Agenda item

1. That:

(a) The projected financial impact of Covid-19 for 2020/21 as set out in section 1 and;

(b) The proposed recovery framework as set out in section 2 be noted.

2. That the extension of the voluntary sector contracts as set out in paragraphs 3.2 – 3.5 and the new one year contract to DENS as highlighted in paragraph 3.7 be

agreed.

3. That the Covid-19 Strategic Risk annexed to the report is agreed.

Decision

1. That:

(a) The projected financial impact of Covid-19 for 2020/21 as set out in section 1 and;

(b) The proposed recovery framework as set out in section 2 be noted.

2. That the extension of the voluntary sector contracts as set out in paragraphs 3.2 – 3.5 and the new one year contract to DENS as highlighted in paragraph 3.7 be agreed.

Corporate objectives

The financial impact and the Council’s response to Covid-19 will impact all of the Council’s Corporate Objectives.

Monitoring Officer comments

The Monitoring Officer continues to monitor the key issues raised by legislative changes and relevant government guidance and ensure that effective policies and procedures are in place to assist services to continue to deliver during the pandemic and subsequent recovery phase.

S151 Officer comments

The Financial Implications section of the report have been written by the S151 officer and will continue to be monitored as actual costs become clearer. Members will be regularly updated on the financial implications of Covid-19 as they develop.

Advice

Councillor Williams introduced the report to members and wanted to place on record his thanks to the whole organisation for the way it has dealt with the current crises and how well all the staff have stepped up to meet the challenge. He said the report contains a number of sections and the impact of Covid-19. The financial implications are still speculation at this stage and a number of measures have been put in place to help businesses, vulnerable people and other organisations. This report is comprehensive in outlining the challenges faced and will continue to face.

S Marshall echoed the thanks to staff who have been working under extreme circumstances and thanked members for their support. This situation is unprecedented and the report identifies the impact on services and identifies the governance for the officer recovery team to work on the programme and this is linked and in line with broader work across Hertfordshire through the resilience forum and the chief executive group. The key recommendations are extending the voluntary sector contracts to give them greater financial security and the sector needs certainty to receive more financial support to continue services at a difficult time. The community grant scheme will be widened to include Covid-19 related projects and there has been a lot of support for local businesses and S Marshall gave credit to the finance and economic development teams for processing grant payments so quickly and effectively. It was also highlighted that the homelessness team had gone from 95 people presenting as homeless pre-pandemic to 185 and this has been done with existing resources. There have been some new services provided to the community such as the food parcels being delivered to vulnerable residents in partnership with the county council. The plans to return to The Forum are flexible dependant on government guidance on public buildings and are currently preparing the building with a 2m distance and there is scope to change to 1m if necessary. Work has been carried out with the town centre businesses and BID partners to help retail businesses to reopen. S Marshall highlighted to members the recommendation to include a new risk to be entered in the strategic risk register that will be reviewed on an ongoing basis, the Incident Management Team are meeting three times a week and members will be updated.

Councillor Tindall also added his thanks to all staff for their efforts over this period that came with very little warning. He asked if there was a date for a return to The Forum or if it would be judged on circumstances.

S Marshall said the building was in the final stages of work; access doors changed to limit touching of door handles and work has started this week on adding screens between the banks of desks and at the customer service unit. Once this has been completed and subject to government advice on public buildings, it is hoped that it will be open for limited access in July. Staff and members will be given a briefing in the next couple of weeks via a webinar.

Councillor Birnie asked why there was no member involvement on the Incident Management Team.

S Marshall said this was in line with normal arrangements for emergency planning and recovery, it is officer led and any decisions that need to be made are done through portfolio holder decisions or reports back to Cabinet. There will be an opportunity to review everything through the overview and scrutiny committees. The decisions made normally have an operational impact rather than strategic.

J Deane ran through the financial aspects of the report. There is clearly a significant risk from a financial perspective in the current year and moving forward. The general fund will be significantly more affected than the housing revenue account. There is a predicted pressure of £5million for the General Fund which represents a third of the net cost of services and is driven largely by a reduced income rather than increased expenditure. These are high level estimates based on how an anticipated recession may unfold and its effect on the council’s income streams. Referring to page 96, this gives some background on the figures and shows the key income streams for the council showing the council may potentially lose up to £6 million of budgeted income in the current year. This will be monitored on a monthly basis, some of these are intense and short bursts of loss of income suppressed, for example car parking which has had almost no income over the short term during the lockdown but hopefully it could recover quite quickly similarly, there are those that haven’t been affected in the short term but could decrease moving forward, for example garages which could be at risk if there is a recession as household incomes become stretched.  It is expected that there will not any more help from central government, the council have been given a grant of £1.6 million but this has been included in the net pressure. The council is part of groups lobbying the government for more funding, including the Local Government Association and the District Councils Network. For future years, there are questions around council tax collection. Although Council Tax collection rates are likely to be down, due to the technicalities of the Council Tax system, there will not be an impact on council tax funding this year. There are some disturbing trends in collection rates emerging– council tax collection was down 1.5% in the second month but take these figures with caution, as approximately 2,500 residents took the opportunity to move from 12 month instalments to 10 months and deferred the first payment until June. Business rates risk is in next year and the big unknown is how this is going to fit into the new government funding scheme. Both council tax collections and future government funding are being worked into a Medium Term Financial Strategy planning to bring to Cabinet in July but this could be delayed as need good quality analysis on June council tax collections.
The Housing Revenue Account is forecasting a pressure of £500k and currently down 5% on rents and significant numbers of tenants have switched to Universal Credit. The pressure has been offset by a hold on spending due to restrictions in place and inability to access tenants houses.

Councillor Tindall asked if J Deane was aware of what was likely to happen with the new homes bonus. He said he had heard that the government are going to continue to roll it out.

J Deane said they are providing monthly returns to central government and they are drilling down more and more into local government finances to understand how they can deal with the pressures they are going to be under.

Councillor Elliot asked about the percentage of government funding that has been paid out

J Deane said it is about 90% given out to retail, leisure and hospitality businesses. Not going to see a full take up of the grant as some businesses in Dacorum wont be able to claim because they are claiming elsewhere and might get hit by state aid rules. At the end of the first two weeks of the Discretionary Fund, approximately a third (£500k) has been allocated and paid out.

Councillor Williams noted that the scheme is going to be extended this week which may encourage more applications.

J Deane said the premises overheads threshold will be lowered to 3,000 from 7,500 and we will be paying £2,000 grants to those organisations.

Councillor Birnie noted that it appears most impact will be coming in the next year rather than this year given the amount of slippage involved. He asked if the council was well covered with its reserves.

J Deane said there is a real pressure in the current year and can guess more accurately what the impact might be in the current year. The impact on future years depends on council tax collections and the severity of any recession. The council’s reserves are earmarked for specific projects which will benefit the borough or deliver on efficiency savings. The reserves can only be used once and cannot be recovered. J Deane said he takes the view that the council needs to push hard for additional funding from government and use reserves as a last case scenario.

Councillor Williams said he has spoken to the MP for Hemel Hempstead and made the point that the reserves are not just sitting there, they have been allocated. Many councils will not survive without further government expenditure and is of the view that Dacorum should also get support.

J Deane supported this comment and said councils in a position of good financial health should not lose out to those in trouble that have taken greater risks. This fairness debate is going through the sector and conversations between central and local government.

Recommendations agreed.