Agenda item

COVID-19 - Financial Impact

Report of the Cabinet Member for Finance and Resources on the financial impact of COVID-19.

Appendix D to this report, which includes commercial details relating to the leisure provider, is exempt under paragraph 3 of Schedule 12A of the Local Government Act 1972 because it contains information relating to the financial or business affairs of an individual or organisation.

Decision:

Decision:

 

1.         Cabinet notes the current financial position for 2020/21 and the actions being taken as detailed within the Financial Impact Report.

2.         Cabinet agrees to continue to monitor the current 2020/21 financial position and recommend amendments to the budget framework at its meeting on 8 September 2020 for consideration by Council on 17 September 2020.

3.         Cabinet agrees to suspend car parking charges until 1 August 2020 at all Council operated pay and display car parks.

4.         Cabinet agrees to continue the remuneration bonus payment of £50 to drivers, operatives, team leaders, supervisors, vehicle fitters and support staff working within the street scene service (together with any staff seconded to the service during the COVID-19 response period) for the period up to and including 30 September 2020.  The bonus payment received by part-time and casual staff will be on a pro rata basis.

5.         Cabinet agrees to re-introduce the billing of rent to the SMEs (small, medium enterprises) that occupy Council premises from 1 July 2020 and delegate authority to the Interim Director of Finance, in consultation with the Cabinet Member for Finance and Resources, to suspend rents for individual tenant businesses that meet criteria in relation to hardship.

 

Considerations/reasons for decision

 

1.         The report from the Cabinet Member for Finance and Resources on the Financial Impact of COVID-19.

2.         Key income areas affected by the introduction of stringent movement restrictions announced by the Prime Minister on 23 March 2020 due to the COVID-19 pandemic.

3.         Income modelling that is being undertaken based on 3, 6, 9 and 12 month scenarios and updated as changes in restrictive measures are announced.

4.         A summary showing financial exposure for the 3-month period attached as Appendix A to the report of the Cabinet Member for Finance and Resources.

5.         Cash flow modelling set out in Appendix B to the report of the Cabinet Member for Finance and Resources

6.         Agreement of the method of cashflow modelling countywide with all authorities working collaboratively to ensure the use of a consistent methodology and to share good practice.

7.         Council Tax and Business Rates were key income sources to the Council and were being carefully monitored.

8.         Data that was being captured to ensure grant monies received were being used to offset the additional expenditure incurred as a result of the pandemic.

9.         Funding received from the Government totalling £1,480,912.

10.      Re-profiling of the capital programmes for both the General Fund and the Housing Revenue Account.

11.      Government schemes administered by the Council with the support of InvestSK.

12.      The Finance Risk Register attached as Appendix C to the report of the Cabinet Member for Finance and Resources.

13.      Comments made by the Finance, Economic Development and Corporate Services Overview and Scrutiny Committee at its meeting on 26 May 2020.

 

Other options considered

 

No other options were considered.

Minutes:

The Cabinet Member for Finance and Resources presented a report to Cabinet on the financial impact of the COVID-19 pandemic.  A financial impact report had been presented to the Finance, Economic Development and Corporate Services Overview and Scrutiny Committee on 26 May 2020.  A further update would be presented to this Committee on 30 June 2020 with the latest information. 

 

The report highlighted the key budget income areas being impacted and the forecasting in place, cashflow modelling and proactive work being undertaken to protect the Council.  The report also included commentary on collection rates for Council Tax and Business Rates, together with the Lincolnshire Business Rate Pooling arrangements and the modelling for any reduction in the Business Rate base.  South Kesteven’s profile showed that it was at a lower risk than some of its neighbouring authorities due to the diverse businesses within its area.  The report also listed the costs incurred by the Council in its response to COVID-19. The Leisure provider details were contained within exempt Appendix D to the report. The report also gave details of the two tranches of funding grant received from Government (totalling £1,480,912) to help offset some of the funding shortfalls.  To date, the Council had passed on £27 million in business grants, awarded £17 million as part of the extended retail relief scheme and awarded grants to over 2,800 working age council tax support claimants, reducing their council tax bills by £150. 

 

Since the report had been published a further 58 employees from the Arts Centres had been furloughed, which would save an average of £29,000 each month. The income cashflow and risk register had been circulated to other senior finance colleagues across Lincolnshire to ensure a consistent approach and share best practice.  Although the total financial cost was unknown, modelling showed income losses of £3.8 million. It was expected that this should be offset by reductions in expenditure such as the furlough of staff, income received in the form of Government grants and use of the budget stabilizing reserve that had been put in place in March 2020.

 

A further financial report would be presented to the July Cabinet meeting with a further review to Cabinet, at its meeting on 8 September 2020 recommending a revised budget for consideration at the Council meeting on 17 September 2020.  The Cabinet Member for Finance and Resources endorsed the recommendations as outlined within the report.   It was noted that the report had been compiled with caution scenarios due to the uncertainty of the situation.

 

On being put to the vote it was AGREED that the Cabinet:

 

1.          Notes the current financial position for 2020/21 and the actions being taken as detailed within the Financial Impact Report.

 

2.          Agrees to continue to monitor the current 2020/21 financial position and recommend amendments to the budget framework at its meeting on 8 September 2020 for consideration by Council on 17 September 2020.

 

3.          Agrees to suspend car parking charges until 1 August 2020 at all Council operated pay and display car parks.

 

4.          Agrees to continue the remuneration bonus payment of £50 to drivers, operatives, team leaders, supervisors, vehicle fitters and support staff working within the street scene service (together with any staff seconded to the service during the COVID-19 response period) for the period up to and including 30 September 2020.  The bonus payment received by part-time and casual staff will be on a pro rata basis.

 

5.          Agrees to re-introduce the billing of rent to the SMEs (small, medium enterprises) that occupy Council premises from 1 July 2020 and delegate authority to the Interim Director of Finance, in consultation with the Cabinet Member for Finance and Resources, to suspend rents for individual tenant businesses that meet criteria in relation to hardship.

 

Supporting documents: