Agenda item

To receive a report from the Executive Director – Resources. The report is not attached to this agenda and will be circulated “to follow”.

(Report No.249) To follow

Councillor Mary Maguire (Cabinet Member for Finance and Procurement) introduced the report of the Executive Director – Resources (No.249) outlining the initial assessment of the financial impact of dealing with the COVID-19 pandemic across both the General Fund and the Housing Revenue Account (HRA).

NOTED

1.            That these were unprecedented and sombre times with many lives having been lost daily. It must be recognised that the Covid-19 pandemic was not only having a significant financial impact but a significant human cost as well. The Council’s response had been immediate and comprehensive providing all the support required to the Borough’s residents and to protect and help the most vulnerable. The response had been excellent from both Councillors and Officers. Local businesses had been supportive and generous donations received in seeking to support those in need.

2.            That this report provided an initial assessment of the financial impact of dealing with the Covid-19 pandemic across both the General Fund and the Housing Revenue Account (HRA) and considered three areas: additional expenditure incurred; loss of income; and, the impact on 2020/21 savings. Prior to this crisis, in February 2020, the Council had agreed a balanced budget, as detailed in the report. As a direct result of the Covid-19 crisis the Council was forecasting financial pressures of £68.086m.

3.            That there were uncertainties at this stage and some major financial consequences would take some time to filter through, as detailed in the report.

4.            That as an initial measure the Council had set aside £3m of its reserves to create a Covid-19 Fund. At this time the total funding received from the Government had been £17.9m. The Government had assured local government that funding would be forthcoming to meet the challenge of Covid-19; the Council would continue to seek further Government funding, alongside other local authorities, to meet the additional costs incurred; currently predicted at £68.086m, as detailed in the report.

5.            That the work that had been undertaken in previous years to set a balanced budget had ensured that the Council’s finances had been in a sustainable position. Rigorous processes had been undertaken and difficult decisions taken to achieve a strong, resilient and sustainable budget. This resulted in a good financial foundation, but all that work was not at risk due to the costs of dealing with Covid-19.  

6.            The huge financial pressures that had now arisen. A number of the most significant cost implications were highlighted including: Adult Social Care pressures and support; the implications and support for the Borough’s care homes – both the staff and residents; the impact and cost of additional support to children and families social care; support of the Borough’s homeless; and, the setting up of the Council’s community support hub. In addition, the impact of the loss of projected income was significant including: parking fees; tax collection rates; business rates.

7.            That the appendices to the report set out the financial pressures for each Council Department; an update on the impact on 2020/21 savings and income proposals; the funding allocation details for London Boroughs; and, the impact on the Housing Revenue Account (HRA).

8.            That section 5 of the report provided an update on 2020/21 savings and income proposals.

9.            That section 6 of the report set out the anticipated impact on the Council’s capital programme; and, section 7, the situation to date regarding Government funding.

10.         The impact on the Housing Revenue Account (HRA) as set out in detail in section 10 of the report.

11.         This was a developing situation that would continue to be closely monitored and reviewed, and necessary actions taken.

12.         That the Council was undertaking scenario planning should the Government not meet the full costs incurred. The Leader of the Council had written to the Prime Minister to honour his commitments to local government to enable Council’s to achieve financial resilience during and post the Covid-19 crisis. Stable and resilient local government would be necessary for the long-term recovery of this Borough and nationwide. Section 12 of the report set out in detail the next steps for the Council. At present, the current estimated shortfall in funding was £45.186m.

13.         That the Council would continue to actively review the financial impact and identify mitigating actions. Members paid tribute to Council officers who had responded quickly to the crisis. Financial pressures in relation to dealing with Covid-19 would continue to be assessed. The Government had made a clear commitment to fund the expenditure incurred by local government and the Council would continue to seek the financial support required, as set out in the report.

14.         The Executive Director of Resources reiterated that the Council had a good financial base to work from with a 5-year medium term financial plan and 10-year capital programme. There were significant challenges and pressures to be met and the full costs of responding to the Covid-19 crisis would continue to be assessed and recorded. The Council would continue to work with other London Councils to lobby the Government for full recompense of the additional costs incurred by local government. Questions were invited from the Cabinet Members and responses provided including the following points set out below.

15.         Members expressed their support and appreciation to Council’s officers for their response and significant work in meeting the challenges faced.

16.         The work that had been undertaken in providing shelter to the Borough’s rough sleepers. Members’ questioned what would happen post the current crisis. In response, it was noted that the Council had received a specific grant for homelessness and rough sleepers of £18k which fell significantly short of the costs incurred. Enfield was working with London Councils in considering proposals for post Covid-19 and was lobbying the Government for additional resources to meet service demand.

17.         That the financial pressures on Adult Social Care provision had been at breaking point for several years. Members sought clarification on the Government funding provision for this sector. The financial pressures were recognised both in the short and long-term. The Council’s support for this sector was outlined, as detailed in the report. Members noted the separate report, detailed in Minute No.8 below, in proposing additional support to Care Homes in the Borough.

18.         Members reiterated the need for full Government funding to meet the additional financial pressures on local government. The financial detail set out in the report was highlighted together with the continuing work that was being undertaken. It was noted that through benchmarking information, Enfield’s projections were comparable with other similar Councils. Enfield was working alongside other local authorities across London as set out in the report. Finance Directors of the North London Councils were meeting on a regular basis to assess the full financial impact on their Boroughs. Thanks and appreciation were expressed to the Service Directors for the provision of detailed financial projections to help in assessing the Council’s financial position going forward. Work would continue to review projections against expenditure incurred.

19.         That the Leaders of London Councils were communicating on a regular basis and would continue to lobby Government for sufficient funding to meet the costs being incurred. The robustness of the Council’s budget and processes in place, provided a sound foundation on which to work going forward.

20.         The significant cost in relation to Education and Children and Families as highlighted in Appendix C of the report. The current unquantified pressures in relation to Education, Appendix F of the report referred, were also noted. In response the Government and Council schemes in relation to the provision of free school meals were outlined and the costs met by Schools through the dedicated schools grant. Work would continue on assessing the full impact of costs incurred and regular updates would be provided to the Cabinet on the ongoing financial implications of the Covid-19 crisis.

21.         In considering the financial impact of the crisis, Members reiterated the significant human cost.

22.         Councillor Caliskan proposed, with the support of the Cabinet, to recommend that this report be referred to the Overview and Scrutiny Committee for its consideration and scrutiny of the financial impact on the Council, as reflected in the decisions below. These were unprecedented times and an evolving situation.

Alternative Options Considered: NOTED, that no alternative options had been considered.

DECISION: The Cabinet agreed to

1.            Note the initial position of forecast cost pressures of £68.086m; less current grant funding allocation of £17.9m, and capital financing savings of £2m and reserves allocation of £3m; current estimated shortfall in funding of £45.186m.

2.            Note that officers would be reviewing actual expenditure, income shortfall and the impact on savings programmes in order to update the forecasts on a continuous basis given the ever-changing nature of the crisis with regular reports to senior management and Cabinet.

3.            As a responsible Council, note that services were working to identify mitigating actions to help address the challenging financial position, including scenario planning in the event of the Government failing to fully fund the Council’s Covid-19 costs.

4.            Refer this report to the Overview and Scrutiny Committee for their consideration and scrutiny.

Reason: The prime purpose of the report was to provide an early assessment of the financial pressures the Council was facing as a consequence of the Covid-19 pandemic.