Town council continues to make financial preparations in case of second lockdown

LYME Regis Town Council has continued to make financial preparations in case of a second lockdown in spring 2021, which the town clerk has warned could wipe out the authority’s reserves.

Lyme Regis was once considered to be a “rich council”, with reserves of £1.4million in the bank. But the impact of the coronavirus lockdown in spring and early summer – as well as a £650,000 major project to resurface the flat roof area above SWIM, the Amusement Arcade and Antiques & Craft Centre on Marine Parade – has seen its reserves significantly reduced.

In April, as lockdown measures first took hold, the council’s reserves stood at £969,794 but by June this had dropped to £581,674. Councillors were warned that they could decrease further to just £67,000 by the end of the financial year in March 2021 but, following a successful late summer season, this figure has continued to increase to about £400,000.

Town clerk John Wright has warned, however, that if a second lockdown was to hit in spring and early summer 2021, when the council usually takes most of its income, it could completely wipe out the authority’s reserves.

To avoid this, town councillors previously agreed to look into paying back £200,000 outstanding from a loan taken out several years ago from West Dorset District Council to develop the Marine Parade shelters, which is currently costing £37,500 a year in repayments to what is now Dorset Council, and then to take out a new loan of £650,000 over 20 years from the unitary authority, which would cost £39,311 a year.

While the annual cost of paying back the loan would slightly increase, it would give the council an additional £450,000 in the bank.

However, speaking at last week’s virtual meeting Mr Wright told members this request had been refused by Dorset Council due to their own financial difficulties, and they were now in discussions with the Public Works Loan Board about a possible loan.

This would be a loan of £650,000 over 20 years at an interest rate of 2.34 per cent. This would allow the town council to clear its outstanding debt with Dorset Council of £200,000 and add £450,000 to the reserves.

Veteran councillor Stan Williams said he could not believe that the council was in this situation, adding: “I’ve done 50 years on this council and we have survived well when we’ve been short of money, during the takeover of the district council.”

Councillor Stan Williams has argued that the town council does not need a loan but should concentrate on chasing its debtors

‘More money than we need lying around’

He complained in particular that they were owed money from the Monmouth Beach area, from chalet owners that had not paid license fees and from Dorset Council which uses town council land for boat storage.

“I have run businesses, when times get hard, you get your money in and we’re not making any attempt to do that,” he said. “We never did deals that the town clerk has done saying you can pay some now and some later… We have far more money than we need lying around.”

The town clerk reminded members that any deals with regards to chalet payments had been agreed upon by the council and not himself. He added: “This is about protecting the council’s finances, not about getting money in. This is about having money available if we have a repeat or something similar to the events of spring this year to make sure the council will have money in place it can call on in extremities.

“It seems to me that this deal with the Public Works Loan Board is exactly what members are looking for; to have available finance if we need it. If we don’t need it, we don’t need to take it out. To have these discussions and agreement in place is a very sensible thing to do.”

Councillor Michaela Ellis agreed that they should make an agreement with the Public Works Loan Board in case financial assistance was needed next year, when more local councils would then be looking for help.

She added that they should also be chasing up payments from chalet owners and beach hut leases should be terminated if owners were not keep up with maintenance and repairs.

Government ‘will not let local councils go under’

The Mayor, Councillor Brian Larcombe MBE, expressed concerns about make an agreement with the Public Works Loan Board before having full details on the terms and possible repayment penalties of the loan.

He said that Councillor Ellis’ argument in favour of the loan “did not wash”, as the government was not going to let local councils go under “because of a last minute scramble to get a loan”.

Mr Wright replied: “We can have one more discussion on this but we can’t just keep having discussions and not making decisions. We have not got a lot to lose in having discussions and coming to some kind of agreement with the Public Works Loan Board, which will satisfy our financial requirements.

“If we do get into a situation in April, May or June next year and we’ve had a repeat of this current year, we will have to borrow money anyway. It’s best to be ahead of the curve here and not react because you’ve run out of money.”

Councillor Rob Smith commented: “It’s very easy to look at the spreadsheet and assume we’re going to have income and car parking for the next few months, but seeing the way COVID is developing across the country and areas going into lockdown, we might not be in that situation in a month’s time.

“This [the loan] is a very sensible lifeboat to have so that if we need to use it we can do, but hopefully we won’t have to.” Councillors are expected to make a final decision on how it plans to improve its financial outlook at a budget setting meeting in November. It was, however, agreed to buy two new beach huts for Marine Parade to then sell.

JOIN OUR MAILING LISTStay up to date with all the news from Lyme Regis, Uplyme & Charmouth by signing up to our regular newsletter.

View our privacy policy.

Woodmead Halls

1 Comment

  1. Mr Williams is quite correct, debts should be collected as a priority. Lockdown may have exacerbated the issue but a lack of urgency in collecting debts due doesn’t appear to be a new phenomenon.

    There also appears to be a distinct lack of transparency of spend at the town council, and a lack of financial oversight; the roof works are just one example and the nebulous, monthly office spend, for which no-one appears accountable, another. Further borrowing, and asset sales, if not ring fenced, are just a get out of jail card for the RFO rather than a responsible, considered approach to the councils income and expenditure.

    Borrow to invest in the town’s assets, not to get out of the consequences of lockdown. Reserves wiped out with a £300k COVID hit? Original roof project £140k, actual spend (including all fees) 24 months later >£700k, and still not fit for purpose. Which has caused more damage?

Leave a Reply

Your email address will not be published.


twelve + nine =