Agenda item

Finance Update

To receive a verbal update on the financial position of the council.


The Strategic Director, Andrew Small gave a short verbal report on the financial position of the council. He noted that things were moving quickly in terms of the cost of Covid at present. He was pleased to announce that the final accounts for 2018/19 had been signed off on 18 June 2020 and they were now finalising the accounts for 2019/20. The Government had recognised that because of the impact of the Covid outbreak there had been less capacity for local government to complete the normal end of year tasks and had given us an extended timetable for closing the end of year accounts. That was, until the end of July to get the accounts published and then until the end of October to get them signed. This reflected the fact that the council staff had been tied up with other emergency work such as administering the new grants.


There was a large range of potential costs to the council this year, most of it was lost income as opposed to additional cost to the council. The current estimates of lost income were between £4.6 million and £7.6 million, a huge financial impact. This was before any government support was taken into account. Thus far the government had provided us with £1.36 million in grant support and we had been told that more money would follow. This would be from three funding pots, money for the cost implications for councils; an income loss scheme, uncapped at present, with the councils having to pick up the first 5% of lost income; and beyond that the government would pay for 75% of lost income. And beyond this there was a scheme for loss of income from Council Tax and Business Rates; we used to have to recoup it over a year, the government now says that we have three years to recoup it.


We did not know what the net impact would be on the Council at present, but it would be significant. He was pleased to say that over a number of years the council had built up a healthy balance and should have around £7million pounds in reserve, which should cover the worst financial impacts of this event. But we needed to keep it under close scrutiny in the coming months, to understand how the actual cost of this event emerges and make sure we have enough financial resources to ensure the council was secure. We will then have to start thinking about financial planning for future years. Not least the onward impact brought upon us by Covid and some structural changes to local government finance that had been planned for 2021/22, around the governments distribution of grant support and changes to the business rate system as well.


Councillor Rackham was concerned about what would happen if we had a second wave, did we have a plan B? She was told that things were very fluid, and the council had to react to events. The government had said spend what you need to, and they would support us, although the council would have to cover some of the costs. So, we can expect mitigation from the government towards the final costs. But we need to be mindful of the second event and what support we have to give to the communities. Also, it was not just about continuing to provide existing services but there was a role for this council in dealing with the impact on the local community that will have cost implications. So, monitoring the finances would be very important throughout the course of this year.


Councillor Bassett noted that it was difficult at present. He asked if we knew how the rent payments were going, were they up to date as more people were being made redundant and had any businesses handed in their keys yet? A Small said that he was not aware of any businesses wanting to hand back their keys as he believed they were waiting to see what happens. Incomes would dip and we must not force any tenants into bankruptcy. Officers were working with tenants and were developing recovery plans with them. A report was going to the next Cabinet with more details.


Councillor Brookes asked if they could have the figures for the first three months Council Tax collections. She was told that these figures were in the Cabinet report, and there had been some defaults this time, so we were sending out soft reminder letters and also signposting people to the help that was on offer for those in difficult financial circumstances.


Councillor Brookes went on to ask about the impact on the HRA account and the possible drop in housing rents. A Small said that there had been a reduction in rental paid, we had not formally stopped chasing rents during the lockdown period, we still contacted our tenants to encourage them to pay but had not taken any enforcement action. There had been a reduction of around £300,000 in terms of rental paid. There was less emphasis on rent recovery action during that time as well.


Councillor H Kane asked if the extra money from the government would be able to cover the Town Council’s loss of revenue. Mr Small said that would be a choice for us to make, but the government money would not cover our losses in the first instance.


Councillor Brookes noted that a lot of people tended to pay their bills in person; would we be opening the Civic Offices to take these payments. A Small said that this was being discussed at present, there was a desire to open some facilities such as the cash office at Debden Broadway.




The Committee noted the financial update given.