Costs associated with a possible surge in evictions, falling income from parking fees and planning applications and increased expense for security on beaches and covid-secure public toilets are some of the issues causing a predicted £3million shortfall to Thanet council’s budget.
The Covid pandemic impact on an already depleted Thanet council budget pot has been listed in a report to councillors.
Thanet council is facing a £3.05million shortfall in funding needed for this financial year (up to April 2021). Prior to the pandemic the council was already facing a predicted £1.3million shortfall.
Council reserves are likely to be used to plug the gap to avoid an impact on day to day services, such as bin collections.
Reserves at the 2019-20 year-end were £2 million unallocated and £12.4 million earmarked spending. Thanet has the lowest reserve pot of all councils in Kent and officers say using it could put the authority at risk of a Section 114 notice – effectively meaning all spending would have to be frozen.
Council leader Rick Everitt says the S114 warning is “an amber light, not a red one.”
He said Thanet’s position reflects that of councils across the country with most, if not all, struggling to deal with the Covid impact.
‘We do have resilience’
Some £1.6 million will be taken from the ‘equalisation’ fund. This is used to balances variances, such as council and business tax collections. Other pots being used include £218,000 from the Dreamland reserve and £420,000 from the council election reserve.
Cllr Everitt said: “The whole point of reserves is protection for things you do not expect.
“We are in uncharted waters in terms of Covid-19 and its impact on everyone’s finances. Our position is not significantly out of line with the average position in the country. Almost all local authorities are struggling financially, not just because of extra expenditure but also lost income.
“We do have resilience and are able to fund the picture as we understand it.”
Changing picture and a ‘second wave’
However, that picture could change before the report is taken to full council in September which may mean amendments either then or prior to that at another cabinet meeting next month.
Cllr Everitt said: “We do have money to fund services and we are constantly assessing the situation as we see it but if fears of a second wave are correct it will be a changing picture again.”
Cllr Everitt says residents will not be affected by any changes to day to day services and said extra money had already been spent in areas the public had requested, such as security on the beaches, extra bins and extra public toilet cleaning. He added: “These are all things the public are telling us they want but it comes at a cost.”
He did admit that Thanet is likely to feel the brunt of any recession caused by the months of closures, saying: “There is a big increase in unemployment. Thanet always suffers more than other areas in recession so we would expect more impact here than leafier parts of Kent and we need to prepare for that.
“I think the council has performed over and beyond in respect of this crisis with really impressive work from officers.”
Budgets and shortfalls
The authority has a £17.1 million budget to fund services during April 2020 – March 2021.
The pot is made up from council tax,fees and charges, retained business rates and Government funding.
The shortfall, which was already predicted to rise to £2.5million by 2023 before the pandemic hit the country, comes amid plunging income from Government. The Revenue Support Grant to Thanet from central government was £97,000 for the 2019-20 financial year. In 2018-19 it was £809,000 and in 2017-18 the grant stood at £1.446m. This is compared to £6.636m in 2013-14.
A one year settlement of £100,000 was made for 2020-21. Plans to end the government revenue support grant from 2020 were rolled forward to 2021.
Money from the government’s New Homes Bonus has dried up as TDC has not qualified for it since 2016-17, apart from small amounts for affordable housing growth.
There has been additional Covid funding from government of £1.5million with another tranche of funding estimated at £1.1m to come.
Last month Kent County Council (KCC) said it was facing the biggest financial crisis in its 131 year history, it has emerged.
Up to £130million of savings could be required at Maidstone County Hall over the next three years while council tax increases and major cuts to services could be considered.
The county council launched a four-week consultation on July 13, inviting residents’ views on spending priorities by visiting the website www.kent.gov.uk/budget and completing the online questionnaire.
Funding gaps and predictions
Risks of a spike in evictions
Overspend £173k (reduced to £153k due to grant funding)
The council invested in new homelessness prevention services, which has had the impact of reducing the use and the cost of temporary accommodation. The number of households in temporary accommodation has reduced from 188 in April 2018 to 60 at the end of June 2020.
This work has continued during the COVID-19 lockdown and a national ban on evictions has further helped reduce the need for temporary accommodation. The evictions ban is due to end on August 23 and there is a significant risk there will be a spike in the number of applications later in the year as cases work through the courts. A spike in casework would lead to an increase in costs.
Covid messages to the public – cost £20k
Building control – impact of £329k losses
Land Charges – impact of £242k losses
Facilities Management – break even
Loss of £56k as a result of vacant units at the Kent Innovation Centre (KIC) and a reduction in income for Dickens House, both being the impact of COVID-19. Offset by savings associated with leasing costs (£56k).
Waste and recycling
Domestic Waste Collection has a £200k overspend as a result of COVID-19 including an increased need for agency staff, combined with a £62k income shortfall resulting from KCC reducing its enabling payment for the recycling and waste service.
Additional costs of £22k for vehicle hire
Clinical Waste loss of £20k income for clinical waste collection.
Coastal Development – impact of £52k
Licensing Income – loss of £109k income likely
Off Street Parking – Income loss likely of £385k
On Street Parking loss likely £420k
In addition there is a predicted reduced income from the Dreamland car park of £270k.
Port and Technical Services -impact £421k
Planning fee income loss predicted £100k for the year.
Business Rates and Council Tax admin costs £50k.
Fall in collection of Council Tax £1m.
Reduction in Business Rates collection £600k.
Impact of reduced internal borrowing £175k.
Additional cost of PPE £60k.
Safer Neighbourhoods may incur the cost of establishing community network, community team, possible enforcement changes and public health £112k.
Increased security/provision of toilets £51k.
Loss of income from Your Leisure £160k.
Other Fees and Charges loss £343k