increased the number of domestic violence and mental health incidents across the borough. He stated that although government grants would help with the COVID-19 pressures, and social care market would continue to see increased demand and more complex care cases to deal with.

The Leader stated that the Council had been in a good financial position before the pandemic had hit, and although government grants did help, they did not fully cover the financial pressures being experienced by the Council. He added that the Council were being affected by the pandemic in numerous different ways, such an increase in people claiming Local Council Tax Scheme support; a reduction in the number of houses being built, so no increase in council tax; and a reduction in car parking fees. He stated that the additional pressures had been unexpected and significant, and Thurrock would have to pay for 75% of its lost income, with 25% being paid by central government. He stated that Council expenditure would need to be rolled back, but projects that had already been started would continue.

RESOLVED: That Cabinet:

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

2. Agreed that Thurrock’s 2021/22 schools funding formula be implemented as stated in section 16. This being consistent with Cabinet’s decision made in February 2020.

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

Supporting documents: