Agenda item
Budget Variation Reports -
The Financial Services Manager will provide a verbal update on Round 2 of the Ministry of Housing Communities and Local Government (MHCLG) return on the financial consequences of COVID-19.
Minutes:
The Chairman introduced this item and then invited the Financial Services Manager to present a verbal update on Round 2 of the Ministry of Housing, Communities & Local Government (MHCLG) return on the financial consequences of COVID-19.
The Financial Services Manager advised Cabinet that there were 2 significant changes to this return which had been submitted on 15 May 2020. The return now included the Housing Revenue Account (HRA) as well as General Fund expenditure and loss of income.
The second return came with the specific instruction to base the Council’s submission on the assumption that lockdown would continue until the end of July 2020 and then everything would return to normal. This meant that some figures would hopefully be better but some worse and only time would tell.
Starting with the General Fund, the estimated loss for the current year and beyond had increased to £2.9m from the £2.4m reported on 29 April 2020 The change was mainly due to the worsening assumptions which were stipulated by the Government.
The adverse effect on the Housing Revenue Account (HRA) was estimated to be around £730k for the current year and beyond, but this was based on the assumptions mentioned previously.
The Financial Services Manager stressed the level of uncertainty around the figures. No one knew what the new normal would be and how local circumstances would develop. It had been mentioned at the last Cabinet meeting (29 April 2020) that the Council had received £1.6m from Central Government but the figures suggested that there would still be a shortfall for 2020/21 and beyond.
The Chief Executive commented that it was hoped that a third tranche of funding would be released by the Government. It had been announced that there was a shortfall of £9billion across the country, with most local authorities experiencing a two-thirds shortfall. In addition, the Government had still not responded on the matter of the New Homes Bonus.
The Chairman invited questions and comments from Cabinet Members. A question was asked concerning the assumption of returning to ‘normal’ at the end of the July. The Financial Services Manager advised that this was to ensure that all local authorities responded to the return on the same basis. The Financial Services Manager was asked to confirm what the projected year end revenue deficit would be, based on the current expenditure. She clarified the forecast was £2.9m, on the assumption that the situation returned to normal on 1 August 2020. This would also depend on the private sector businesses returning to ‘normal’ and re-establishing income streams for example parking charges and Council Tax payments. The Financial Services Manager confirmed that no further modelling had taken place as there was no further data to work on at this moment in time, but the Council would be looking to carry out further modelling in due course. The Chief Executive added that the Corporate Management Team had been looking at a number of options and would be reporting back to Cabinet on this in the near future. The current situation was producing a deficit of c£500k per month, but this could change if the lockdown continued further. Cabinet was asked whether any actions were being taken to reduce overheads in order to make savings. The Chief Executive advised that the Council was keeping expenditure to a minimum and that the budget was being closely monitored.
Cabinet then noted this report.