Agenda item

To consider the report of the Chief Officer Resources.

The report of the Chief Officer Resources was submitted for consideration.

At the invitation of the Chair, the Chair Officer Resources explained that the report gave an early indication of the impact that Covid-19 would have on the revenue budget in terms of expenditure and income.  The report assumed that the lockdown had lifted at the end of June and that some normal activity would resume in July and future forecasts would be updated to take account of any revisions to the current situation.

Overall a net increase in expenditure of £2.4m was forecast together with a net reduced income of £1.6m which resulted in an adverse impact on the overall budget of £4m.

Welsh Government had announced a number of financial packages to support local government and these included £30m Hardship Funding, £14m Adult Social Services, support for Free School Meals, Homelessness and £78m was being provided across Wales to fund loss of income.

The report assumed all the additional costs incurred for the Council’s response to Covid-19 would be fully funded and this would result in the cost pressure reducing to £1.465m. However initial indications from Welsh Government were that ICT costs would be only 50% funded and some costs were likely to be deemed ineligible. 

The Chief Officer Resources advised that during Quarter 1 it was forecast that there would be a £1.7m loss of income with significant losses in the catering service (school meals) and waste.  Welsh Government had advised that the £78m to support lost income would be released in tranches, with the first tranche covering car parking, waste, cultural services and school meals.  The remaining loss areas would be considered by the Wales Government Panel subsequently.  Officers were currently in the process of finalising the quarter 1 claim submission which needed to be received by Welsh Government the following day.  Any support received would improve the reported position, however given the fact that Covid-19 was still in the community, the resulting financial impact could continue to impact on the Council for future quarters and the quarterly budget monitoring reports would reflect this going forward.

Paragraph 5.2 of the report provided details of the additional expenditure incurred as a result of the pandemic and these included an increase in council tax support, adult social care, waste services and free school meals.  There were also some cross cutting areas of expenditure which relating to ICT, personal protective equipment and sanitiser products.

Paragraph 5.3 of the report provided details of the loss of income that would be incurred as a result of the pandemic which included an overall reduction in Council Tax Collection whilst the report quoted 2.6% this had been revisited and was now 1.1%.  It was hoped that this would be delayed income rather than a loss, however, given the current economic situation there was a high risk of non-collection and the possibility of debt write off was increasing.

The forecast assumed a loss of income from industrial units of £68,000 for the month of April 2020 only i.e. a one month rent free period for tenants. It also forecasted a loss of rental at the General Offices of £10,000 for the period April 2020 to June 2020. The forecast assumed the 2 month rent deferral would be collected by the end of the financial year but this would be dependent on businesses.

The other areas that forecasted loss of income was for school meals, loss of income for school catering and cleaning through service level agreements and the loss/delayed income from the disposal of recycling waste and trade waste operations. Other areas included the loss of income from bulky waste collection, grounds maintenance, littering and dog control orders.

With regard to the Bridging the Gap proposals it was forecast that £1.217m (83%) would be achieved at this point in time which would offset some of the identified cost pressures combined with some additional income receipts detailed in paragraph 5.7.1 and reduced expenditure detailed in paragraphs 5.7.2 - 5.7.5.

As at end May, 140 staff had been furloughed and none of these staff had been put at financial detriment with all staff continuing to receive 100% of their salary.

All Council budgets would be reviewed to determine if the budget could be reprioritised to mitigate additional costs and the loss of income and management fees would also be reviewed to ensure that there was no double funding from the public purse.

Members were then given the opportunity to raise questions/comment on the report:

Corporate Risk Register/Funding – in reply to a question, the Chief Officer Resources confirmed that due to the potential financial and operational implications, Covid-19 had been included on the Corporate Risk Register.  In terms of funding, the Council had limited resources available to establish a fund to help with Covid-19 and whilst the Council was grateful for the support provided by Welsh Government it was acknowledged that they also had limited resources available, therefore, alternative resources to fund the additional costs being incurred as a result of Covid-19 would have to be identified.  This could be by the re-prioritisation or virement of current budgets or consideration of the utilisation of reserves.  This would be considered as part of the budget setting process going forward later in the year and for 2021/2022 financial years onwards.

The Leader of the Labour Group said that given the comments made by the Chief Officer and the difficulties that the Council would be faced with in the future, he made reference to the Transformation Budgets that were detailed in paragraphs 5.7.12 and 5.7.13 and the assumption that these had been fully committed.  However, he asked that when the final cost analysis was known and should a further spike occurred during the autumn. whether there would be any potential to un-commit these budgets for this purpose?

The Leader of the Council advised that all local authorities were in the same position and in terms of the budget position several discussions had already taken place with the Chief Officer Resources how to approach this and how plan for the worst scenario but hope for the best.  He advised that all budgets would be looked at. 

One point he had continually made at WLGA and the Chief Officer Resources had been doing so at the Treasurer’s meetings which was gaining some traction, was why not enough pressure was put on the Treasury around the capitalisation of revenue because this would have a major benefit on local authorities across Wales and this would ease the revenue monies the Welsh Government had been supporting authorities with to date.

Furlough – in reply to a question, the Chief Officer Resources confirmed that the Council had been successful in its claim to HMRC which would improve the financial position.  It was noted that 140 staff had been furloughed from a number of different service areas but a significant number were from school catering service, midday supervisors and cleaning.  This was as a direct result of school closures a service had not been required, however, some staff had been redeployed.  Those staff who were more vulnerable or who were unable to work from home had been furloughed.

ICT Costs – at present the cost of ICT provision was £38,000 and 50% of this had been funded by Welsh Government.  However, it was anticipated that this figure would increase slightly but this current figure was not known at present.

Council Tax Reduction – a Member referred to the fund of £9.3m for 2020/2021and enquired whether this funding had been fully committed and would discussions be taking place to increase this funding provision. The Chief Officer Resources confirmed that there was an expectation that this budget would be fully utilised and at present due to the number of claimants, there was an expectation that this budget would be exceeded.  It was important to note that the £9.3m which had been set aside was more than the actual funding element that had been received from Welsh Government as part of the Revenue Support Grant.

Discussions had taken place at the Treasury Group in terms of additional support for the Council Tax Reduction Scheme and Welsh Government was considering this at present and feedback on their determinations was currently awaited.

Members ICT – a Member expressed her concern that the figure of the £27,000 was so high especially as the majority of Members already had been provided with laptops.  It was noted this figure was currently an estimate and included the provision of laptops, mobile phones, pulse fobs for remote access and licences.

Loss of Income – in reply to a question, the Chief Officer Resources confirmed that the vast majority of income loss could be claimed back from Welsh Government and the Council would be progressing and trying to maximise the income loss claims and Members would be updated on the success of the claims going forward. It was noted that the loss of income in relation to domiciliary care and industrial units formed the basis of income loss claim that was being submitted to Welsh Government the following day.

Vacant Posts – had not been included in the calculations due to the time elements but would be included in the quarterly reports and forecasts going forward.

Pay Bonus for Employers – a Member expressed her concern that no mention had been made in the report relating to the £1,000 pay bonus for employers for retaining furloughed staff and keeping them employed until January 2021 and asked whether this should be factored into the budget going forward.

The Chief Officer Resources advised that reason that this had not been factored in was because the announcement had been made after the report had been prepared but this matter would be pursued as the majority of furloughed staff would be brought back to assist with the re-opening of schools.

School Budgets – a Member referred to paragraph 5.7.10 of the report and said that as schools had also seen an increase in expenditure they should not be asked to refund monies to the LEA.

It was confirmed that the Council had not made a decision at present whether to change the funding for schools.  However, for 2021 it was important that all budgets be looked at going forward because of the pressures that the Council, schools and other organisations were under.  It was also pointed out that schools had also saved costs because they had been closed.  The officer reiterated that no decision had been made on this at present but it was important to look at and review all budgets going forward to determine if they could be repurposed.

The Member said that whilst she appreciated that schools had been closed the teachers were still teaching the children. Also expenditure had been incurred for supply teachers to cover staff who were unable to work.

Members were advised that Councils within the Greater Gwent area have been canvassed for their view in relation to school budgets. Responses suggest that whilst school funding was on the radar, no conclusions or firm decisions have as yet, been arrived at.

Appreciation – A Member expressed his to the Chief Officer Resources for the detailed report.  However, he pointed out that due to the timetabling of the report unfortunately, Council would not have a full insight until the Welsh Government decision had been received in respect of the Council’s claim for funding which was due to be submitted the following day.  He reiterated his appreciation to Rhian and her team for pulling together this information at such quick speed given everything that was currently happening.

The Leader of the Council said that he was grateful for the comments made by the Member and concurred that the speed that the Chief Officer’s team had to comply with deadlines and turn around this information had been absolutely incredible. 

He acknowledged Members concerns regarding the finance issue but gave an assurance that whatever happened albeit repurposing, reprioritising or a refresh of the budget this would come back for a Council decision.  The report provided details of the financial position at a point in time and possible suggestions but this would all be subject to the democratic process.

It was unanimously,

RESOLVED, subject to the foregoing, that the report be accepted and Option 1 be endorsed, namely:

-      the current forecast position be agreed; and

the progress made against the Bridging the Gap programme for 2020/2021 be noted.