Agenda item

The report before Members set out the 2020/21 Period 1 (April) financial monitoring position. The report focused on the financial impact of the Covid-19 pandemic on Havering and the potential financial gap for 2020/21 to be funded from reserves.

The report included:

·        A summary of the outturn for 2019/20

·        Estimated financial impact of the pandemic on the Council for April 2020

·        Government support provided to date and potential future commitments

·        A financial projection setting out the potential impact on 2020/21

In February 2020 full Council agreed a balanced budget for 2020/21. The budget was set before the Covid-19 pandemic took hold in March and therefore was based on an assumption that the Council operations would be as in a normal year.

The budget included a package of £14.5m of savings which had been developed and reviewed throughout the budget process. This meant that a number of the savings proposals were already in place at the start of the year but the majority were based on assumed actions during the remainder of 2019/20 and during the course of 2020/21.

The budget also included a full appendix setting out the proposed fees and charges for the year and was set based on an assumption that this income would be received throughout 2020/21.

The budget setting process included the Council Tax resolution and agreement of Council Tax levels for the forthcoming year. In calculating the level of Council Tax required to balance the budget an assumption was made on Council Tax collection rates. Havering assumed a collection rate of 98.3% in its tax base used to calculate Council Tax yield.

Any lower than planned Council Tax or Business Rate yield would cause a deficit in the collection fund. In setting the 2021/22 Council budget the Council was required to estimate any deficits on the collection fund and to include funding to balance the fund. This would clearly be a significant issue in setting the budget for next year unless the Government stepped in with further support.

The budget included a package of £14.5m of savings which had been developed and reviewed throughout the budget process. This meant that a number of the savings proposals were already in place at the start of the year but the majority were based on assumed actions during the remainder of 2019/20 and during the course of 2020/21.

Councils began experiencing costs and loss of income in relation to the Covid-19 pandemic during March. On 23 March the Prime Minister instructed the country to stay at home effectively stopping income streams for local authorities from that point onwards. The report highlighted the service areas that had been hit the hardest.

The Council had also started to experience costs directly relating to the pandemic in March. The Government issued its first support allocation to the Council in late March and as these costs were defined amounts a proportion of the grant was matched against these costs. The remaining grant was rolled forward to cover expenditure and income loss in 2020/21

The report also highlighted other areas of income loss and unplanned costs that had been incurred. The report also highlighted risk areas.

In response to a question regarding a possible review of office space requirement going forward and technology expenditure officers confirmed that both areas were being reviewed.

Officers also confirmed that the Council had received funding of £1million to assist with establishing the Government’s test, track and trace system.

Officers confirmed that debt collection had been paused until the end of June. Debt collection would restart in July as it was important that debts were not allowed to escalate.

Members confirmed that after consideration of the report they were satisfied with the content and had no comments to pass on to the Executive.