Council facing £300k monthly cost and fraud risks due to coronavirus
The coronavirus pandemic and lockdown measures are costing one council £300,000 a month and have put the authority at extra risk of fraud.
South Staffordshire District Council has been awarded £1.1m funding from the Government to help cover additional costs incurred during the pandemic.
But its financial risk levels are currently classed as high, members were told on Tuesday during an online meeting.
The council is also losing income each month due to the closure of the district’s leisure centres to the public.
James Howse, corporate director for resource, said: “There are clear indications Covid-19 will have a big financial impact, therefore it does increase the likelihood that risk will come to fruition.
"If Covid-19 finishes quite quickly it will go down – if it continues for a few months that score will go up.
“For every month of social distancing it will cost the council in the region of £300,000 per month.
"And it won’t be as simple as one day we have Covid-19 and the next day we are back to normal.
“The specific risks that we need to manage include the leisure centre income – if leisure centres are closed we’re not getting any income.
"We’re mitigating that to ensure we open leisure centres as soon as possible – but in a way that is safe.”
While some council activities have come to a temporary halt however other services have seen a surge in demand, including those handling applications for council tax support and housing benefit.
The authority has also handed out around £15m grant funding from the Government to 1,300 businesses in the district in need of financial support during the lockdown.
But both of these tasks have put the council at additional risk of falling victim to fraudulent claims, the audit and risk committee meeting heard.
There is also a risk of potential attacks on council’s cyber security, which could lead to loss or theft of confidential data or loss of IT services the authority relies on to carry out its services. The risk level has been increased, a report to Tuesday’s meeting said.
Measures are being taken to address the risks. And Mr Howse told the meeting: “There have been no incidents of fraud I’m aware of.”
The report said: “The extended leadership team is meeting daily to manage the council’s response to the Covid-19 outbreak and this includes managing the acceleration of agile working and the associated risks and issues.
"Staff training and communications are being issued frequently to maintain and increase awareness, including warnings re Covid-19 specific phishing and spam emails.
“Covid 19 will impact upon the fraud risk profile of the council – at least for a period of time.
"The main areas of additional fraud risk relate to fraud via misrepresentation and/or misappropriation, via Cyber Security attacks, requests, processing and approval of financial transactions, including grant payments and financial support.
“Although the above areas have been identified as high risk, discussion with members of the extended leadership team and review of revised processes by internal audit, where required, has provided assurance that senior management are aware of the potential fraud risks and are taking reasonable measures to mitigate against these.”
Councillor John Michell, who chaired the meeting, said: “As an organisation we are even more vulnerable to fraud from many areas. In a way it is quite worrying – in another way it is reassuring we have identified risks and are taking steps to reduce them.”
