Agenda item

Colleen Warren, Financial Services Manager, on behalf of Jaclyn Gibson, Chief Finance Officer:

a)    presented Performance Scrutiny Committee with the provisional 2020/21 financial outturn position on the Council’s Revenue and Capital Budgets;

b)    explained that Covid-19 had taken its toll on the financial resilience of the Council, as income streams had plummeted and there had been a requirement to incur costs to ensure services were being provided throughout the pandemic; and to respond to consequences of the pandemic. The impacts of this were not restricted to the current financial year but would have a significant impact over the period of the current MTFS and possibly beyond.  In terms of the current financial year, 2020/21, the key challenges faced were in respect of:

·         Exceptional costs of dealing with Covid-19 and increased service demand; and

·         Loss of income.

In response to calls from the sector the Government had allocated a total of £4.6bn of general purpose grant funding to support local authorities to cover expenditure related pressures and announced an income compensation scheme to recompense councils for approx. 75p in every £1 of lost sales, fees and charges income. To date the council had received funding support of £1.877m for Covid-19 related pressures and was forecasted to receive £2.989m through the income compensation scheme and a further £0.519m through the Local Tax Income Guarantee Scheme. There had however been no additional financial support provided to the Housing Revenue Account.

c)    provided information on the Council’s:

·         General Fund Revenue Account - the General Fund revenue budget was set at £12,963,220, which included a planned contribution from balances of £286,310 (resulting in an estimated level of general balances at the year-end of £2,522,188).

The financial performance quarterly monitoring report for the 3^rd quarter predicted an underspend against the revised budget of £122,723. The provisional outturn for 2020/21 now indicated that this underspend had increased by £25,658, resulting in an overall budget underspend of £148,381 (including proposed transfers to/from earmarked reserves and carry forward requests). They represented a variance against the revised budget of 0.6%.

Full details of the main variances were detailed in Appendix B and the key variances were shown in the table at paragraph 3.3 of the report.

The most significant impact of Covid-19 had been on the Council’s income streams with monthly income levels plummeting across a range of discretionary services, as well as through investments and rental streams, as a result of the shutdown of the economy and its likely phased path to recovery. The Council’s reliance on local income streams had increased significantly in recent years as Government Funding had reduced through austerity measures and new funding mechanisms had been introduced resulting in the Council having to be more self-sufficient and secure its own funding sources.  Prior to the implementation of new funding mechanisms in 2013, less than 20% of the Council’s funding sources were subject to any level of volatility, for 2020/21 90% was now subject to volatility and emphasised the financial risk that the Council faced from its income streams.

·         Housing Revenue Account (HRA) – for 2020/21 the Council’s HRA net revenue budget was set at £75,000, resulting in an estimated level of general balances at the year-end of £1,000,141.

The financial performance quarterly monitoring report for the 3^rd quarter predicted an underspend of £772.391. the provisional outturn for 2020/21 indicated an underspend of £74,512. This resulted in the HRA balances at 31 March 2021 of £1,074,653.

Full details of the main variances were provided in Appendix D with the key variances shown in the table at paragraph 4.3 of the report.

In line with the General Fund the HRA had also borne the financial impacts of Covid-19 resulting in exceptional costs in responding to the pandemic and pressure on income streams. These had included:

o   Exceptional Expenditure:

-        Establishment of Housing Rent Hardship Fund

-        Provision of PPE and Covid-19 secure status for HRA services and buildings

o   Income Pressures:

-      Housing Rent Arrears

-      Housing Voids

-      Investment Income

-      Court Cost Income

·         Housing Repairs Service – the financial performance quarterly monitoring report for the 3^rd quarter predicted a £204,670 surplus outturn for 2020/21. The provisional outturn for 2020/21 had shown a trading deficit of £322,088, a movement of £526,758. The movement was as a result of the delay in billing as highlighted in Quarter 3 which forecasted the outturn position difficult. Now that billing was up to date the full financial impacts of Covid-19 had resulted in a loss to the HRS.

The main over and underspends included within the provisional outturn were detailed in Appendix F, with the key variances summarised in paragraph 5.3 of the report.

d)    provided information on:

·         General Investment Programme – the last quarterly report approved a General Fund Investment Programme for 2020/21 of £5,117,557. Movements in the programme since the revised budget was approved decreased the actual capital expenditure in 2020/21 to £3,212,056. A summary of the change was shown in paragraph 7.2.

The overall spending on the General Investment Programme for 2020/21 was £3,212,056, which is 62% of the revised 2020/21 programme as per the MTFS 2021-26.

·         Housing Investment Programme – the last quarterly report had approved a Housing Investment Programme for 2020/21 of £19,960,118. Movements in the programme since approval of the revised budget decreased actual capital expenditure to £16,376,767 in 2020/21. The final outturn position was shown in the table at paragraph 7.10 of the report.

The overall spending on the Housing Investment Programme for 2020/21 was £16,376,767 which was 83.17% of the revised 2020/21 programme as per MTFS 2020-25.

e)    invited members’ comments and questions.

Question: Members asked whether the Strategic Priority Reserve utilised to enable staff to work from home.

Response: This money would be used to make the Council more efficient and to update IT in communal areas.

Question: Members asked how the Council was performing compared to similar authorities.

Response: Officers believed that similar authorities were in the same position as the Council and that the funding which had been provided by Central Government was a one-off payment.

RESOLVED that the report be noted.