Agenda item

Agenda item

Council Finances - 2020/21 Budget Update


The committee received a report of the Interim Head of Finance with an update on the council’s finances as a result of Covid19.


The Interim Head of Finance introduced the report. This was not part of the usual reporting cycle and reflected the current exceptional circumstances. The report reflected a snapshot in time and the situation was evolving. Key points for the committee to note were:

·        The council had had a significant loss in income (£2.3 million) which included the leisure management fee, community asset rents, market rents, CitiPark rent, intu rent holiday, car parking fees and other commercial rent loss.

·        Croxley Park had a sinking fund as part of the agreement to cover unexpected drop in rent receipts.

·        Covid19 had also resulted in increased expenditure in many areas including; accommodating rough sleepers, additional CSC staff, IT costs and building support costs.

·        Some savings had been made including the cancellation of elections and postponing recruitment to certain vacancies.

·        The council had received two government grants totalling almost £1 million but these did not recognise the significant loss in income.

·        The result was a gap of £1.7 million in the revenue account.


The situation was not yet fully known. Rents for the first quarter of 20/21 would be payable shortly, the leisure centre was also not yet able to reopen, and it remained to be seen how many businesses may go out of business at the end of the furlough scheme.


Additionally, intu had gone into administration; the Watford centre remained open and the council was optimistic that a buyer could be found.


All councils were facing similar pressures and council tax receipts may well be affected. It was noted that councils could not go bankrupt, but could issue Section 114 notices which indicated that they could no longer sustain a budget.


Members discussed the multi-storey car park on the Riverwell development and noted that there had been problems in identifying a suitable developer. It was confirmed that there was no update on this as the negotiations with the Department of Health and West Herts Hospital Trust were ongoing. The council’s investment was not at risk.


Following a question about benchmarking, the committee was advised that the council sent a monthly return to the Ministry of Housing, Communities and Local Government to reflect the current situation. The District Councils Network also collated this data but most authorities of a similar scale to Watford had comparable problems.  No data was widely available yet but Watford had been congratulated on its response to the crisis and recovery. The Portfolio Holder added that comparisons were difficult to draw and that the government was less sympathetic to councils who had been innovative.


Discussing intu, the committee were advised that a different management company could be brought in as the shops were independent of intu. As the freeholder, the council received £0.8 million a year in rental income from the site and would therefore be a creditor in the worst case scenario. It was not, however, within the gift of the council to direct the outcome of the administration process.




that the report and the committee’s comments be noted.


Supporting documents:


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