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Issue - meetings
Financial Implications Arising From Covid-19
Meeting: 06/07/2020 - Cabinet (Item 263)
263 Financial Implications Arising From Covid-19 PDF 474 KB
(Peter Grace, Assistant Director, Financial Services and Revenues)
Decision:
1. An updated Medium-Term Financial Strategy be considered by Cabinet on the 1 September 2020; this will include a mid-year review of the Capital Programme and the impacts on reserves.
2. To continue to review expenditure pressures and income opportunities as part of the Council’s Priority Income and Expenditure Review (PIER) process in order to help achieve sustainable budgets in the future.
3. The Council continue to make representations for additional funding from government – both in the short and long term.
Minutes:
The Chief Finance Officer presented a report to provide details of the financial impacts of Covid-19 on the Council.
The report identifies that there will be significant and continuing impacts for 2020/21 and beyond, and also highlights the need for additional government funding.
The cost implications of Covid-19 are large and varied. The estimates are changing weekly as the impacts become better understood and the rules change.
In February 2020, before the implications of the pandemic were fully understood, the council identified that a balanced budget could only be achieved in 2020/21 using £1.182m of reserves. The forecast deficit for 2021/22 being £798,000 at that time.
The monthly return to government in May 2020 on the impact of Covid-19 identified additional costs/ loss of income amounting to some £4.9m. The estimated costs/ loss of income ranges from a best-case scenario of some £3.65m to a worst-case scenario of some £10.1m. The range is very wide as it is hard to estimate given the unknown timescales and the impact of the lockdown, and the depth/ length of any recession.
The government have provided grant funding of £985,000 to date.
The Chief Finance Officer informed the Cabinet that, whilst the initial financial impact of Covid-19 is becoming clear, there will be a far-reaching impact across all Council activities and some of these will carry on into the next financial year. However, the Council has been prudent in setting aside sufficient reserves to cope with unexpected events in the short term, but will need to replenish the reserves in the future.
The Medium-Term Financial Strategy will be updated and will look to provide indicative financial forecasts for the 5-year period 2020/21 to 2024/25. It is intended that this will be considered at Cabinet on 1 September 2020.Councillor Chowney proposed approval of the recommendations, seconded by Councillor O’Callaghan.
RESOLVED (unanimously) that:
(i) An updated Medium-Term Financial Strategy be considered by Cabinet on the 1 September 2020; this will include a mid-year review of the Capital Programme and the impacts on reserves.
(ii) To continue to review expenditure pressures and income opportunities as part of the Council’s Priority Income and Expenditure Review (PIER) process in order to help achieve sustainable budgets in the future.
(iii) The Council continue to make representations for additional funding from government – both in the short and long term.
Reasons for the decision
1. Covid-19 has had a significant impact on the Council. Most, if not all, areas of council activity have been substantially impacted. The Council’s financial position was difficult before the pandemic and it is now even more challenging.
2. The Council’s revised Medium Term Financial Strategy will look to provide revised expenditure and income projections for 2020/21 and the years beyond. This will form the basis for producing a budget for 2021/22 albeit that until the final funding settlement is known (expected December 2020), much of the budget planning work will need to consist of scenario planning and identifying potential savings.
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