Agenda item

 

To present to the Executive the provisional 2019/20 financial outturn position on the Council’s revenue and capital budgets, including the General Fund, the Housing Revenue Account, the Housing Repairs Service and Capital Programmes, still subject to Audit by Mazars, the Council’s external auditors.

 

Although the Council was now facing a severe financial challenge as a result of the COVID19 pandemic, which saw the UK enter into a ‘lockdown’ in late March, the financial impacts were largely not seen until April in the new financial year.   This report therefore covered the financial position of the Council for the year 2019/20. 

 

Decision

 

Executive:

 

(1)       Noted the provisional 2019/20 financial outturn for the general fund, housing revenue account, housing repairs service and capital programmes as set out in sections three to seven of the report and, in particular, the reasons for any variances.

 

(2)       Approved the proposed transfer to general fund earmarked reserves as set out in paragraphs 3.6 and 3.8 of the report.

 

(3)       Approved the financial changes to both the general investment programme and the housing investment programme, as set out in paragraphs 7.4 and 7.10 of the report, that were above the budget variance delegated to the Chief Finance Officer.

 

 

None.

 

 

General Fund

 

For 2019/20 the Council’s net General Fund revenue budget was set at £13,655,090, including a planned contribution from balances of £554,410 (resulting in an estimated level of general balances at the year-end of £2,452,134).

 

The financial performance quarterly monitoring report for the 3^rd quarter predicted a shortfall against the revised budget of £222,080. The provisional outturn for 2019/20 now indicated that this shortfall had decreased by £88,258, resulting in an overall budget shortfall of £133,822 (including proposed transfers to/from earmarked reserves, but excluding carry forward requests).  This represented a variance against the revised budget of 0.99%.

 

Full details of the main variances were provided in Appendix B whilst the key variances were summarised below:

 

·       City Hall, Industrial Estates & Lincoln Properties – Increased Income (£167,351)

·       Housing Benefit Overpayments – Reduced Income £389,536

·       Other Interest – Increased Income (£88,080)

·       Car Parking – Increased Income (£90,912)

·       Housing Regeneration – Reduced Expenditure/Increased Income (£98,366)

·       MRP – Reduced Expenditure (£288,200)

·       Direct Revenue Financing – Reduced Expenditure (£230,475)

·       External Interest Payable – Reduced Expenditure (£222,139)

·       Yarborough LC – Reduced Income - £53,400

·       TFS Savings Target – Shortfall in Delivery £201,705

 

Although there were several significant variances highlighted above the most significant of these was in respect of housing benefit overpayments.  Over recent years the level of overpayments had continued to significantly increase, however more recently with the transition of benefits customers to universal credit and with the use of ‘real time’ information the level of overpayments raised had drastically reduced.  This had led to a budget pressure due to reduced income from the reclaiming of the overpayment from the claimant.  As part of the 2020/21 budget setting process the MTFS 2020-25 was refreshed and now reflected the impact of this. A number of the other variances also had ongoing implications and had been factored into the MTFS 2020-25, approved in March 2020, other variances though had arisen due one-off factors and were unlikely to be occur again.  The impact of COVID19 may though exacerbate some of these variances and close budget monitoring would be crucial in 2020/21.

 

In addition to those transfers to/from earmarked reserves already budgeted for, there were a number of further contributions to and from existing reserves as detailed within paragraph 3.6 and 3.8 of the report.

 

In addition to these transfers to/from existing earmarked reserves, it was also proposed that a new reserve be created for the COVID response.  Additional resources of £353,654 had been identified, arising from both a change of financing of the capital programme, and a review of the annual MRP charge.  These one-off resources would be contributed to the reserve to be used as part of a range of measures to mitigate the increased expenditure and reduced income set to be experienced in 2020/21.  Further details of these measures were set out in a separate report on the 2020/21 budget to the Executive.

 

All of the proposed transfers to/from reserves were reflected in the provisional outturn position.

 

By approving all of the proposed carry forwards the budget shortfall would increase to £167,562 and result in balances at 31^st March 2020 of £2,235,878.

 

Towards Financial Sustainability Programme

 

The savings target included in the MTFS for 2019/20 was £4,650,000. Progress against this target, based on the outturn position showed a secured total of £4,448,250.  A summary of the provisional outturn position was shown in the table at paragraph 3.12 of the report.

 

Income from fees and charges represented a significant proportion of income to the Council, with the primary sources being from car parking, development management and building regulations and were monitored regularly by the Corporate Management Team.  These discretionary income streams had been severely impacted by COVID19, although the outturn figures for 2019/20 did not reflect this, in some areas income has plummeted from the end of March 2020. A summary of the progress of these key income streams against the approved budget for the financial year was shown in the table at paragraph 3.13 of the report

 

Housing Revenue Account

 

For 2019/20 the Council’s Housing Revenue Account (HRA) net revenue budget was set at £52,040, resulting in an estimated level of general balances at the year-end of £1,078,609. 

 

The financial performance quarterly monitoring report for the 3rd quarter predicted an underspend of £79,582. The provisional outturn for 2019/20 now indicated an overspend of £71,514. This would result in HRA balances at 31 March 2020 of £1,007,095. The main over and underspends included within the provisional outturn were summarised as follows:

 

·      HRS Surplus – Additional Income (£72,487) (as detailed within section 5 of the report),

·       Council Tax– Additional Expenditure £94,286,

·       Depreciation – Revaluation of properties – additional expenditure £383,122,

·       Loan Charges – Interest on additional borrowing – increased expenditure £71,869,

·       Major Repairs Reserve – DRF adjustment to fund additional depreciation and loan charges – (£440,526).

 

A HRA general balance of £1,007,095 as at 31^st March 2020 although lower than assumed in the MTFS, still remained within prudent levels.

 

Housing Repairs Service

 

For 2019/20 the Council’s Housing Repairs Service (HRS) net revenue budget was set at zero, reflecting its full cost recovery nature.

 

The financial performance quarterly monitoring report for the 3^rd quarter predicted a £117,075 surplus outturn for 2019/20. The provisional outturn for 2019/20 showed a trading surplus of £72,487.

 

The net trading surplus of £72,487 was the result of several year-end variations in income and expenditure against the approved budget. The main over and underspends included within the provisional outturn were detailed in Appendix F, with the key variances summarised at paragraph 5.2 of the report

 

The surplus of £72,487 has been repatriated to the HRA, as the major service user and reflected in the HRA outturn within this report.

 

Earmarked Reserves

 

The details of all earmarked reserves and their balance as at 31 March 2020 were attached to the report at Appendix G and summarised in paragraph 6.1 of the report.

 

General Fund Investment Programme

 

The last quarterly report approved a General Fund Investment Programme for 2019/20 of £12,509,748.  Movements in the programme since the approval of the revised budget decreased actual capital expenditure in 2019/20 to £10,056,747. A summary of the changes was detailed at paragraph 7.2 of the report.

 

Budget re-profiles approved by the Chief Finance Officer during the final quarter were detailed at paragraph 7.3 and Appendix I attached to the report.

 

New projects/changes requiring the approval of the Executive were detailed at paragraph 7.4 of the report together with changes approved by Executive in respect of Boultham Park Lake Restoration and Greetwell Hollow included within the final quarter as detailed within Appendix I attached to the report.

 

The overall spending on the General Investment Programme for 2019/20 was £10,056,747, being 80.55% of the revised 2019/20 programme as per the MTFS 2019-24. Although this would appear to be low, the following points should be taken into consideration: -

 

·       Covid-19 has delayed work programmes with slippage moved into the next financial year.

·       Disabled Facilities Grant works had been agreed and were expected to occur within 2020/21.

 

Housing Investment Programme

 

The last quarterly report approved a Housing Investment Programme for 2019/20 of £14,906,247.  Movements in the programme since the approval of the revised budget decreased actual capital expenditure to £11,977,262 in 2019/20.

 

Changes approved by the Chief Finance Officer in the final quarter were set out in Appendix K of the report and summarised in paragraph 7.9 of the report.

 

Changes requiring Executive approval were highlighted at paragraph 7.10 of the report and Appendix K of the report.

 

The overall spending on the Housing Investment Programme for 2019/20 was £11,977,262 which was 80.19% of the revised 2019/20 programme as per MTFS 2019-24.

 

Although this would appear to be low compared to previous financial years, the following points should be taken into consideration:-

 

·       Due to Covid-19 various scheduled work programmes had slipped or been delayed into 2020/21, with the 2020/21 budget impact still being assessed to be reflected within 2020/21 reports.

·       9 Property acquisitions were ongoing with delegated authority to start as at the 31^st March 2020, totalling £1.1m

·       £590k had been released into available resources from the 2019/20 HIP programme.

·       The budgets for large new build schemes DeWint, Markham House and Rookery Lane had been reprofiled into 2020/21 in line with expected expenditure outflows.