The re-opening of our high streets is a symbolic milestone on the journey to economic recovery and for all of us perhaps a sense of the beginning of a return to normality.
A new way of working
The Foundation has partially re-opened our offices at One Garden City, with our property team being the first to try out socially distanced working. Although home working will remain the dominant mode of working for most of our staff for the foreseeable future, many of us will start to work part of the week in the office in one of a number of new ‘team bubbles’. I am certainly yearning for the collaborative opportunities to be back working alongside colleagues and the creative energy that comes from that. Whether social distancing can really allow that to happen is yet to be seen but it will be great to be back in the town and with the team.
Impact on our financial future
For the Foundation and our people, there is no easy journey back to normality. COVID-19 has had a profound impact on our income, particularly that large proportion of rental income from our property investments. This income enables us to reinvest millions of pounds back into the Letchworth community each year. Sadly, we do not see that income returning in full very quickly – many of our tenants have had massive short-term income shocks themselves under lockdown. Add to this the prospect of a deep and potentially long recession, which means many of these businesses face a challenging financial future.
Supporting our tenants
We will support our tenants to adapt and respond as best we can, and there are many examples across our business community of great innovation in the face of adversity that will make their businesses stronger. Our new business blog series is shining a light on these small businesses who took risks to transform their businesses during lockdown. Their stories are inspiring and demonstrate the importance of being agile and responsive.
Ultimately though we cannot assume that all of them will be able to meet their commitments in terms of paying rent or indeed continuing to trade. We have lost about a third of our rental income over the last quarter, which combined with a loss of the income from our trading activities, most notably Broadway Cinema & Theatre and Standalone Farm, means we are forecasting ending this year with a deficit of £2.7m.
Managing our deficit and shaping a new future
Doing nothing would mean we face a similar deficit in 2021. We cannot sustain such losses and so after many long discussions with our trustees, we have started the unenviable task of talking to our staff about making savings of some £2.6m this year to get us to a more balanced budget ready for 2021. The impact of that level of cuts, approximately 20% of our turnover, means we won’t return to normal. There will be many activities, support and sadly people’s jobs that are going to be lost over the next few months as we make enormous changes to ensure we can continue to support our community, albeit in a new way.
We must not undermine the fragile local economy further and we are working hard to make sure venues like the cinema and farm can re-open. But it is likely others won’t. Over the coming weeks, as we explore ideas with our staff, we will share our plans about the changes we have to make. These will be changes that are certainly not choices but are obligations to ensure the Foundation’s long-term financial sustainability.
Building on an incredible community response
Despite this backdrop, we are absolutely committed to nurturing the inspirational community action triggered by COVID-19. The creation of the Letchworth Community Response Team and the wider voluntary and community action has seen people mobilising to ensure access to food and medication, reaching those in the community who are isolated and lonely, or throwing a lifeline to those escaping the worst horrors of domestic violence. At a time of growing need and reducing budgets, this grassroots action is going to be critical in terms of supporting people and helping them return to a new normality.
Despite significant financial constraints we want to do what we can to support the community to reach those who needs support. That’s true for our business and residential tenants, retailers and residents – we need to build on the collaboration that this crisis has initiated so that we create a stronger more resilient garden city.