Powys Council could furlough staff as £3.3 million lost each month

Powys County Council's Head of Finance, Jane Thomas, will lay out the cost of dealing with the pandemic at a meeting scheduled for Tuesday afternoon.

The worst case scenario is that the authority could run out of cash.

At the moment Ms Thomas says that the council is losing £3,350,000 a month and by the end of June it is calculated that £10,038,000 will have been lost.

At the beginning of the crisis the council implemented its business continuity plan to focus on ‘business critical’ activities such as social care.

Several hundred workers were moved from their usual work and redeployed to what the council considers “essential” services.

Ms Thomas explained: “It is difficult to make an accurate assessment when we are only three weeks into the financial year.

“We do not know how the situation will develop or even for how long it will continue.

“We have however assessed the budget and categorised the main areas of potential impact.

“Based on this initial assessment it is clear that the impact of the virus will have an unprecedented detrimental financial impact on the Council.

“Without further government support the council may not be able to financially sustain itself for the current financial year.”

Ms Thomas stressed that this Powys is not a unique case and that every local authority in Wales, is in the same boat.

Ms Thomas continues: “We have not considered furloughing of staff to date as we were advised initially that it did not apply to the public sector.

“However in recent days the Local Government Minister Julie James has indicated that furloughing is an option that councils should consider to mitigate the loss of income.”

She also says that Heads of Service will need to start looking at any saving proposal that can be done quickly.

Powys has a workforce of over 4,200 full time equivalent posts and furloughing is the Government funded Coronavirus Job Retention Scheme that helps employers cover staff costs.

They can keep employees on the pay roll who have been asked to stop working and workers could get paid 80 per cent of wages, up to a monthly cap of £2,500.

The figures estimate that by June the council will lose £6,395,000 income that they collect such as, car parking fees, licence fees, planning/building control fees, cultural venues, leisure centres/sports facilities, bus revenue, industrial units and property rents.

Part of this year's budget had been based on a calculation of £10.7 million of cuts and efficiency savings being delivered to balance the books.

The report shows that by June the savings target will be £2.356,000 behind schedule.

The cost pressures due to coronavirus have also been calculated as £3,377,000 with the council receiving £2,044,000 in Covid Grant funding from the Welsh Government.

Any shortfall would need to be funded from the council's reserves.

On March 31 the total reserves stood at £26,962,000 with over half of that – £13,969,000 – in ring-fenced accounts.