To receive any announcements from the Chief Executive.
Minutes:
The Chief Executive announced that the Council’s magazine, the Bulletin, was in the process of being delivered to 45,000 households across the borough. The Bulletin contained the annual report for 2020-21 which details some of the tremendous work that Spelthorne Borough Council and its staff have delivered in support of its communities, particularly those most vulnerable throughout the Coronavirus pandemic.
The impact of the pandemic has been profound and has seen this authority assist more than 17,000 vulnerable residents and support businesses with £50million of grants and additional support. The Chief Executive stated that he wished to place on record his thanks to the Council’s staff who continued to do their utmost for the borough’s communities.
The pandemic has had an impact on many people’s wellbeing as well as a financial cost to the authority.
The Chief Executive explained that Councillors had asked to be kept informed of some of those costs and asked the Deputy Chief Executive and S151 Officer to provide an update.
The Deputy Chief Executive and S151 Officer reported that the COVID-19 pandemic had had significant financial impact on the Council, as had been the case for all councils, and the ongoing impacts on service income streams could continue for a number of years.
In May 2020 the Council took prompt action to set an emergency budget allowing up to an additional £2.2m of net spend to be funded from Reserves. This budget was set at a time when councils had received only one tranche of emergency COVID-19 funding from the government and the share allocated to districts and boroughs was particularly low. Happily, the funding for local government was significantly improved and in particular funding for districts and boroughs, in recognition of their proportionately greater reliance on sales, fees and charges. As a result, as reported to Cabinet in May 2021, the Revenue Outturn impact on the Council was considerably better than we initially feared, and we did not need to apply any of the additional £2.2m reserves and indeed were able to add to reserves.
Since the pandemic commenced we have distributed the funding support from Government for businesses across the borough. In 2020-21 we distributed £18m of business rates relief towards retail, leisure and hospitality businesses. In 2021-22 with the more reduced scheme we are anticipating distribution £11m of business rates relief. In 2020-21 we distributed as business support grants (excluding LRSG) £19m and we anticipate distributing (Restart & ARG) £6m in 2021-22. In particularly we still have £2.2m of Additional Restrictions Grant, which is the discretionary grant for businesses who do not pay business rates, with an applications window for businesses to apply currently open
As part of the broad ranging COVID-19 recovery plan we have a number of specific actions to support economic recovery across the Borough. The Deputy Chief Executive and S151 officers explained that he was delighted to attend the opening of the Council’s incubator for fledging and small businesses in Sunbury and that putting this support in place was particularly timely given the numbers of people prompted by the impacts of COVID-19 to change course in their lives and set up a new business.
For 2020-21 the Council collected 96.7% of council tax due and for business rates, allowing for a late period received a couple of days after the year end, collected 95.7%. These figures are better than anticipated, however the Council does face the challenge of recovering arrears from individuals and businesses.
The Deputy Chief Executive and S151 officer advised that the Council’s investment assets portfolio continued to hold up extremely well. To date 98.4% of the rental income invoiced for 2020-21 had been collected with the majority of the outstanding balance covered by rent deferral agreements which means over the new year that percentage will rise closer to one hundred percent. This percentage is much better than national averages for commercial rental and is a reflection of the strength of our assets, their location and also the excellent work our assets team have done to pro-actively engage with tenants and manage the portfolio. This means the investment assets have continued to be able to support the funding of our services for residents and contribute towards our housing delivery and regeneration programme.
At the end of 2020-21 we were able to add a further £5.4m to our investment assets sinking funds to bring their balance up to £26m. Remember these funds are set aside, on the basis of 50 years modelling, to cover future potential dips in income in the event of tenants exercising break clauses or not renewing leases resulting in void and rent free periods. Since the pandemic commenced in March, officers and key councillors have met weekly to review our sinking funds projections on an expected and worst-case basis. These projections have been improving in recent months and indicate that even on the worst cast scenarios we comfortably have sufficient funds to insulate the Revenue Budget and council tax payers from any dips in rental income over the next 10 years.
Unsurprisingly the external valuations of the balance sheet values of our investment assets have dipped, by an average of 5.4% which again is better than sector averages. This does mean the asset value on the Balance Sheet as at the end of March 2021 dipped £52m on paper. However, the important thing is the income streams being generated by these assets continue to be robust, and over time we expect these values to recover. Remember we are looking to hold these assets for the long term. On the other side of the Balance Sheet cash backed reserves increased from £44.7m to £84.5m. This included in addition to increasing sinking funds, increasing our General Fund Reserve (a general contingency) from £1.25m to £2m and setting aside £1.5m for green initiatives/green belt fighting fund. In addition the March 2021 figure included £27m of business support grants to be applied of which the majority relates to the accounting treatment for the Collection Fund.
With respect to our investment in the Elmsleigh centre as to be expected recovery of rental from retailers to date has been more challenging but is improving as we come out of COVID-19 restrictions. To date we have collected 81.6% of the rental due for 2020-21. The reason we bought out the long lease on the centre was to enable the Council to invest in diversifying the site to protect the long-term viability of the centre. We are actively progressing this with schemes to add affordable residential on site and bring in a range of community facilities into the centre. Additionally, we are anticipating that the opening of the Tesco Metro later this year will help further boost footfall.
Looking ahead to future uncertainties, we do not know over how long a period and to what extent our service fees and charges income, for example car parking, will recover. We are beginning to see the impacts on housing options of the national moratorium on landlords evicting tenants. This makes it even more important that we maintain the momentum in delivering our affordable housing delivery programme. Nationally we are seeing significant increases in construction materials costs which we are monitoring with respect to the risk to our Capital Programme. We do not yet know what the impact locally on our residents will be when the Furlough scheme ends in September.
During the pandemic our two leisure centres have twice been closed by the regulations. Each time when they have reopened the Council has provided some financial support to the operator as we recognise how important these facilities are to the health and wellbeing of our residents. Whilst the leisure centres figures are doing a bit better than expected when they re-opened in April we do need to anticipate that may require some further financial support in the future.
As we move towards working on hybrid office/remote working basis for the longer term there will continue to be a need to invest in equipping out staff with appropriate ICT. We are looking to build on the new Customer Services telephony system as part of a broader digital transformation programme to improve service responsiveness for customers.
We are now starting work on the 2022-23 Budget, Capital Strategy and Capital Programme and are refreshing our budget gap projections for the next four financial years. We are looking to bring forward the budget process forward a little bit this year to enable more time for challenge and consideration. We are also proposing that in September we undertake a residents’ budget consultation.