This report sets out the projected financial impact of Covid-19 on the Council’s revenue and capital budgets up to 31 March 2021.

The Executive Director of Resources submitted a report setting out the projected financial impact of Covid-19 on the Council’s revenue and capital budgets up to 31 March 2021.

The report explained that the estimated impact of Covid 19 on the Council included actual and projected expenditure arising directly as a result of the pandemic necessary to either maintain existing services or to provide additional capacity/services as necessary; actual and projected income lost due to reduced demand and cessation of services; and the projected impact on the delivery of agreed Medium Term Financial Strategy (MTFS) savings as a result of the refocussing of staff to respond to the Pandemic. The Council had received a total of £8.3m in general support funding from Central Government in two tranches: £3.8m and £4.5m respectively.  Based on the latest projections, the total net additional cost to the Council, including BFfC, as a result of Covid-19 up to 31 March 2021 was £15.6m, of which £1.1m was the total net cost incurred in 2019/20 and £14.5m the projected net impact in 2020/21.

The report identified £3.4m of 2020/21 MTFS savings as being at risk as a result of Covid-19. Assumed income would be delayed, albeit a significant percentage may only be temporary whilst lockdown and recovery ensue.  The Council’s Medium-Term Financial Strategy included all prior year savings and income targets within the base budget for future years. There was therefore a significant risk that, without further action, the Council’s 2021/22 budget would need to find equivalent levels of savings to address the gap which would arise if the at-risk savings were not realised or mitigated on an ongoing basis.  In addition, it was highly likely that Council Tax and Business Rates collection would be impacted; projected losses based on a comparison with 2019/20 collection rates indicated a potential total loss of £7.559m with the Council’s share being £5.149m.  This amount would be a pressure on the 2021/22 budget in addition to the lost savings and income. 

HRA rent collection was being closely monitored and the collection rate for April was at 97.48%, which was slightly above the budgeted collection rate of 97.40% but lower than the pre-Covid collection rate of 98.75%.  The Council’s Capital Programme would not be delivered as originally planned due to delays caused by lockdown restrictions and social distancing, which created risks associated with investment property investment and slippage of capital receipt forecasts.

The report noted that all councils were required to provide a monthly return to the Ministry of Housing Communities and Local Government (MHCLG) setting out the estimated financial impact of Covid-19, and that this report reflected the amounts included on the Council’s second Covid-19 return submitted to the MHCLG on 15 May 2020.

Resolved –

That the projected financial impact of Covid-19 as set out in the report be noted, and that further reports on both the forecast position and outcomes arising in respect of next steps be brought to the Policy Committee in due course.