Council faces need to save £16m due to Covid-19 pandemic

 

By Owen Sheppard Local Democracy Reporter

A town hall will need to save a further £16million because of the impact of the coronavirus pandemic.

At a meeting on July 23, Hammersmith and Fulham councillors were told in detail about the costs the council has taken on, due from lost parking fees to buying supplies of PPE.

As with all councils across the UK, the Government has provided help. Hammersmith and Fulham is in line to receive about £22million. This includes a £13.5million “emergency Covid-19 grant”, and an anticipated £8.7million to cover three-quarters of all its lost revenue.

However, members of the Finance Policy & Accountability Committee last week heard that the council will need to cover much of the burden alone, to the tune of about £16.4million.

Here is what we learnt about some of the biggest factors that have affected the council’s finances since March, and what it’s looking to do next.

Protecting care homes and vulnerable residents 

Thousands of people signed up to the Hammersmith and Fulham Community Aid Network, which supplied food and help to residents who were self-isolating and shielding, and stocked newly-formed food banks.

For the council, this cost some £1.3million.

Finding huge amounts of PPE, while the country was in the midst of a national shortage, cost it £2.8million. And £2million of those supplies were reserved just for the borough’s care homes and for carers doing home visits.

Among other costs, the council set up a temporary mortuary in Bagleys Lane. This and other “coronial arrangement” costs added up to £828,000.

About £900,000 was spent on pavement widening and new cycle lanes.

Millions given to local businesses to keep them afloat

The council’s new head of finance, Emily Hill, explained at the meeting that thousands of businesses in the borough “simply were unable to pay because they didn’t have any money coming in”.

To compensate the council for lost business rates revenue, the Government gave it £117million.

The Government also put the council in charge of distributing grants to individual businesses in the borough that needed help. These have run to a total of £51.7million.

Nearly £12million from parking charges and fines

One committee member called the £11.8million figure “fascinating”.

Ms Hill said fines are “not used as a revenue generating activity”. Rather, they are used to “enforce transport policy”.

London councils are unique compared to the rest of the country, because they use revenue from fines to pay for road maintenance. Whereas other councils receive government funding for this.

A further £3million of lost revenue was owed to the fact that libraries and leisure centres have been shut. There was also a shortfall in fees from planning and licensing applications.

The council’s rainy day fund is running low

Hammersmith and Fulham has consistently been dipping into its reserves in recent years.

Its reserves stood at £68.8million at the start of the year, down from £113million in 2018.

A report presented to the committee said it expects the reserves balance to be £41.4million by the start of 2023-24.

Because of this relatively low level, the report said: “The current reserves forecast means that there is limited scope to fund the shortfall in Covid-19 funding whilst meeting current commitments.”

Could there be cuts?

The committee report said there could be “early implementation of potential 2021/22 savings”, and that these will be brought to a council Cabinet meeting in the autumn.

There are numerous ways councils can save or make money without having to cut essential services.

However, the report continues by saying its “recovery programme” will include: “service reviews and departmental income and savings opportunities, alongside council-wide/cross-cutting programmes.”

What if there’s another lockdown? 

Councillors raised the issue of what would happen if there was a second lockdown, and the council’s various contractors, as well as local businesses, needed further help.

Ms Hill said the council has been encouraged by the Government to keep paying for outsourced services in order to limit the damage to the local economy, even if the council’s funds run low.

“The Government expects us to bear some element of the pain of this,” she said. “But they haven’t said ‘that’s it, that’s all we’re giving you’.”

A committee member made a point that Leicester had not been given extra financial support by the Government when it went into a second lockdown earlier this month.

Ms Hill explained that was because measures like the furlough scheme were still in place to help Leicester. She said the Government would be more likely to step in if local lockdowns happen after the national furlough scheme has ended.

Could the council run out of money?

Ms Hill explained that the (MHCLG) Ministry of Housing, Communities and Local Government – the department that deals with local councils – has seemed open to the possibility of needing to bail out an authority that runs into trouble.

“If the council finds itself in a situation where it can’t balance its budget, we would have discussions with the MHCLG. If you look at Transport for London, they were very close to saying it looked like they were going to go bust, and it went into discussions with the Government to work out a rescue package.”

She added: “Just to be clear, Hammersmith and Fulham is not having those conversations.”

There’s also the fact that a national recession will affect London councils’ finances.

Ms Hill said: “An economic downturn hits the council in a number of ways.”

There will be an “increase in demand for services”, such as social housing, temporary accommodation and rough sleeping services.

And she said a poor economy will likely reduce the amount of tax and rent the council receives, if more people go into arrears and need help.

She added: “Although there’s that quantifiable problem, there’s a longer term issue as to how the council manages an economic downturn situation.

“We also don’t know what our grant allocation [central Government funding] will be for next year. Usually we expect a four-year settlement.”

Picture: Top row: Judith Worthy, Emily Hill, Councillor Max Schmid Bottom row: Councillor PJ Murphy, Councillor Patricia Quigley, Councillor Guy Vincent