Perfect economic storm means tough choices to balance the books
Canterbury City Council is determined to overcome the biggest financial challenge in its history as it deals with the continuing effects of the Covid-19 pandemic on its budget including the latest lockdown.
The city council plugged an unexpected £12 million hole it in its 2020/21 finances with an emergency budget in May by drawing on £7.5 million of its reserves, delaying its big capital or infrastructure projects for at least a year, not filling job vacancies, stopping all non-essential spending and closing some of its car parks to save money on business rates.
Between 2012 and 2020, the council made ongoing savings of £12.5 million – the equivalent of £1 million to £1.5 million every year.
A report to councillors on the council’s Policy Committee outlines a raft of proposals to deal with a £9 million shortfall projected before the government announced its latest national restrictions to ensure it balances its books in the 2021/22 financial year while continuing to provide vital frontline services.
The council also needs to maintain a sound financial footing for the future by rebuilding its reserves – the savings it uses to weather the storm when a crisis like this one hits.
The committee will be asked to give its permission to consult the public on the council’s plans. A final decision on the budget will be made by councillors in February in light of the public’s views and when the financial implications of the latest lockdown should be a little clearer.
Cllr Ben Fitter-Harding, Leader of Canterbury City Council, said: “As a second lockdown looms large on Thursday we are in the middle of a perfect economic storm when it comes to the council’s finances. The demand on our services is increasing but our income is falling.
“Now, more than ever, we need a comprehensive plan to balance the council’s books in 2021/22 and focus our increasingly-scarce resources on those who need us the most – our residents and our businesses.
“Our focus will be on delivering vital frontline services like waste collections, housing and helping rough sleepers while protecting the district by using our enforcement powers.
“This budget proposal sets us on course for a smaller, more efficient, council that is determined to deliver its services in the best possible way by putting its customers at its heart.
“And while the council needs to raise money to achieve its aims and be ambitious for the future, parking charges are just one example, we recognise our very real role in helping to stimulate our economy with new offers and schemes to encourage the return of customers when the restrictions are lifted.
“This storm will pass, and the council needs to be fighting fit and ready to take advantage of the opportunities that will inevitably open up for the whole district when this crisis comes to an end.”
The report assumes the government will continue to limit annual increases in Council Tax to 2% or £5, whichever is greater.
One of the key savings to be considered by councillors is a recommendation to opt for Euro 6 diesel rather than electric buses for the next Park and Ride contract which starts in April 2021 and runs to 2028, with a possible extension to 2029.
At that point the council would look again at the options in the hope prices for alternatives will have fallen and the switch made more affordable.
Taking this course would represent a saving of around £445,000 a year. The report also recommends the council does not add to the existing Park and Ride service.
Other proposals to reduce costs include:
- £1.4 million in operational and efficiency savings across the council
- Reducing the councillor Opportunities Fund for a second year
- Allowing private operators to run the cafe at the King’s Hall, and hire it out for weddings, and to run the cafe at the Beaney House of Art and Knowledge
- Reducing repairs and maintenance work at nature reserves and amenity areas
- Closing three sets of public toilets – the location to be decided and a consultation held when that decision is made
- Allowing the council as a whole to access the surpluses generated by the Whitstable Harbour Board as it is likely these will not be needed to pay for quay replacement projects in the next five years
Proposed ways to generate income include:
- Increasing the hourly tariff in Canterbury’s high demand car parks – Watling Street and Queningate – to £2.80 an hour
- Increasing the hourly tariff in Canterbury’s medium demand car parks – Whitefriars, Pound Lane, St Radigund’s, North Lane, Northgate, Longport, Castle Row and Millers Field – to £2.30 an hour
- Increasing the cost of using the Park and Ride service to £4 a day
- Creating a seasonal high-demand tariff at the Gorrell Tank and Keams Yard car parks in Whitstable for the summer
- Introducing a seasonal tariff to park at Reculver Towers and the Reculver Country Park
- Introducing a flat rate tariff (£1.50 weekdays and £3 at weekends and over bank holidays) at Hampton, Reculver Drive, Ocean View and Swalecliffe Avenue car parks in Herne Bay from 10am to 4pm during the period April to September
- An additional street market in Canterbury next summer
- A 3% increase in fees and charges across the board except where they are set by the government, are restricted to income recovery only or have fallen behind what other providers are charging such as in the district’s cemeteries
- Introducing a new fee for developers for the monitoring of s106 planning agreements
The hourly tariff at the Castle Street multi-storey, Holman’s Meadow and Station Road West multi-storey car parks will fall to £1.80 an hour.
Cllr Fitter-Harding said: “Generating income from our car parks is not the driving force behind these proposals although the money that comes in helps to pay for vital frontline services that are more important than ever during this crisis.
“We want to encourage greater use of those Canterbury car parks with spare capacity and reduce the queues at those car parks that are full every day.
“We also want to give our customers certainty when it comes to the cost of their parking with a daily cap on charges payable in any 24 hour period to encourage them to stay longer and overnight.
“We propose to cut the hourly tariff across almost 40% of the total spaces in the city so there is a £1 per hour difference between the cheapest and most expensive in the hope price will influence where motorists choose to park. Drivers will pay a premium for convenience.
“We will also work with businesses, retail or otherwise, to introduce discounts and incentives that will encourage people back into our town and city centres once the latest lockdown is over.”
The budget also takes unavoidable increases in spending in some areas into account including:
- Investing in digital technology to help increase efficiency and save money in the future
- The ending of the current waste and street cleansing contract means an inevitable increase in costs whichever way the council chooses to deliver that service
- Tackling an increase in homelessness as the effects of the pandemic and the recession bite
When it comes to capital spending, the money used for infrastructure schemes and building projects, the report proposes a number of large scale schemes be delayed until after 2021/22.
These include the refurbishment of the Kingsmead Leisure Centre in Canterbury, the regeneration of Beach Street in Herne Bay and the planned revamp of St George’s Street in Canterbury.
Finally, the report to councillors outlines the effect the coronavirus is having on businesses in premises owned by the city council.
As they recover from being closed because of lockdown earlier this year, takings are down and costs have increased because of the need to keep customers and staff as safe as possible.
While the government has provided businesses with a wide range of financial support, some council tenants will not be able to pay their rent.
Deputy Chief Executive Tricia Marshall said: “Where businesses are experiencing difficulties in paying their rent, we’re working with them to ensure they have tapped into all of the support that is available.
“In some exceptional cases, we have agreed that rent payments can be deferred.
“However, it is inevitable that a number of businesses will go into administration during this year and we are forecasting for the current financial year income will be down to £10.9 million.
“Whitefriars represents £8.2million of the budgeted property rent income. We always knew rental income would fall in the period 2020-2022 due to lease expiries and rent negotiations.
“But this has been compounded in the current year by the impact of the pandemic and it is currently forecast income will be down to around £4million for this year.”
Since the purchase of the first half of Whitefriars, any income the council has received over and above what it budgeted for has been put in an earmarked reserve in order to smooth any income shortfalls over the lease renewal period.
As of March 2020, the reserve balance stood at £2.7m. It is anticipated all the reserve balance will be required in this year to cover income shortfalls.
For 2021/22, it is forecast that property income will be down by £2.8m of which £2m relates to Whitefriars.
Some improvement is expected by 2023/24, though rents are expected to still be significantly below the current year’s budget.
The Policy Committee takes place at 4pm on Wednesday 11 November. To watch the meeting live, visit YouTube and search Canterbury City Council.
Published: 3 November 2020