Agenda item

This matter is the responsibility of Executive Councillor Benet Allen, Portfolio Holder for Communication and Corporate Resources.

Report Author: Kerry Prisco, Management Accounting and Reporting Lead.

The General Fund Financial Performance Report was introduced by Cllr Benet Allen, and presented by Kerry Prisco.

The projected outturn financial position for the year is an overspend of £326k based on estimates made as at 30 June 2022. This is mainly due to a potential pay award pressure exceeding that budgeted, pressures on staffing costs in a challenging labour market and efficiency savings that have not yet materialised.   

There are still further risks and uncertainties well documented within the report, with some that will materialise over the next few months and place further pressure on the reported outturn position e.g. pay award and insurance premiums. As reported nationally, the current economic situation is challenging, and the Council is impacted by the rising cost of utilities, fuel and cost of materials. These areas of the business have and will continue to be reviewed closely, and best estimates have been included within this forecast.   

The current level of General Reserves is £6.229m which provides the ability to cover the current predicted overspend, if required, as well as sufficient resilience to mitigate the risk of any further significant overspend or additional pressures.   

The Senior Management Team will manage the position carefully with the aim to come in on budget by the end of the financial year.  

The Committee made the following points:-

·       Cllr Lisgo asked for more clarity on paragraph 5.12 of the report which explained that the car parking income budget has been reduced and other service have had their budgets realigned. Car Parking income sits within the External Operations Directorate and has not had its budget changed in the preceding two years, despite the pressures experienced by COVID. The projected forecast was more optimistic, and this adjustment provides a more realistic figure that reflects the challenges within the service. The figure was reduced in the budget setting process for 22/23 but following analysis of the data as part of the Qtr1 process it is considered prudent to reduce it further. Car Parking income is predicting to be lower by about £302k at the end of the financial year.

·       The External Operations Directorate have also looked across the whole range of services to see if this budget loss can be covered by realigning budgets in other areas or producing savings to mitigate against it. Budgets will be realigned across commercial services, building control, fleet management and other contractual services to alleviate this and reduce the pressure. As of Qtr1 each Directorate is looking within its own services to make those savings but this might broaden out as we move through the financial year.

·       A request was made for a table to be produced via the Written Answer Tracker to clearly explain how the variances had been arrived at.

·       Car Parking income is ring-fenced and cannot be used to bolster other services within the council. It can only be spent on car park related projects and should not be seen as an income generating “cash-cow”.

·       It was queried why the car parking income had reduced and what impact this had on Council services? So far in this financial year there has been no free car parking, so there has been no loss of income due to this. Covid has played a significant part in the reduction of car parking income. Pre-covid habits have yet to return and there is still a reluctance to utilise the car parks in the town centres. There are less people travelling and returning to work, as more are choosing to work from home.

·       Cllr John Hassall also mentioned that the Park and Ride had increased whilst the Toneway repairs were underway, and people were taking advantage of the free fares. Once the fares were re-implemented the income would be generated for SCC as they manage the service not SWT.  Chris Hall pointed out that while the failure to generate income via car-parking was causing one Performance Indicator (PI) to fail, it would alternatively mean that SWT was delivering on its climate change ambition by encouraging Active Travel and more sustainable forms of transport.

·       What is the financial risk going forward?

Fuel costs have increased due to inflation. (Highlighted in Para 8.4 report). There has been a 45% increase in the price of fuel – petrol/diesel which is going to cause a significant pressure on budgets. The risks and predicted out-turn are in the report and are being closely monitored.

·       Pre-App planning advice is delivered at net cost so is not income generating to the council.

·       The current budget did not predict the rates of inflation now being experienced and significantly underestimated them. Comment from the S151 Officer, Paul Fitzgerald was that although SWT has a predicted overspend, it is not as bad as expected. This is being mitigated and SWT has healthy balances in reserves. In the fullness of time, as we progress through the year some adjustments will need to be made, but at the moment the losses and gains are balancing out and SWT is managing to withstand the financial pressures. SMT is planning to come in on budget and is doing everything it can to deliver that.

The Committee noted the report.

(Prop: Cllr Coles / Sec: Cllr Whetlor Unanimous

Cllr Thwaites did not vote as left the room during the discussion.