Minutes:
The Committee received a presentation from the Director of Finance and Resources on the Council’s reserves and the financial sustainability of the Council in light of the Covid 19 pandemic. This provided a more detailed explanation in respect of each of the relevant indicators and considered the potential long-term implications for the Council. It also included detail in respect of the mitigation measures that had already been implemented and included information in respect of the following proposed Finance Strategy which recommended an approach to securing the finances of the Council, with general reserves only to be used as a last resort:
· To secure financial support from central government through:
- DFC support for income (loss £4m secured for Q1);
- DFC Covid-19 community support funding;
- Claim for increased waste costs from DEARA;
- Use of Scheme of Emergency Financial Assistance;
- Use of Covid-19 Job Retention Scheme; and
- Lobby DOF for rates income guarantee based on the EPP.
· To balance the deficit as far as possible through savings in the 2020/21 budget by:
- Identifying and capturing savings associated with the closure of facilities and withdrawal of services;
- Assessing the financial impact of re-opening facilities and re-instating services;
- Re-alignment of budgets to revised priorities;
- Implementing strict vacancy control measures;
- Exercising stringent expenditure controls; and
- Reviewing capital expenditure.
· Through the use of balance sheet funds (CCIF £14.35m, Neighbourhood Regeneration Fund £8m);
· The use of specified reserves (14.7m); and
· The use of general reserves (£12.9m).
The Committee was provided with a detailed analysis of the gross loss of income from across the Council’s various revenue streams. It included specific detail in respect of a 3 month rent holiday that had previously been agreed for all Council tenants for Quarter 1 (April – June), a loss of income of £1.5m. The Members were asked to note that the majority of other public and private sector landlords had continued to require payment in full, unless agreement had been reached on deferring payment. The Director reported that this was not a sustainable position for the Council and it was therefore recommended that from Quarter 2 the Council would resume full invoicing for rents.
The Director also drew the Members’ attention to specific detail in respect of the additional expenditure associated with the Council’s response to the Covid 19 pandemic. At this stage, the expenditure related to the additional costs associated with the delivery of critical services, the establishment of the community hub and the facilitation of home working. The Director explained that, as the Council moved to re-opening, additional costs would be incurred to secure a safe and secure working environment and to facilitate a sustained period of a significant number of staff home working. As a result, a further estimated £1m would be required for digital support to enable continued service delivery both on site and remotely.
The Members also were presented with the current cost of the Community Response to date and the potential cost of the City re-opening. The Committee noted that there had been significant costs associated with the increased waste management costs and advised that a claim had already been submitted to DEARA to recover this expenditure.
The Committee was also advised that the reopening of leisure facilities was also likely to be complex and costly as it would require a phased approach.
In addition, the Waterfront and the Ulster Hall had both forecast significant losses due to the closure of its facilities. The Director requested that, as the Belfast Waterfront and Ulster Hall Ltd. Shareholders’ Committee was currently not meeting, the Council would issue a Comfort letter to Barclays Bank in respect of its overdraft facility.
The Director advised that in respect of rates income there was an obvious concern about a loss of income for the Council in future financial years and he outlined the importance of local government continuing to lobby central government for the rates in the next two years to be based on the 2020/21 EPP.
The Director concluded by detailing the mitigation measures that had already been implemented by the Council which included, funding from the Department for Communities, use of the Scheme of Emergency Financial Assistance, use of the Furlough Scheme and departmental savings. He advised that more information in respect of the expenditure controls to be implemented by the Council would be presented at the next meeting which would include potential savings from employee costs.
The Committee agreed:
· the proposed finance strategy to manage the impact of Covid-19 and noted that a financial update would be provided to the Committee on a monthly basis rather than quarterly;
· that the Council would resume full invoicing for rents for all tenants, recommencing Quarter 2;
· that the Council would issue a Comfort letter to Barclays Bank in respect of the overdraft facility for the Belfast Waterfront and Ulster Hall Ltd;
· noted that the financial impact of the re-opening of leisure centres and potential saving from employee costs would be considered at the July meeting; and
· noted that the expenditure controls to be exercised by the Council would also be presented at the July meeting for information purposes.
Supporting documents: