Agenda item

(Finance and Economic Development) To consider the attached report (C-009-2020-21).

 

(1)          The Cabinet agreed to support staff in managing their health and safety requirements at home by providing an allowance from the funding set aside in the Budget, of no more than £180 one off payment per employee;   (2)          The Cabinet gave their agreement to continue work on mitigation risk package by transferring some commercial rent risk to Qualis;   (3)          The Cabinet agreed the key principles and the approach to debt recovery together with the timetable;   (4)          The Cabinet agreed the Covid19 Response List;   (5)          The Cabinet agreed to the secondment of a Strategic Director to Qualis for a period of up to 2 years with a 1 year review to oversee the development of the commercial operations; and   (6)          The Cabinet agreed to receive regular updates on the Financial impact.

 

The Finance and Economic Development Portfolio Holder introduced the Financial Issues report on Covid 19. He noted that was a long and detailed report on the council’s response to Covid and he complimented the staff on their work and dedication to the residents.

 

Covid 19 had presented the Country and this Council with a massive and unexpected challenge.  The changes required to daily life to slow the spread of the virus and protect the most vulnerable were unprecedented and were huge and potentially long lasting.   Even beyond the need to actively control the virus, the impact of this event would live on through the cost to the national finances, the impacts on the economy and employment and the acceleration of changes to the way in which people shop, work and live their lives.

 

In Epping Forest District, the immediate implications were already being felt in the form of increased unemployment numbers. The number of those registered as unemployed rose by 343% between January and May 2020 and now stands at 4,985, (6.1% of the workforce).  On top of this, a further 16,700 residents have been furloughed and there was a significant concern that many of these may add to the unemployment totals when furlough ends.

 

So far, the Council has responded incredibly to the immediate challenge. The vulnerable had been looked after, businesses had been supported and the council had worked closely with partners to maintain the safety of the community.  Through all this the council’s workforce had rallied to the challenge and ensured that services had been maintained, as far as rules allowed.  There was much to be proud of in the council’s response.

 

Financially, the impact on Epping Forest District Council (as with all councils) would be vast.  Over the past decade the Government has encouraged all councils to become more self-reliant through locally generated income streams.  Covid19 has hit these income streams hard and the impact would last for many months and potentially for years.

 

He emphasised that the Council did not have enough money to do everything that it would like to do or even sufficient finances to do everything it ought to do. Effort needed to be focused to doing those things that would give the most benefit to our district and to our residents.

 

The financial impacts on our council were huge, maybe up to £8million. He noted that the employees had almost entirely moved to a work from home approach, but this had its own impacts on health and safety. They would need to work properly and safely.  Therefore, one of the recommendations in this report was to allow employees the ability to spend some money to purchase things to allow them to work more effectively and sensibly at home.  We will encourage purchases from local suppliers if possible, so we kept that money within the district. We have budget provision to allow us to do this.

 

Areas where we had lost significant income was the car parks and the leisure centres. With reductions in our council tax and non-domestic rates collection. There had also been increases in housing costs and the provision of homelessness cover.

 

At the latest government review to help local authorities, Epping Forest gained £211,000 as a reflection of our increased costs.

 

We have currently made a number of decisions in response to Covid such as works on our High Streets to make them safer places for our residents to come back to, we have also reduced the car parking tariff allowing resident to park and shop for up to two and half hours for only 20p.

 

It was recognised that significant number of people owed us money and it should be noted that we were deferring payment and not writing off debts.

 

Going forward, several options were mentioned in the report for recovery from Covid. We would be focusing money on where it would make the biggest impact. The Portfolio Holder also wanted it put on record that recent talk of building a new leisure centre in Loughton was just a copy and paste error in a recent report and should not have been there. There were no plans to produce a leisure centre in Loughton.

 

They were also proposing to move, where they could, the assets the council had into Qualis so that they could maximise the return that the council could get.

 

They were also looking at a ‘office local’ offering offices for people who wanted to stay local and not travel into London; and a ‘travel local’ option to make it easier for people to get round our district, focusing on the areas of rural economy where travel was difficult at present.

 

They were proud of having a successful digital enterprise zone and as has been proved recently that we are in a situation where digital was becoming even more critical to the success of businesses and we would look to develop this work further.

 

The final recommendation was to second a Strategic Director to Qualis as a Managing Director. We need to make Quails as successful as possible to help us in our recovery and to make this happen, we need to put one of our Strategic Directors in there to make sure they are fully aligned to what we want to do as a council.

 

Councillor S Kane welcomed the report, it will be crucial in shaping the district across the next few years. The proposals in section 9 were large and he would like to hear his colleagues view on this. They want to accelerate the move into Qualis in order to combat the outcome of the Covid crisis, but it was a big load to put on a newly formed company. He then asked Councillor Philip about recommendation 5, to agree the list. Was this just the various business plans set out in the report. Councillor Philip said they were unless they wanted something added or taken out.

 

Councillor Patel noted that section 9 was ambitious but set out a proper economic strategy for the council. The recommendation highlighted how important Qualis was to the Council and we needed someone in Qualis to hit the floor running and deliver what we were setting out. He completely agreed with the appointment as there was no time to go through a recruitment phase.

 

Councillor Holly Whitbread said it was testament to the work of the council over many years that we were in a relatively strong financial position to weather this storm. It was important that we built on the foundation over the few years and to ensure that Qualis was strongly managed. Councillor Philip commented that this was an ambitious list to achieve, one of the biggest challenges that we have faced. And it was only because we were a well run council over the last few years that that we were in a strong position now.

 

Councillor Heap commented that the compassionate view the council took on debt recovery was exceptionally good. In terms of Loughton Centric Parade, how did this transfer of money work, were there any transactional charges? It said that business rate would increase, did this mean the actual will go up or will there just be more businesses. Asking about the Strategic Director that will be seconded across, would they be collecting two salaries and were there any bonus schemes; and by having a Managing Director, which was a good idea, it did tend to removing the Councillors control of the organisation, it was now just the Cabinet plus the Managing Director making all the decisions. There was no oversight for this process. Councillor Philip replied we need to be compassionate about debt recovery, but still needed to be fair and firm. As far as Centric Parade was concerned, we as a council call down a loan, then lend the money to Qualis at commercial rates and any profits they make can come back to us. There will not be two salaries. Quails was an entirely separate company from the council which would take on housebuilding for us and the private sector along with repairs. It was a properly constituted independent company, so the Cabinet received the overall business plans and would get a quarterly report from Qualis. But for day to day operation it operates as a company in the real marketplace and was able to react at speed. In seconding an officer, we do not have recruitment costs, nor take the time it would need to do this. That officer will also know Qualis and the Council and understand the situation

 

Councillor Janet Whitehouse noted that there was no mention of the heritage of Waltham Abbey, such as the Gunpower Mills and the Abbey which should be added to bring more people into the town.  Councillor Philip noted that neither the Gunpowder Mills or the Abbey were new things and so their attraction should not have changed as a result of Covid. There was a good Town Council in Waltham Abbey publicising the area. We were looking to increase footfall to drive business in the town.

 

Councillor Murray thanked the staff for their work during Covid. On the arrears and debts, he hoped that in practice it was as good as it read. There was a need to improve travel around the district and must be geared around public transport. He had no problem with the business plans outlined in Section 9. But with the talk about Qualis tonight, it just reinforced his opinion about the lack of accountability and public scrutiny for Qualis. Policies would be discussed in private with public discussion only on the outcomes.  Finally, as a trade unionist and a workplace representative he was unclear on the one-off payment for equipment for staff on health and safety issues. The report indicates that the one-off payment was for health and safety issues, but the recommendation reads as though this was an automatic payment to staff. He would have difficulty in justifying a further £180 payment to every member of staff, given that they have had one payment and most of them will still retain their job when lots of residents were facing a real threat of unemployment. He was more than happy to support the £180 if it was for health and safety reasons and if it was not an automatic payment. Councillor Philip agreed with giving the thanks to the staff. The aim in terms of arrears policy was to be sympathetic and fair to our residents. He agreed that there would be significant issues in the district a recent report said that there had been a 340% rise in the number of unemployed in the district, and that was unlikely to fall in the near future. We do have pockets of deprivation across the district which they will deal with. Local transport was key; to be done effectively and to benefit the majority of people. As for the staff, he referred to paragraph 4.10 of the report indicating that they had considered bulk buying items centrally for all staff. There was a difference from choosing to work from home to finding, due to circumstances outside your control, that you would need to work from home. We know that it could be difficult working from home, and this will be able to provide staff with the funding to buy items that they need to have to make their home comply with the health and safety requirements. See paragraph 4.11 and so these requests should be justified on these grounds.

 

Councillor Sartin asked about the secondment of a Strategic Director to Qualis, how would the remaining Strategic Directors cover the areas of responsibility that were left behind. Councillor Philip pointed to paragraph 10.6 which states that we shall still have a Chief Operating Officer and a Strategic Director. The Chief Executive added that the responsibilities would be transferred to the remaining Strategic Director the COO and the Chief Executive. A lot of the work that was there, the accommodation project and Qualis, was now underway, so this was a reduction in workload. But this will all be reviewed after one year.

 

Councillor Chris Pond thanked the staff and the council’s contractors, especially Biffa who have worked very hard as well as the Cabinet. He noted that the loss of commercial rents were not mentioned and wished to know how many had been unpaid and what was the prognosis of the recovery of the commercial sector over the next few months. Councillor Philip said that he did not have the figures on commercial rents with him but will get back to him on this. It was a constantly changing situation, we did have a slump in our commercial rents at the start of the financial year, but as we moved to reopening businesses, that backlog recovered somewhat. Interestingly it was the smaller businesses that were good at paying their rent and not the multinationals. They would publish figures when they have them either in a report or the bulletin, but he was unsure at present when or where this would be.

 

Councillor Wixley added the Waltham Abbey Museum and the White Water Rafting centre to Councillor Whitehouse’s historic place in Waltham Abbey and that it was also the gateway to Lee Valley Park, we had an officer dedicated to this. He asked about paragraph 9.64 on the concept of Local offices. Could it be explained. Councillor Philip replied that the museum was a great asset and we would not ignore it. The Lee Valley Park and the White Water Rafting was outside our district and people visited there without going into Waltham Abbey. We do not have a dedicated tourism officer, but we do derive a lot of money from tourism in the district and we do it from a small part of our economic development staff. The local office scheme was to encourage local resident to work locally by enabling them to travel easily locally. We were looking at the centres we have in the district and the likely fact that there would be some vacancies occurring in the existing properties. Could we make them into a drop-in office that would allow you to work locally, especially if combined with Travel Local. Businesses will be changing how they work.

 

Councillor Jon Whitehouse agreed with the approach taken on debt recovery but noted that they would also need good quality advice from the voluntary sector. He agreed that there was a need for a local transport scheme, they have seen various initiatives such as the Chigwell bus, but it would need to be subsidised; where would this money come from. He had no issues with slimming down the corporate management team as he thought it was top heavy, but he thought that Qualis was going to externally recruit to this post. Did that just not happen or were there no appropriate respondents. How will the revenue generated by Qualis be monitored and managed? And finally, he noted from the St John’s project, that the expected rate of return had gone up from 6% to 12 to 15%, a big change and raised questions on the funding of facilities and services for which this was intended. How do we make sure the quality and facilities would be delivered? Councillor Philip answered that debt recovery would be treated sympathetically; we did not provide debt advice but would support Citizens Advice on this. The Chigwell bus service was not a good example of local travel and we were looking at something different to this, as setting up an appropriate fleet mix and making it as useful as possible at an appropriate cost. As for the Qualis Managing Director, it was the aim of Qualis to get a Managing Director and a number of other positions and recruitment consultants were approached, and if we do not choose to appoint tonight then we can go back to them. But this was the right approach to take. If we appoint an MD by September, we will be within our timeframe as the interim board would come to an end then.  We will receive a quarterly report from Qualis shortly that will look at their proposal for Epping as a whole and to deliver what’s needed for the town in a suitable timescale.

 

Councillor Plummer commented that we needed to get the health and safety assessment right; there was also a local letting agent who was not being as helpful as they could be; and what was happening to the Police Station in Waltham Abbey. Councillor Philip replied that most of his points had already been addressed. And no, we do not interfere with letting agents, it was not part of our remit.

 

 

 

Decision:

 

(1)          The Cabinet agreed to support staff in managing their health and safety requirements at home by providing an allowance from the funding set aside in the Budget, of no more than £180 one off payment per employee;

 

(2)          The Cabinet gave their agreement to continue work on mitigation risk package by transferring some commercial rent risk to Qualis;

 

(3)          The Cabinet agreed the key principles and the approach to debt recovery together with the timetable;

 

(4)          The Cabinet agreed the Covid19 Response List;

 

(5)          The Cabinet agreed to the secondment of a Strategic Director to Qualis for a period of up to 2 years with a 1 year review to oversee the development of the commercial operations; and

 

(6)          The Cabinet agreed to receive regular updates on the Financial impact.

 

 

Reasons for Proposed Decision:

 

This was mainly an information paper on the Covid 19 situation and its financial impact on the council. This paper provided a summary of the impacts to date, assessed the scale of the financial challenge facing the council, highlighted the action now required to accelerate the restoration of services and the economy and it considered the strategic response required to deliver a stable financial base from which to enable the continued provision of core services and support the district through recovery.

 

Other Options for Action:

 

No other options available.