Agenda item

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

This report provides an update on the projected outturn financial position of the Council for the financial year 2020/21 (as at 30 September 2020).

This report provides an update on the projected outturn financial position of the Council for the financial year 2020/21 (as at 30 September 2020).

The position this year was significantly affected by COVID – both in terms of large additional sums spent on issuing financial assistance to local businesses and council tax payers, and direct impact on the Council’s service costs and income. Financial pressures are reported, which is partly offset by emergency grant funding from Government but has also required the Council to reprioritise funds and support the annual budget from reserves. Despite this, the Council remains financially resilient and continues to forecast adequate reserve balances.

The current forecast was summarised:

General Fund Revenue Projected £551k overspend (£625k relating to COVID and an underspend of £74k for non-COVID) Housing Revenue Account Projected £140k overspend

This report provided the Council’s forecast end of year financial position for revenue and capital expenditure as at 30 September 2020 for the Council’s General Fund (GF) and Housing Revenue Account (HRA).

The regular monitoring of financial information is a key element in the Council’s Performance Management Framework. Crucially it enables remedial action to be taken in response to significant budget variances, some of which may be unavoidable. It also provides the opportunity to assess any consequent impact on reserves and the Council’s Medium Term Financial Plan.

Members will be aware from previous experience that the position can change between ‘in-year’ projections and the final outturn position, mainly due to demand-led service costs and income levels. The budget monitoring process involves a detailed review of the more volatile budgets and a proportionate review of low risk/low volatility budget areas. Budget Holders, with support and advice from their accountants, update their forecasts on a monthly basis based on currently available information and knowledge of service requirements for the remainder of the year. As with any forecast there is always a risk that some unforeseen changes could influence the position at the year-end, and a number of risks and uncertainties are highlighted within this report. However, the following forecast is considered to be reasonable based on current information. 

Budgets have now all been allocated out to the relevant Directors.

General Fund Revenue Budget – 2020/21 Forecast Outturn

The Council was forecasting an overall net overspend of £551k (2.6% of £21m Net Budget), as summarised below. The main reasons for this are due to pressures relating to COVID additional cost and income reductions accounting for £625k of the overspend. A recommendation to Full Council was included in the Month 4 forecast report to approve a supplementary estimate of £657k from General Reserves for COVID related pressures. This is due to be considered by Council on 15 December 2020.

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

·        HRA debt was questioned. This was currently around £100 million and was serviced in some instances by internal borrowing

·        Would external borrowing be required to service the levels of debt.

·        Clarification was requested on the £249k funding for Unitary and if this had been spent. This would be provided to the committee as an update.

·        A mixture of borrowing and capital right to buy receipts covered

·        Additional borrowing capacity enabled shocks

·        External treasury advisors were worked with to ensure all activities were safe

·        The age of the housing stock varied in age but the profile of the housing stock could be provided, the majority was post war.

·        Leisure operator approval was an assumption that SLM would receive a loan, this was not required so would be remove from future reports.

·        It was considered if Covid-19 losses would be absorbed with General Reserves. It was questioned if an increase in welfare funerals would be included as part of the Covid-19 costs. It was a general increase which couldn’t identify Covid-19 as being responsible.

·        Income loss compensation arrangements meant 70% cover in reduction from sales fees and charges which included loss of parking revenue, therefore 30% would need to be covered.

·        Was there specific central government recompense for the car parking income and addressing the vulnerability of the budget in the reliance on parking income? Assumptions were being made against future budgeting for the next financial year along with scale of reserves to address volatility and further reductions in income.

·        It was requested for a car parking strategy to be provided along with income and usage numbers to be supplied quarterly.

·        Alternatives for the use of car parks which were underutilised due to the reductions in travel were requested.

·        Further information on the future use of assets alongside income modelling was requested.

The Scrutiny Committee noted the Council’s forecast financial performance and projected reserves position for 2020/21 financial year as at 30 September 2020.