Issue - meetings

The Committee considered the latest financial monitoring report, which summarised the projected outturn position for the Council’s general fund revenue account, based on actual and accrued data for the period April 2021 to January 2022.

Officers were projecting an underspend on the general fund revenue account of £229,000.  This figure included the final element of the in-year savings plan to redeem the Council’s holding in the M&G Global Dividend Fund as investment income (£1.306 million). However, there was still expected to be shortfalls around expectations of budgeted income.

The direct expenditure incurred by the Council on Covid-19 in the current financial year currently stood at £334,454.   The Council had received a non-specific Covid-19 grant of £622,690 to finance direct Covid-19 costs for 2021-22.  

The indirect costs of Covid-19, particularly the loss of income, were reflected in the services forecasting. The Council had made a claim for some of the income loss for the months of April to June, under the Sales, Fees and Charges (SFC) compensation scheme totalling £1.45 million.  This was currently included within the projection.  Officers were currently projecting a loss of income for the full year of around £4.2 million.  At present the Government did not have any plans to extend the SFC compensation scheme further.

The Council was currently forecasting to have £51.6 million in reserves at the end of the year, of which £10.64 million was usable.

A surplus on the Housing Revenue Account would enable a projected transfer of £8.4 million to the new build reserve and meet the forecasted £2.5 million to the reserve for future capital at year-end. 

Progress against significant capital projects on the approved programme as outlined in section 7 of the report was underway.  The Council expected to spend £59.74 million on its capital schemes by the end of the financial year. 

The Council’s underlying need to borrow to finance the capital programme was expected to be £28.98 million by 31 March 2022, against an estimated position of £94.59 million. The lower underlying need to borrow was a result of slippage on both the approved and provisional capital programme as detailed in paragraphs 7.3 to 7.6 of the report. 

The Council held £212 million of investments and £332 million of external borrowing on 31 January, which included £193 million of HRA loans.  Officers confirmed that the Council had complied with its Prudential indicators in the period, which had been set in February 2021 as part of the Council’s Capital and Investment Strategy.

In considering this report, the Committee made the following comments: 

·       In response to an enquiry, in the context of outstanding sundry debts, as to whether the Council had contingencies in place to assist those in financial hardship, including support from the Government, the Director of Resources confirmed that the Local Council Tax Support Scheme would help people who were struggling to pay their council tax if they met certain criteria, and there was also a discretionary hardship fund as a fall-back.  It was also  ...  view the full minutes text for item 61

Decision:

(1)    That the results of the Council’s financial monitoring for the period April 2021 to September 2021, be noted.

(2)    That the actions set out in paragraph 4.3 of the report submitted to the Executive to achieve in-year savings to help reduce the overspend and mitigate the impact on reserves, be approved.

(3)    That the implementation of a “voluntary expenditure freeze” across services, be approved.

Reason:

To enable the Executive to respond to the scrutiny of the Council’s finances.

Other options considered and rejected by the Executive:

None.

Details of any conflict of interest declared by the Leader or lead councillors and any dispensation granted:

None.

The Executive considered a report that summarised the projected outturn position for the Council’s general fund revenue account, based on actual and accrued data for the period April 2021 to September 2021.

The report had been reviewed by the Corporate Governance and Standards Committee on 18 November 2021 and the comments arising were set out on the Supplementary Information Sheet.

In the absence of the Lead Councillor for Resources, the Leader of the Council introduced the report.

The meeting heard that the Covid pandemic continued to have a negative effect on the Council’s finances and that steps would need to be taken to mitigate those effects and maintain a sound financial position. The general fund summary was set out in Appendix 1 of the report predicting a gross overspend of £2.6m. There was a positive effect coming from a reduction in minimum revenue provision, lower interest rates on the loans portfolio and receipts from North Downs Housing resulting in a net projected overspend of £1.76m. The main cause of the overspend was the reduction in car parking revenues estimated to be in the region of £3.7m which had been offset to some extent by Government’s fees and charges reclaim scheme. However, the scheme had closed in June 2021 and there was no indication it would be resumed. There was a reduction in the value of the leisure management contract of £800,000. The direct Covid expenditure of £300,000 had been offset by Government for the full year. Finally, there was a £500,000 overspend in Planning which was partially due to staff expenditure to clear a backlog and also to provide cover for senior staff illness. On a positive note, the pre-application service would now be able to resume in the New Year and return services to normal functioning levels.

The report had set out ways in which the Council could prevent further impacts on reserves. There would be a capital return fund investment of £1.5m and the original investment would be reinvested in a suitable way. This would be a one-off opportunity to mitigate budget shortfall whilst the mid-term position remained the same with an additional £1.5m required to balance the budget for 2022-23.

The Leader reflected that with the fast-changing Covid scenario the Council should remain prudent and advised the Executive to agree the recommendations set out in the report. The Executive, consequently,

RESOLVED:

(1)    That the results of the Council’s financial monitoring for the period April 2021 to September 2021, be noted.

(2)    That the actions set out in paragraph 4.3 of the report submitted to the Executive to achieve in-year savings to help reduce the overspend and mitigate the impact on reserves, be approved.

(3)    That the implementation of a “voluntary expenditure freeze” across services, be approved.

Reason:

To enable the Executive to respond to the scrutiny of the Council’s finances.

The Committee considered the latest financial monitoring report, which summarised the projected outturn position for the Council’s general fund revenue account, based on actual and accrued data for the period April to September 2021.

Officers were projecting an increase in net expenditure on the general fund revenue account of £1,762,936, which was down from £3m reported at the last meeting after transfers to and from reserves.   This was predominantly due to the review of the interest receivable and payable which had resulted in a net increase in interest receivable.

Covid-19 continued to impact the Council.  The direct expenditure incurred by the Council in the current financial year currently stood at £299,597.  The Council had received a grant of £622,690 to finance direct Covid-19 costs for 2021-22.  

The indirect costs of Covid-19, particularly the loss of income, were reflected in the services forecasting. The Council had made a claim of £1.45 million in respect of some of the lost income for the three months April to June, under the Sales, Fees and Charges (SFC) compensation scheme.  This was currently included within the projection.  Officers were currently projecting a loss of income for the full year of around £4.2 million.  At present the Government did not appear to have any plans to extend the SFC compensation scheme beyond June 2021.The report considered the expenditure and income forecasted up to 30 September 202, which would potentially be subject to movement depending on the success of the Government’s roadmap for lifting all Covid restrictions. 

Whilst a £17 million transfer from reserves had originally been budgeted, this was now expected to be £24 million. The Committee noted that reserves generally were running at dangerously low levels of approximately £5.8 million, whereas officers would normally recommend reserve levels at around £12 million.

There had been a reduction of £178,097 in the statutory Minimum Revenue Provision (MRP) charge to the general fund to make provision for the repayment of past capital debt reflecting a re-profiling of capital schemes. 

A surplus on the Housing Revenue Account would enable a projected transfer of £8.4 million to the new build reserve and meet the forecasted £2.5 million to the reserve for future capital at year-end.  The transfer to the New Build reserve was £7,372 higher than budgeted due to lower total expenditure over income.

Progress against significant capital projects on the approved programme as outlined in section 7 of the report was underway.  The Council expected to spend £60.444 million on its capital schemes by the end of the financial year. 

The Council’s underlying need to borrow to finance the capital programme was expected to be £37.78 million by 31 March 2022, against an estimated position of £94.59 million. The lower underlying need to borrow was a result of slippage on both the approved and provisional capital programme as detailed in paragraphs 7.3 to 7.6 of the report.

The Council held £204 million of investments and £339 million of external borrowing on 30 September, which  ...  view the full minutes text for item 43