The Cabinet Member for Finance and Performance explained that since the coronavirus lockdown council income from sales, fees and charges had fallen while spending had increased, including on supporting care homes, providing personal protective equipment, supporting local businesses, making transport changes to aid social distancing and delivering food packages to vulnerable people. It was noted that this had led to a significant budget shortfall.
It was highlighted that, at the beginning of the pandemic, central government had stated councils would be fully recompensed. However, it was noted that reimbursements, to date, had covered less than half of the deficit. As a result, with the country facing recession and uncertainly, it was estimated that Lambeth could face a £27m budget shortfall – potentially raising as high as £50m. Despite this, Councillor Kay explained prudent financial management over recent years had meant that this could be covered by reserves. As a result, a Section 114 notice would not need to be issued.
The following points were noted:
- Local government had already been faced with a lack of financial clarity prior to the pandemic, due to uncertainty over the fair funding review, business rates and adult social care funding, leading to a series of one-year settlements. These issues, along with Brexit, were still firmly on the horizon.
- The Council had tried to do what was necessary during Covid-19 and would continue to work on a recovery which worked for everyone, including investing in jobs, affordable workspace, cultural facilities, digital infrastructure and tackling the climate emergency. However, the unprecedented financial gap would result in significant financial pressures on the delivery of council services if no further government funding was forthcoming.
It was highlighted that the Financial Planning and Medium Term Strategy Report 2020/21 to 2024/25 had been considered by Overview and Scrutiny on 16 July 2020. The Leader of the Council thanked the Committee for their contribution and invited Councillor Liz Atkins, Chair of the Overview and Scrutiny Committee, to summarise the Committee’s observations and recommendations which had been set out via a supplementary agenda paper.
Councillor Jonathan Bartley, Co-Leader of the Opposition, raised concerns which focused on identified pressures of £21.3m over the Medium Term Financial Strategy (MTFS) period, set out in section 2.20 of the report, and stated these costs should be investigated as they were not related to Covid-19. Councillor Bartley also highlighted, in relation to irrecoverable loss of income, that the Council was expected to receive compensation with further details awaited from the Government.
In response to these questions the Director of Finance and Property, clarified that section 2.20 of the Financial Planning and Medium Term Strategy Report related to unavoidable growth, and highlighted:
- Some of those costs related to Covid-19, others were identified as part of the closure of the 2019/20 accounts. Temporary accommodation was a particular issue, which was expected to continue especially as Covid-19 ... view the full minutes text for item 4