Minutes:
(a) Council’s Financial Position
The Head of Resources advised the Committee that he was required to provide Government with a monthly update financial return indicating the loss of income and identifying additional costs as a result of Covid-19. Government assumed on their return template that Local Authorities would return to normal after July however, the Head of Resources outlined it was not expected that the levels of income would return to normal then due to the economy taking longer to recover. The latest forecast projected was a potential loss of income of around £3.4m due to a reduction in fees and charges and a forecast reduction in collection of council tax and business rates. There were additional costs in housing the homeless, employing agency staff in Waste and Recycling to ensure rounds were completed and to shield the vulnerable totalling around £600,000. The Government had provided £1.018m in support, which was not enough to compensate for the predicted shortfall of £2.9m. The Council had unallocated reserves of £1.2m which was nowhere near enough to cover the losses. If the Council used the allocated earmarked reserves, this would have an impact on the capital replacement of vehicles and improvements to ICT infrastructure and result in additional implications for the Council as there would be a need to have to borrow more funds to cover this if the reserves were not available any more. Unless the Government provided more financial support, then a Section 114 notice would need to be considered which would result in spending only on the essential services and to bridge the gap the Council may need to look at the services that could be cut back on.
Selaine Saxby MP for North Devon addressed the Committee. She advised that Robert Jenrick, Secretary of State for Housing Communities and Local Government was aware of the problem Councils face and believed support would be coming. She advised that as lockdown was being eased that where possible the Council needed to generate income such as opening car parks which showed that that the Council was doing all it could and not just asking for help. The Government would produce briefing sheets for Districts and Parish Councils on issues such as PPE for cleaning of toilets. Shops were expected to start opening on 15 June 2020. Overnight accommodation was due to restart in July and that there may be a chance that the use of second homes may be earlier, however she was pushing against this proposal. The Tourism Industry had requested three weeks notice prior to the re-opening of overnight accommodation. The “R” (reproduction number) for North Devon was currently 0.8 and was high due to Care Homes. Plymouth was higher at 0.9 due to a higher density of population. Social distancing was crucial in bringing the “R” number down. Schools were doing a fantastic job in getting children back to school.
In response to questions, the Chief Executive advised the following:
· The level of recycling had increased for the months of April and May.
· In relation to the re-opening of High Streets, the Government had issued guidance regarding the re-opening of public toilets and requirement for PPE. The Council had a role as an employer and to protect staff and members of the public. He was comfortable with the level of PPE required and the Council kept up to date with the latest Government guidance.
· Public conveniences in coastal areas had been re-opened. The Council needed to employ additional staff prior to opening further toilets.
In response to questions, the Head of Resources advised the following:
· Although the volume of collection of recyclable materials had increased, the forecast for the sale of recyclable materials income was lower than when the budget had been set due to a reduction in material prices.
· Trade waste income was lower than forecast, but it was anticipated that it would start to recover as shops and businesses start to re-open.
· Other Councils were all in the same financial position. The Government had advised that there would be further tranches of funding, however the funding granted of £1m to-date was not sufficient to cover the forecast losses. Unless there was some certainty of funding in the very near future or that the levels of income start to recover, then he would consider looking to issue the Section 114 notice by the end of July 2020.
· There was no current risk of the Council not being able to pay employees. However there was a need to address the funding shortfall and bridge the funding gap and potentially review non-essential expenditure moving forwards.