Agenda item

Report of the Chamberlain.

The Committee received a Report of the Chamberlain concerning the impact of Covid-19 on the Corporation’s Revenue Budgets as at end of period 2 of the 2020/21 financial year.

The Chamberlain opened the discussion by highlighting the improved outlook compared to the last time he presented to the Committee in May; namely, the estimated overall forecast year-end overspend across all the funds is an improved position of £30.4m (average £3m per month across the year).

This comprises an adverse variance of £21.6m (9%) on Chief Officer Cash Limited Budgets, mainly on City Fund, and an adverse variance of £8.8m (20%) on Central Risk Budgets (excluding The City Bridge Trust grant giving and London Community Response Fund advance commitments).

Whilst these revised forecasts were encouraging, Members should be in no doubt as to the formidable challenges that lie ahead, not least in ensuring that the Corporation’s legal obligation to balance City Fund over the medium-term was achieved.

In terms of the drivers of income losses; whilst firm figures on rental income, taking

into account the Corporation’s financial support to tenants, the scale of bad debts at year end, and the broader economic fallout on demand for office space, were all difficult to fully determine at the moment, the immediate consequences have fallen predominantly on the Barbican Centre, the Guildhall School of Music and Drama (GSMD), the Corporation’s three fee paying schools, and areas under the Open Spaces department’s remit.

In response to a query, the Chamberlain confirmed that the Commissioner of the City of London Police was projecting an underspend due to him being unable to recruit to the degree he had anticipated pre-Covid. Whilst further departmental underspends were not immediately forthcoming, it was hoped that more would emerge in due course.

In terms of next steps, the Chamberlain confirmed that further discussions concerning prioritisation would take place at the Resource Allocation Sub-Committee away day on 3^rd July, and a re-budgeting round would culminate in a new budget submission in the autumn. He also highlighted a) the cross-departmental work currently being carried out to deliver the new Target Operating Model (TOM) and b) a review the City Surveyor was carrying out on the timelines of the major projects, as significant opportunities to produce savings across the medium-to-long term.

The Chairman thanked the Chamberlain for his remarks and emphasised that, whilst the projection had improved since May, “a £30m overspend was a big deal”, “whilst we may be able to absorb one-off hits, no one should underestimate the significant structural impact this would have on the Corporation’s finances over the coming years”. In terms of re-prioritisation, “nothing should be off-limits”. He added that, whilst the Corporation had statutory duties in some areas, “how we delivered those duties was not proscribed, and efforts should be made to explore how we can become more efficient and effective in delivery in the future”.

A Member expressed his concern that the level of central government financial support to the local government sector thus far, namely £3.2 billion, was inadequate, he queried whether the Corporation was working with others in an effort to maximise lobbying efforts. The Chamberlain responded that the Corporation had taken up all offers of help from central government and intended to continue to do so, furthermore, it was actively working in collaboration with others to secure additional support.

RESOLVED – that the Committee noted the Report.