Agenda item
Financial Impact - Covid-19 Pandemic
Minutes:
The Executive Director of Finance and Corporate Resources presented a report which detailed the financial implications for the Council of the Covid-19 pandemic. In considering the report Members were asked to note that the situation was rapidly changing which meant that some of the figures that had been reported would also change. For example, on the day of the meeting the Government had announced that VAT for the hospitality sector would be reduced from 20% to 5% and this would have implications for some of the Council’s fees and charges. There was also some uncertainty about the financial position moving forward, including about the arrangements that the Government would be putting in place in respect of business rates.
The report detailed the estimated impact that the lockdown during Covid-19 had had on the Council’s income in April to July 2020. Estimates had also been provided for the likely impact in August to October 2020 and an assumption had been incorporated into the report that income levels would be close to normal by December 2020. Officers had estimated that £2 million in income would be lost and in fact approximately £2.3 million in income had not been forthcoming, though this remained based on assumptions.
Specific challenges during the lockdown included an estimated loss of £500,000 income from car parking charges, which included a period after the new proposed app payment system had been introduced, as a recovery in the number of customers parking to visit the town centre was likely to take some time. There had also been a decline of approximately £200,000 in income from trade waste services, which was likely to be due to the fact that many local businesses’ employees would have been working from home during the lockdown. Officers agreed to provide further information in respect of the reasons for the decline in income from Trade Waste outside the meeting
There had been a decrease in Council Tax payments during the lockdown, though a lot of payments had been deferred from April and May to July 2020, so the actual impact remained to be determined. Officers explained that the proportion of residents who chose to pay their Council Tax through direct debit payments had declined during the lockdown by 0.3%, from 66% to 65% of residents.
Concerns had been raised by local authorities with the Government in respect of the potential impact that a loss of income would have on the sustainability of Council services. The Government had offered to reimburse some income, though Councils had to cover the first 5% of any lost income; in the funding formula the Government would supply 75% of 95% of anticipated income that was lost and the Council would have to cover the remaining financial loss.
All Councils had been lobbying the Government in respect of the position of providers of Leisure Services. There had been recent legislative changes which had implications for liabilities relating to leisure services. Once Leisure Services could start to be delivered it was likely that service providers would require support, particularly as there remained uncertainty about the number of customers who would want to attend leisure activities initially.
The Council had been in correspondence with the Government about the impact of the Covid-19 pandemic and lockdown on the authority’s financial position. The Government had requested further information about the Council’s balances and there was some uncertainty about whether the Council would be required to use some funding from balances to help balance the Council’s budget moving forward.
Officers were in the process of developing the Council’s Recovery Plan. There was the possibility that Members would need to review the contents of the authority’s Council Plan to take into account the impact of Covid-19. For example, there was the possibility that the plan would need to be amended to focus on supporting businesses if a significant number of companies went into administration as a result of the impact of the lockdown. Further changes in respect of the impact of the pandemic on the Council’s budget would be reported to Cabinet in due course.
Following the presentation of the report Members discussed the impact that Covid-19 had had and could continue to have on the district moving forward. In particular, concerns were raised about the impact that the closure of leisure services could have on the sustainability of the industry. Concerns were also raised about the income that a reduction in footfall in town centres within the district could have on the local economy.
During consideration of this item Members also discussed the financial implications of Covid-19 for the Council’s budget. Based on the figures provided, Members were advised that there could be a shortfall of £700,000 - £800,000 in the budget, depending on the income that could be recovered from Leisure Service providers once leisure centres reopened.
RESOLVED that the projected budgetary impact of the Coronavirus Pandemic outlined on this report and related actions both taken so far and planned for the future be noted.
Supporting documents:
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