Agenda item

Finance Update and Budget Monitoring Report

Cabinet Portfolio:                 Corporate Services and Finance

Strategic Directorate            Finance and Customer Services

Minutes:

Consideration was given to a report that was submitted for pre-decision scrutiny ahead of the Cabinet meeting scheduled for 15 June 2020 in respect of the latest Finance Update and Budget Monitoring Report.

 

The Leader, the Cabinet Member for Corporate Services and Finance, the Strategic Director of Finance and Customer Services, the Assistant Director – Financial Services and the Head of Corporate Finance attended the meeting to present the report and to answer members questions.

 

The report provided an update on a number of financial matters, including those related to Covid-19. It was noted that the report provided an interim update following on from the approval of the Budget and Council Tax 2020/21 in February 2020 and in advance of the final Financial Outturn report for 2019/20 and Financial Monitoring 2020/21 reports that were scheduled to be submitted to Cabinet for consideration in July 2020.

 

The report noted that in common with other local authorities across the country the Council had and continued to face significant challenges both operationally and financially due to the Covid-19 pandemic and by the restrictions that had been put in place in order to manage it.

 

It was noted that the MHCLG had been collating monthly reports to monitor the financial impact of the pandemic on local authorities. The report stated that the latest figures that had been submitted to the MHCLG showed a total estimated financial impact of the pandemic to the Council of £40.1million due to a combination of additional costs incurred, the loss of sales, fees and charges and other income, the non-delivery of required budget savings, an increase in rent arrears and other costs for the Housing Revenue Account and a loss of business rates and council tax income.

 

It was noted that the majority of the increased costs had been incurred by Adult Social Care in dealing with issues directly linked to the pandemic including dealing with additional demand for services, supporting the local social care market to ensure its sustainability and providing personal protective equipment. The report stated that with regard to loss of income that the Regeneration and Environment Directorate had been most severely impacted due to a loss of sales, fees and charges and income, with the main areas of impact having been incurred by the Cultural and Related Services and Planning and Development services.

 

It was also noted that the council’s response to the pandemic had put at risk its ability to deliver on the £16.3million of savings and cost reductions that were needed to deliver a balanced budget for 2020/21 budget, and that with the majority of the required savings being within social care services there was a significant risk of the Council being unable to be deliver on these due to the impact of Covid-19.

 

The Strategic Director noted that the Council had received £16.239 million of emergency funding to date in order to deal with the financial impact of the Covid-19 pandemic and that this funding would cover the vast majority of additional expenditure incurred directly as a result of Covid-19, but that it would not cover the loss of income for the Council as a result of the pandemic or non-delivery of savings and planned cost reductions. The report provided further information on the funding received and how it had been used to support service provision.

 

The Strategic Director of Finance and Customer Services advised that regular updates on Covid-19 financial impact would be provided within the 2020/21 Financial Monitoring reports to Cabinet. The report also provided a summary of the potential financial impact on each directorate within the Council. The Strategic Director noted the significant financial challenges for the Council moving forward and emphasised that the predicted financial impact had been based on certain assumptions, and as such could change in the future.

 

Members asked if the calculations that had been made included any assumptions based on the predicted economic impact of the pandemic on the wider Sheffield City Region. The Strategic Director advised that the calculations made related only to the Council’s own finances, but as they did include assumptions regarding business rates and Council Tax collection, it was confirmed that these would be impacted on by the wider economic impact in the Borough. Members sought assurance with regard to the robustness of the methodologies used in estimating the financial impact on the Council of the pandemic. The Strategic Director provided information on how extra expenditure incurred by the Council was being recorded and provided assurance that the working practices in place that monitored the financial impact were as robust as was possible in a difficult situation that was constantly changing.

 

The Strategic Director advised that a key part of the approach to managing the Council’s finances continued to be the delivery of the savings that had been approved in the Council’s budget in February 2020 and noted that even with the budgetary pressures of the pandemic it was essential that that as much of the approved budget strategy, including savings targets were delivered. The Strategic Director noted the difficulties of delivering savings in both Adults and Children’s Social Care, where significant savings had been identified to be made, when it Adult Care in particular was the directorate that had faced the majority of increased demand and expenditure during the pandemic.

 

The Chair asked whether the Council would need to consider cutting or stopping all non-essential spending due the budgetary pressures created by the pandemic, as had been the case at other local authorities. The Strategic Director advised that this was not something that was currently being considered and the most important thing was to get as much of the budget strategy as possible back on track.

 

Members asked for information on the lobbying activity that was being made to Government with regard to additional financial support being made available to the Council. The Leader advised that lobbying activity via the Local Government Association had been taking place and that representations to Government had also been made by the three MP’s that represented the Borough.

 

Members asked whether additional pressure on the Children’s and Young People’s Services budget was expected when more children returned to school and demand for services could increase. The Leader advised that this was a concern, and that an increase of children coming into the care system would create increased budgetary pressures. The Leader reaffirmed that despite the pressures created by the pandemic on the Council’s finances, he was committed to carrying on and delivering on the commitments detailed in the 2020/21 budget.

 

Members asked that with large numbers of staff having worked from home during the pandemic whether future savings could be enabled with reduction of the Council’s office space. The Strategic Director advised that this was something that could looked at in the future in order to deliver some savings, but noted that any savings delivered while welcome, would be modest in scale.

 

The Chair asked for further information on business rates and Council Tax collection. The Head of Corporate Finance advised that support for businesses with business rates had been provided and that analysis had shown that the impact of reduced business rates collection in Rotherham was potentially not as severe as faced by other local authorities. The Strategic Director advised that support was being offered to residents struggling to pay their Council Tax but noted that it was important when offering support that this support did not create increased and unsustainable burdens of debt for residents.

 

The Leader noted that it continued to be difficult to assess the financial impact of the pandemic on the Council, and that the situation would become clearer as the economy reopened and scale of the economic recession became clearer.

 

The Chair thanked the Leader, the Cabinet Member for Corporate Services and Finance, the Strategic Director of Finance and Customer Services, the Assistant Director – Financial Services and the Head of Corporate Finance for attending the meeting and answering their questions.

 

Resolved: -

 

1)    That Cabinet be advised that the recommendations be supported.

 

2)    That the Leader of the Council write to all three Members of Parliament for the borough seeking their support to lobby the Government to ensure the Council is fairly funded to respond to the impact of the Covid19 pandemic.

 

3)    That, at an appropriate time later in the year, the Leader of the Council hold an all Member Seminar on the proposals for the authority’s recovery from the Covid19 pandemic and the likely financial impact of proposed changes.

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