Derry council chief executive John Kelpie warns of stark choices if Stormont supports stop

This was the candid warning delivered by DC&SDC Chief Executive John Kelpie at a meeting of the Council’s Governance & Strategic Planning Committee this week.

Mr. Kelpie warned the burden of a potential collapse in non-domestic rates as a result of the pandemic cannot be met solely by local authorities.

According to a report on the council’s financial outturn for Quarter 1 - April to June - the council was looking at a small surplus which was good news. But the report from the Council’s Lead Finance Officer Alfie Dallas cautioned: “The economic impact of the pandemic is likely to have a very significant impact particularly on non-domestic ratebase income as a result of increased vacancies and higher risk of defaults and irrecoverable debt. It is hoped due to the Government reliefs available to businesses during this financial year that this is significantly mitigated, however, this remains a very substantial risk to the 2021/22 rates process.”

Bids for further support have been tabled collegiately with fellow members of the NI Local Government Association and SOLACE, which represent the 11 local councils.

But Mr. Kelpie said: “I’m not trying to be over-dramatic about this but obviously we have seen some impact already in the retail sector. Possibly, but hopefully not, any further impact in the retail sector may take place post-Christmas at a time when you are trying to strike the rates. We won’t know what that impact is and we will find it exceptionally difficult to strike rates and then, in doing so, you may need to make conservative estimates about what we need to put in place for the rates at a time when we simply can’t be raising rates to the level that we might have to compensate for, thus further exacerbating the situation.”

It is crucial government supports continue to avoid a situation where the council has to make a choice between rate hikes and service cuts, he said.

“That will see no growth for us...but it is far better that than see a very significant loss because all of our strategic plans will be compromised if we can’t have certainty about where we are going financially and we will tailspin into trying to find huge savings to potentially compensate for something that we are not quite sure will happen or not. I think that will have such a detrimental impact on council service delivery, council finances and the organisation as a whole and how we proceed.”

Mr. Kelpie urged the Executive to “maintain the work done to date to keep us solvent”, and said he did not want to face a scenario where “uncertainty causes us to start reviewing very significant potential service cuts that we might have to put in place in February.”