Agenda item

This report set out information related to Somerset West and Taunton Council’s

(SWT) financial performance for the 2020/21 financial year. The outturn figures

included are provisional subject to the completion of the external audit of the statutory financial statements. The audit is due to be completed between July and September with the findings due to be reported to the Audit and Governance Committee on 27 September this year.

 

The COVID pandemic had significantly impacted upon the Council's services, costs

and income during the past financial year. The situation has been extremely dynamic

throughout the year both in terms of various announcement of additional funding

arrangements from Government and the local impact on demand for and delivery of

services. Budgets were revised at Quarter 3 taking into account changes agreed by

Council including allocations from reserves, plus further changes made under

delegated powers such as to reflect more recent COVID grant funding allocations

made. Measures were implemented early in the year by leadership to mitigate risk

and uncertainty.

 

By the end of the financial year, COVID has resulted in additional cost pressures and

loss of income to the General Fund totalling £7.270m. This has been partly offset by

additional government funding of £5.718m but has required £1.552m of Council funds to meet the shortfall.

 

COVID has also impacted on the expenditure for ‘business as usual’ services.

Management have prioritised significant intervention and support in response to

COVID and in some cases activity has been delayed or deferred e.g. due to supply

chain limitations. This has contributed to a carry forward of planned spend into

2021/22 of £2.079m. Despite the financial pressures and ongoing delivery of key

services the Council has contained spend and reports a net underspend against final

General Fund revised budget of £1.245m.

 

The revenue outturn position for the financial year 2020/21 is as follows:

 

The General Fund (GF) Revenue Outturn position for 2020/21 is a net underspend

of £1.250m (5.9% of net budget). This is net of £2.079m of budget carried forward to

2021/22.

 

The HRA Revenue Outturn position for 2020/21 is a net overspend of £15k (0.1% of gross income).

 

The HRA is a ring-fenced, self-financing account used to manage the Council’s

Housing Landlord function, which is budgeted to break even (net of approved

transfers to/from HRA Reserves). As the HRA Net Budget is net £nil with costs wholly offset by income and reserves, performance is reported against gross income for monitoring purposes.

 

The capital outturn position for 2020/21 was set out:

 

The total approved General Fund Capital Programme budget in place in 2020/21, including schemes brought forward from previous years, was £112.5m (Appendix C). This relates to a combination of schemes to be delivered in the year and some that will span over more than one year. £63.3m has been spent during 2020/21. Of the remaining £49.2m, £0.1m is reported as net underspend on projects completed during the year, £7.5m is removed from the budget as it is no longer required, and £41.6m will be carried forward for ongoing schemes.

 

The actual spend on the HRA Capital Programme during 2020/21 was £9.1m with

£231k budget underspend being returned as no longer required (Appendix D). The

major areas of capital spend during the year related to the capital maintenance for

the existing housing stock and the development and acquisition of new stock. Capital

budget totalling £125.3m is planned to be spent over the MTFP, which includes

housing development projects that will be delivered over several years (Appendix E).

 

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

 

·        The update was welcomed by the committee and considered positive given the impact of the pandemic although emphasis on accurate budget provision was encouraged in future years.

·        Expediting work around phosphates was encouraged.

·        Future expenditure in the context of the formation of the Unitary Council was a concern, increased financial justification was requested going forward.

·        Risks and response to uncertainty had been positive, future demands on funds with the change coming with the New Council was a recognised risk.

·        Section 9 of the report was considered and criteria used in the process of its decision making. Members of the Executive came forward with different ideas to use the funding, members were encouraged and could still bring ideas and alternatives to use the funding, the committee were reassured that these ideas were not set in stone.

·        Questions were asked in relation to the process around this was requested to address concerns ensure fairness and transparency. It was questioned if there were other ideas put forward and not included on the list.

·        The process was outlined for Executive members to give consideration of how underspends could be used to fund projects within the districts. Further concerns were expressed over the fairness of the process and the opportunity for Councillors outside the Executive to have an opportunity to have an input.

·        The year-end position identified and underspend, as a result the Executive and Senior Management team had set out the proposals in the report to go through the Scrutiny process.

·        Prudent expenditure going forward was encouraged to be tested to ensure its appropriately spent approaching the end of the Council in 2023 and ensure future liabilities and minimised.

·        The items individually were within the Executive authority to approve.

·        Accuracy of budgets was a concern even with the considerations of uncertainty that the pandemic brought. Concerns were expressed that some areas that had underspends could have been budgeted for in advance.

·        Commercial property shortfalls was a further concern in future years, with accuracy of figures needing to reflect the previous budget setting.

·        The funding for phosphates were welcomed with this impacting delayed with planning cases significantly.

·        It was questioned how social hosing debt in this financial year compared to the previous year. A written answer would be provided to the committee following the meeting.

·        Reference was made to the explanation on page 44 in relation to revenue contribution to capital. It was questioned if this was used to repay capital to the PWLB debts. Depreciation was paid in the capital repairs reserve, using it to finance spend repay debts was a decision made, more detail could be provided following the meeting.

·        More clarity for the intended use of revenue contribution to capital was requested in future reports.

 

 

 

 

The Corporate Scrutiny Committee Recommended that:-

 

The Executive:

1. Note the impact of COVID on the Council’s cost and income during 2020/21 financial year.

2 Note the reported General Fund Revenue Budget underspend of £1.25m in 2020/21and the General Reserves Balance of £7.915m as at 31 March 2021.

3. Note the S151 has approved General Fund Revenue Budget carry forwards totalling £1,139,360 as detailed in Appendix A.

4. Approve an additional General Fund Revenue Budget carry forward of £939,940 for items greater than £150,000 as detailed in Section 7.

5. Note the inclusion of the items included in in 2.15 the supplementary budget of £806,000 for the 2021/22 General Fund, but requests further clarity from the Executive over the compiling of the list, whether it is definitive or not, and how other items can be considered.

Revenue budget funded from general reserves as detailed in Section 8.

6. Note the reported Housing Revenue Account Budget overspend of £15k in 2020/21and the HRA General Reserves Balance of £2.8m as at 31 March 2021.

7. Note the Capital Outturn position.

8. Approve the proposed carry forward of £41.6m approved budget to 2021/22 General Fund Capital Programme (as per Appendix C) and the £125.3m HRA Capital

Programme for the MTFP period (as per Appendix E).

9. Approve the retrospective inclusion of £3,789,053 Budget in the 2020/21 Capital

Programme funded with matching grant income for the Watchet East Quay

Development, as SWTC is the accountable body for the Coastal Communities Fund

grant allocated to this scheme which commenced in previous years, noting there is

no net cost to the Council.

10. Note the Capital Programme schedule identifying the schemes and overview profile providing the basis for future performance monitoring (as per Appendix E).