As the country enters a second week of lockdown to counter the Covid-19 pandemic, Richard Harbord considers the key issues at the heart of local authority finances.
In some ways financial resilience is the key requirement for local authorities at any time, but in the current crisis it has assumed unprecedented importance.
Managing confronts local authorities with major challenges. Perhaps the biggests difficulty with the pandemic is that there is no certainty about time scales; it is impossible to draw any conclusions about how long it will last.
The present lockdown has, for the majority of people, got to remain in place for another week, but it seems hard to believe that life will return even to even a semblance of normality in that time.
The pandemic will affect local government at multiple levels. Finance chiefs will be looking at issues related to everything from cashflows affected by council tax payments; the implications for revenues from commercial activities; support from grants and their administration; and, of course, the impact on business rates revenues.
Impact
Local authorities generally have extensive plans for emergencies and pandemic plans. This pandemic is, of course, something that exceeds the boundaries of most preparations which are largely based on influenza.
Councils are very much in the front line in such a crisis and a large number of staff have to minimise, as best they can, personal risk while maintaining existing vital services, fulfil new functions requested by central government or even just keep the local machinery running where it has to.
In one respect, at least, you could argue that local government had a head start, in as much as most have workable day-to-day home working policies. It’s also the case that a large proportion of income comes in automatically by way of direct debits etc., (although we will come back to that). The pandemic’s timing at the very end of the financial year is, in part, helpful as most taxation income was already collected and income from other sources less affected than it could have been.
There has been a need to boost some areas of working. Suddenly, many authorities have been deluged with people needing guidance and help, and unfortunately during the era of austerity local authorities cut back on communications and similar staff. Councils are, in general, attempting to support all those residents that are known to them as being vulnerable. Many are keeping in touch with this group by twice weekly telephone calls.
From my personal experience as clerk to a large crematorium board, I know well that front-line staff are placing themselves at risk daily while using deep cleaning and social distancing. Administrative staff can work from home but key people have to be present and the service needs to run as near normal as possible.
Our staff also suffered additional stress as the public failed to understand the government restrictions on close family only and continued to turn up with 30-50 or more mourners.
Finances
In financial terms there are a number of key areas. A very detailed and continually updated cash flow forecast is essential. Some authorities are not collecting council tax direct debits in April and that will add to the difficulties.
They also need to ensure that residents understand that this is a one-month concession, which will need to be dealt with in full in due course. The effect of closure of gyms, theatres etc., also needs to be taken into account and a workable policy for subscription refunds, or not, needs to be implemented.
Many commercial organisations have resisted refunds but providing newsletters and live video streaming to justify their position. Local authorities may, or may not, be able to do that. Returning to crematoria, live streaming of services has been helpful in keeping attendance down and the costs of that form part of the funeral costs.
The government has offered to accelerate grants and other payments to ease cashflow difficulties and local authorities need to be in a position to provide supporting information.
The fact that a large proportion of businesses are having a business rates holiday is a major feature of cashflow. Councils are also left to make decisions on which businesses fall within the regulations for relief. Claims for hardship are expected to rise and will need to be dealt with carefully and swiftly. A number of authorities have offered to ensure suppliers are paid immediately and there remains a need to pay wages, salaries and pensions on time.
Although many authorities will have limited attendance in offices to a small number, arrangements to speak to staff and members regularly and hold meetings must be in place.
There is an additional threat to local authority’s IT systems at this time from scams and hackers. A number of authorities have been slow to invest properly in cyber security.
Currently, we are all receiving large numbers of emails with attachments relating to the pandemic. Opening a “wrong” attachment could be costly and cause havoc at this time. There is a number of cases of ransomware emails being received and the ability to know whether emails are genuine and where they have come from is vital.
Of course, there are minor things like closing the final accounts. The date for this is likely to be put back, if for no other reason than allowing the public access to the accounts is currently problematic.
However, it is a task that still has to be done. There are also commercial partners involved in this such as valuers, who will be struggling to complete their certificates whilst in lockdown.
Finally, will the world ever be the same? Will the virtual office be the norm in future? Will the government use this turmoil to make major changes?
Whatever happens, the effects of this current situation are clearly going to be far reaching.
Richard Harbord is former chief executive at Boston Borough Council
