Thanet council Cabinet members are to consider the significant impact of COVID-19 on the authority’s finances – resulting in a £840,000 shortfall – when they meet on Thursday, January 14 to discuss the budget for the 2021-22 financial year.
The Budget report sets out how the council will allocate a pot of £17.165million to fund services from April 2021 – March 2022. The options set out to deal with the £840,000 fund shortfall are mainly internal management of budgets and the council says it will have minimal impact upon frontline public services for residents.
Cabinet will consider a £4.99 – or 2.1% – increase per year for Thanet District Council’s element of Council Tax for a Band D property. This equates to a weekly increase of around 10p per week.
They will also consider a 2% rise on fees and charges which will bring in an estimated £400,000. The fees hike will include areas of on and off street parking, crematorium fees, costs for bulky and green waste and higher port and harbour fees.
An overspend, substantially caused by Covid-related factors, of £1.7million for the current financial year (2020-21) will also be reviewed. This is proposed to be covered through the use of reserves and represents an improvement over the previous forecast of a £3million overspend.
It is being recommended that £400,000 of government Covid funding this year is set aside as a provision against Covid losses in income in 2021-22.
During 2021-22, council reserves will be supplemented by £100,000 in Revenue Support Grant and £215,000 Lower Tier Services grant which had not been planned, as well as further Covid funding.
Cabinet Member for Finance Cllr Rob Yates said: “Protecting the services that matter most to local people is a key part of our consideration when we meet to review the proposed budget next week. We’ve seen a substantial impact on our budget as a result of COVID-19 and our priority has rightly been on the immediate coordinated response to support our residents and businesses.
“Delivering a balanced budget is key and thanks to robust financial management we will be considering a range of options which ensure we can achieve this position whilst limiting the impact as far as possible on local services.
“These are unprecedented times and the level of challenge on the council’s finances is immense, not least considering the significant reduction in funding we’ve seen in recent years from the Government. We will continue to do all we can to protect critical public services and support the local community during this pandemic.”
There are expected to be shortfalls in the collection of council tax and business rates due to the and increased unemployment from an economic downturn (resulting in more Council Tax Support (CTS) claimants and non-payment by those not in receipt of CTS).
Business Rates income could similarly be hit by business failures from an economic downturn with a non payment estimate of £600k. There is also the potential cliff-edge of Business Rates relief for small businesses and those in retail, leisure and hospitality, which has applied for this year but will end in 2021-22, with those businesses expected to start paying rates again
Income from fees, including parking, are also expected to be hit as Covid restrictions continue. This includes Dreamland car park is part of the Dreamland estate sale to amusement park operator SHL resulting in a forecast loss of £150k income for the year.
Your Leisure – The council’s leisure trust, Your Leisure, is facing a substantial shortfall in its income as a result of Covid, as are all leisure trusts.
The council has paid its management fee for the year up front, and has paid an additional £160k to the trust. This additional fee is equivalent to the previously agreed 2020-21 budget saving in the management fee that will not be achieved as a result of the pandemic.
Ongoing discussions are taking place with Your Leisure to establish their resourcing requirements, which could lead
to further demands on the council’s finances
The council says permanent savings must be made.
This will mean each Service Director has to find savings from their budgets. There will be reduced spending and bolstering council reserves will be delayed until 2022-23 to help meet the financial gap.
Council staff also face a ‘restrained’ cost of living pay award in 2021-22 “in order to protect services and minimise staffing reductions.”
A 1% increase in pay is proposed to be built into the budget, along with the cost of paying the National Living Wage and increments. Incremental increases through the grading structure are a contractual obligation to the council and a right for staff. In addition, the council is legally required to implement the increase in the National Living wage which is forecast to increase by 5.5% to £9.20 per hour on 1st April 2021. The combination of these pay pressures will cost the council an estimated £294k in 2021-22.
The council’s property holdings total of £267 million net book value after depreciation has been applied.
Where assets are no longer viable or surplus to requirements they will need to be disposed of in order to reduce the council’s liabilities and to generate capital receipts to fund new developments or be transferred for community benefit.
The creation of new investment assets, such as new beach huts, will be explored to create additional income.
Social rents have been set based on government rent guidance. Affordable Rents are linked to local market rents and to the Local Housing Allowance for the area. Rents are applied to individual properties at the lower of either 80% of the local market rent or the Local Housing Allowance.
Councillors have raised concerns about the impact of a rent increase on current tenants and, as a result, the budget suggests a CPI+1% increase for social rent tenants and a freeze for affordable rent tenants. Based on the proposed increase across the whole stock the average rent is £84.94, this is an average increase of £1.89p per property per week
Service Charge Increases
Tenant service charge increases continue to be capped at £3 a week.
Planned capital projects include:
Jet-Ski Berths at Ramsgate Marina.
Ramsgate Port – Berth 1 Refurbishment
Thanet District LED Lighting – convert council owned street/open spaces lighting to LED (also replacing lamp columns where necessary).
Replacement Crematorium Chapel Roof to make the roof watertight and reduce the need for repairs.
Royal Harbour Multi-Storey Car Park Lift Replacement.
Government funding includes:
A further tranche of emergency Covid funding in 2021-22 of £1.016m.
A promise of further support for quarter one of 2021-22 for losses in sales, fees and charges due to Covid.
A Local Income Tax Guarantee scheme to assist with irrecoverable losses of Council Tax and Business Rates in 2020-21, value currently unknown.
A Local Council Tax Support grant to assist with additional costs of Council Tax Support, worth approximately £300k in 2021-22.
Revenue Support Grant of £100k rolled over for one more year to 2021-22.
A Lower Tier Services grant, probably one-off, worth £215k in 2021-22.
Consideration of using the Minor Works team to generate income from selling handyperson services.
A review of printing services income and expenditure including scope to in-source more printing.
Growth in income generated from fees and charges.
Investigation of more shared services including leadership teams.
Expand the CCTV service to sell to other external organisations.
Increase the use of direct debits to improve income collection across all chargeable services.
The future picture
A report to Cabinet members says: “An optimistic view would be that vaccines are now being rolled out, the Spring will start to see a return to some semblance of normality, the wider economy will grow quickly, Thanet’s business sector will start to recover, unemployment will fall, and Thanet will become a popular destination in the summer of 2021 for visitors and staycations.
“Any remaining adverse impact on residents, businesses and the council’s finances will be covered by additional Government support and we will be well placed for economic growth, a stabilisation of the council’s finances and an ability to replenish reserves.
“A more pessimistic view would be that the vaccination programme is slow to roll out and take-up is limited, there continue to be local outbreaks of Covid, there are still restrictions on trading, unemployment remains high, Thanet’s business sector is found to have been badly damaged by the economic effect of Covid and slow to recover, Government support is inadequate and the council’s finances are in an even worse condition, with reserves being perilously low.
“The view of the S151 Officer is somewhere in the middle of these scenarios in economic terms, but the budget for next year still presents a challenge and reserves are very low.”
The budget pot
The money that is used to fund public services is made up of Council Tax, income including fees and charges, retained Business Rates and Government funding (including Revenue Support Grant and New Homes Bonus).
Thanet District Council receives just 12p in every £1 of Council Tax. The remainder goes to: Kent County Council, Kent Police and Crime Commissioner, Kent Fire and Rescue Service and Town/Parish Councils.
If approved, the budget will then be considered at a full Council meeting in February.