Agenda item

This matter is the responsibility of the Executive Councillor Ross Henley, Portfolio Holder for Corporate Resources.

The purpose of this report is to provide an update on the projected outturn financial position of the Council for the financial year 2020/21 (as at 31 July 2020).

The report provided an update on the projected outturn financial position of the Council for the financial year 2020/21 (as at 31 July 2020).

Reporting is undertaken monthly to the Senior Leadership Team, with quarterly reporting to Scrutiny and the Executive Committee. Reporting is primarily ‘by exception’ and focusses on the forecast position for the year as a whole compared to the Annual Budget. Forecasts were compiled by budget holders, with support and advice as appropriate from finance specialists (accountants) and case officers. Forecasts will take into account known / committed items as well as assumptions about future performance and demand.

The primary focus for the first 4 months had been around the impact of COVID-19 on the Council’s costs, and the mitigation available through the receipt of emergency grant funding from Government towards additional costs and loss of income. The report also summarised the position on ‘pass through’ funding where the Council had provided significant financial assistance to local businesses and council tax payers funded by Government.

The current revenue forecast outturn for the financial year 2020/21 was summarised as follows. These were the best estimates at month 4 of the financial year based on information currently available:

a)       General Fund (GF) Revenue Budget = forecast net overspend of £1,012k

(1)   £657k relates to COVID and it is recommended that a supplementary budget is approved to fund this from General Reserves. The full extent of COVID is still being monitored and therefore these figures could change and will be updated in future reports.

(2)   The remaining £355k is due to other pressures which will continue to be monitored throughout the year.

b)       Housing Revenue Account (HRA) Revenue Budget = forecast net overspend of £180k.

There was £30.6m of budget rolled forward with the GF capital programme from 2019/20 to 2020/20 and it was proposed to reduce the 2020/21 programme by £1.370m for budgets no longer required, bringing the total proposed budget for 2020/21 to £95.4m. There were currently no forecast variances to report at this early stage in the financial year.

There is £15.8m of budget rolled forward within the HRA Capital Programme from 2019/20 to 2020/21 bringing the total budget for 2020/21 to £31.7m. There are currently no variances to report for the HRA capital programme.

During the discussion the following comments and questions were made:-

·        Concerns were expressed in relation to the carry forward of the Disabled facilities grant. Further information was requested on the proposed budget of £3.5 million.

·        It was questioned if recent commercial loans made by the council were irrecoverable if the company went into administration. A response would be provided following the meeting.

·        Many budget holders were consulted across the organisation, making assumptions and plans around financial planning for the rest of the year.

·        The Budget was set on reasonable estimates in good faith with a balance between caution and optimism, services and chances of budgets being 100% accurate.

·        Any Growth in income would be offset by valuation reductions and appeals in respect of business rates, not all business rates income was retained.

·        Government had deferred the introduction of 75% business rates retention to an unspecified time.

·        The view was provided that creating more employment in the district was where finance needed to be directed. Further support was needed for businesses to address the Covid-19 impact.

·        Covid-19 funding from central government was discussed, it was anticipated that all costs and loss of income incurred by Councils would not be covered by central government.

·        The situation remained volatile but the Covid-19 expenditure would be monitored.

·        Coal Orchard construction costs were considered, this financial assessment was entailed in the business case. A combination of rental income and capital receipts were planned to cover the investment over a period of time.

·        Further information was requested from costs variances around Economic development, parking income, major contracts, climate change, and public health.

·        Internal operations and the IT Server refresh was questioned? Contingency if there is a breakdown in the server? Further detail requested if this was part of maintenance of IT infrastructure, it was determined that this was an Increase in budget from previous years on the server refresh. An overview would be provided to the Committee following the meeting

Scrutiny Committee reviewed the report and supported the following proposed recommendations to the Executive and Full Council:

1.1            The Executive reviews the Council’s forecast financial performance and projected reserves position for 2020/21 financial year as at 31 July 2020.

1.2            The Executive recommends that Full Council approve a supplementary estimate of £657k from General Reserves to fund the estimated overspend related to COVID.

1.3            The Executive recommends that Full Council approves the realignment of budgets for COVID related income and expenditure to offset the reported variances that net off to zero when including the £657k in 2.2 above.

1.4            The Executive recommends that Full Council approve changes to the General Fund Capital Programme by a total of -£1.370m for the following headings as referred in para 11.3:

a)     £295,000 reduction to Major Transport Schemes budget

b)     £375,000 reduction to remove budget for Creech Castle Road Improvements contribution

c)     £200,000 reduction to Employment Site Enabling schemes budget

d)     £1,000,000 reduction to Public Transport Improvements budget as Housing Infrastructure Fund bid not successful

e)     £500,000 increase to Education Provision budget funded by Community Infrastructure Levy.

1.5            The Executive recommends that Full Council approve the revised Budget Total for the Growth Programme of £3.56m to be funded by New Homes Bonus as set out in para 11.7 Table 8, and CIL-funded Infrastructure Capital Programme totalling £16.262m as set out in para 11.10 Table 9.

1.6            In the light of the recent adoption by Council of policy on an Affordable Employment Land Local Development Order, the Scrutiny Committee recommend to the Executive a new fund of £575,000 is allocated towards Employment Site enabling schemes to support that policy.