Agenda item

The Director of Finance submits a report summarising the expected financial impacts of the pandemic on our budget.  The Committee is recommended to note the report and make comments to the Director of Finance and City Mayor as wished.  The Committee also is asked to support the City Mayor’s stance that the Government is expected to meet the full costs incurred.

The Director of Finance submitted a report summarising the expected financial impacts of the Covid-19 pandemic on the Council’s budget. 

The City Mayor introduced the report, expressing his anger that the government had not kept its promise to support local businesses throughout the extended local lockdown period. 

The Director of Finance drew Members’ attention to the information in the report on estimates of additional costs of the lockdown and estimated loss of service income, as well as support available.  It was noted that:

·           Rates paid to care home staff had been increased, to encourage staff to remain working at the care homes in which they currently were employed;

·           Accommodation would continue to be provided for rough sleepers while lockdown restrictions were eased and work with rough sleepers to find them long-term accommodation would continue;

·           The costs of shielding were now reducing, but some questions remained about how long this support would be needed for;

·           Nearly £800,000 would be lost every month that the Council’s leisure centres remained closed, due to loss of income and ongoing building costs;

·           The Government had made a number of grants available, but on a piecemeal basis;

·           Over 6,000 businesses had received business rates support.  As approximately £2million provided for this remained unallocated, the Council had asked for permission to use the funding for other support in the city, but this had been refused;

·           It was anticipated that the extent of the economic recovery over the next 12 – 36 months would impact on the amount of Council Tax that could be collected during that period;

·           A lot of engagement had been done to support housing tenants;

·           Major capital schemes had been impacted by supply chain issues, the exit from the European Union and increased costs due to social distancing on construction sites; and

·           A major concern was the long-term impact of the Covid-19 pandemic.  There would be a government spending review in the autumn, which it was anticipated would have a negative result for local government.

The Committee thanked officers for the response that had been made to the pandemic and expressed disappointment that the government had not fulfilled its pledge to provide funding. 

Concern was expressed that any underspend on the ringfenced business grant scheme would have to be returned to the government.  The City Mayor confirmed that, at present, all unused funding from this allocation would have to be returned to the government. 

The Director of Finance advised that funding for a discretionary business grants scheme, for businesses not eligible to receive assistance from the main business grants scheme, was funded from money received for the ringfenced business grants scheme.  The first round of applications for funding from the discretionary scheme had closed and the second round, which would include charities with fixed building costs who had lost income, would open soon. 

The Committee requested that as many businesses as possible be helped, especially those adversely affected by the extended lockdown period.  In reply, the Director of Finance explained that businesses had to suffer a significant loss of income to be eligible for assistance, the Council having set the amount at 40%.  However, some flexibility would be applied where possible, (for example, if a charity had had a loss within a couple of percentage points of this amount).  The amount of money available for discretionary awards was fixed, so the more businesses that applied, the less individual businesses could receive.

It was asked whether the threshold of 40% loss of income for eligibility for business support could be reviewed, as this appeared to be high.  However, the Director of Finance explained that increasing the number of businesses assisted would reduce, or remove, the amount available for the discretionary scheme, meaning it would not be possible to launch the forthcoming second round of that scheme.  The government had announced that all support to businesses would end on 27 August 2020, so all assistance needed to be given before that date.

The City Mayor advised that the Council wanted to use this situation as an opportunity to provide people currently living on the streets with decent accommodation and to help them remain in that accommodation.  The recently announced national fund for this work would be used to facilitate this.

In reply to enquiries by Members about whether all recipients of Council Tax support needed it, the Director of Finance explained that all recipients would be credited with the award.  If the recipients paid their full Council Tax, the support amount would show as a credit on their account.

The Committee requested clarification of the anticipated cost to the capital programme of social distancing requirements.  The Director of Finance drew Members’ attention to the information set out in the report, explaining that all capital schemes and contractual commitments had been reviewed.

Some concern was expressed that the approach being taken by the City Mayor in dealings with the government did not help the city.  In reply, the City Mayor explained that, as City Mayor, he had a responsibility to speak clearly and firmly on behalf of the people and businesses of Leicester, particularly as the city had been promised support that was not now being provided.  The Conservative Member of Parliament for Oadby and Wigston also had been angry at the way in which his constituency had been treated and had been outspoken in expressing this.

AGREED:

1)    That the report be noted;

2)    That the City Mayor and Director of Finance be asked to note the comments recorded above and take these in to account when further considering the financial impacts of the Covid-19 pandemic on the Council’s budget; and

3)    That the City Mayor’s stance that the Government is expected to meet the full costs incurred as a result of the Covid-19 pandemic be supported.