Who says local government accountancy is predictable? We may not be living life on the edge, and we should be thankful we have a job, but COVID-19 has brought chief finance officers a heap of new challenges.
Let’s start with business grants. Are league tables really necessary? I had resorted to statistics to help describe my authority’s performance. ‘There are only six shire districts in the country with more eligible businesses than us that have paid a higher percentage of grants’. And now there’s the Local Authority Discretionary Grants Fund.
I am old enough to remember when a discretionary grant meant just that – basically, that we could spend on pretty much anything legal. This new grant has so much ‘guidance’ and the pot is so small in comparison to the business base, that unsurprisingly, many authorities have just copied and pasted the guidance into a web form and invited applications.
And then there are the monthly Ministry of Housing, Communities and Local Government (MHCLG) returns. April’s was OK, but May’s was endless and confusing. I am still not convinced that the designer of the form understands local government accounts (we accrue).
Was I the only one who felt some of the questions were designed to enable a ministerial soundbite that showed we weren’t spending all the funding and we had lots in reserve? It reminded me of recently completing a ‘cancelled due to COVID’ form to reclaim airline ticket costs – you have to fill in the boxes but there is a feeling that one wrong move, and you lose.
The financial reality at my authority is that we are losing millions in income and our estimated losses are nearly a third of our £17m net revenue expenditure.
Our reserves are the lowest in Kent and some of the lowest in the country. Some of our earmarked reserves are for committed projects but, there are degrees of earmarked-ness. We have some that are earmarked for, say, training, which could be used. Also, there are our ‘savings’. As an example, we annually set aside income from the crematorium to fund new burners every 15 years or so. We could use that income and borrow to fund the burners.
So far, the Government emergency funding of £1.5m is a fraction of our estimated losses and we do not have enough earmarked-but-not-committed reserves to cover the shortfall, so there are tough decisions to be made.
Fortunately, we never bought an office block or a shopping centre to generate commercial income. We like to say how far-sighted we were, but the reality is that we never had the risk appetite. We might have if we had the cash/balance sheet to do so. We want to avoid cutting services, but we also want to start investing in local economic recovery.
Despite local political turmoil in recent years and a minority administration, members have been on board with our financial strategy. An all-member briefing recently raised concern about our predicament, but was supportive of our plans. As with any cohort of 56 people, some are more engaged than others, but even those for whom local government finance doesn’t rock their world, they have trust and confidence in the collective leadership’s financial strategy.
We have had good, if sometimes challenging discussions with our two MPs. They have had huge mailboxes of queries and complaints about business grants and our honest and transparent approach to the responses has helped build stronger links with them both. I have learned more about business rates than I ever thought I would, and the support of digital solutions partner Civica, who delivers the revenues and benefits service, has been excellent.
Life is challenging, and it is hard to take a breath and celebrate our small successes – for example, a team of volunteer staff making thousands of calls to businesses that were unaware of the grant scheme.
I believe we will come out of this crisis financially weaker, but with strengthened relationships and trust in our local public servants. We just need the Government to fund the losses and we can really start looking to the future with optimism. I am particularly excited about developing the new medium-term financial strategy.
Tim Willis is deputy chief executive and chief finance officer at Thanet DC
