Issue - meetings

The Committee considered the Financial Monitoring Report for Period 10 which summarised the projected outturn position for the Council’s General Fund (GF) revenue account and Housing Revenue Account (HRA), based on the latest actual and accrued data.

The revised budget had been adjusted to reflect the changes agreed to bring the budget back into a balanced position.  Officers were projecting an overspend within services on the GF revenue account of £0.237 million, which included specific reserves transfers.  Corporate adjustments, provisions and external interest receivable, was forecast to overachieve by £0.488 million to give an overall favourable variance of £0.251 million.  Any surpluses or deficits would impact reserves at year end.

Officers were projecting an overspend on the HRA of £0.328 million, details of which were highlighted in the report.  GF reserves were forecast to be £39.210 million at year end, of which £31.445 million were earmarked and £7.765 million were available and classed as usable, although this excluded the GF working balance.

Progress against the capital programme was underway.  The Council expected to spend £73.68 million on its capital schemes by the end of the financial year against a budgeted expenditure of £228.64 million. This forecast supported the report of the Interim Joint Strategic Director of Finance reducing the Capital Programme by £96.6 million.

Debt due to the Council was £4.576 million of which £1.333 million was supported by payment plans. 

There were £6.613 million savings within the 2024-25 budget which would be monitored and reported on monthly.

The Lead Councillor for Finance and Property, Councillor Richard Lucas thanked the finance team for the regular and timely financial monitoring reports to this Committee, which helped officers to better manage their operations. 

During the debate, the following points were raised:

·      Query as to how the figure of £370,000 in respect of capital schemes funded from s106 developer contributions was arrived at, and what plans were in place to spend this money. It was noted that the Committee was due to consider the Section 106 Monitoring Report at its meeting on 6 June.  It was agreed that the previous S106 Monitoring Report considered on 29 November 2023 should be circulated to the Committee.

·      Query over the “green” project status of the Ash Road Bridge scheme, when the report also states that the risk register has a “red” rating against both the current risks and the milestones.

·      Query over the Ash Road Bridge scheme figures quoted in the General Fund Capital Programme Estimated Expenditure (Appendix 4), where estimated expenditure approved by Council in February was quoted as £22.492 million, with a revised estimate of £30.374 million, but the project officers' estimate was shown at £19.349 million.  In response, the Deputy S151 officer indicated that the detail of these figures would be looked at and a response circulated to the Committee.

·      In response to a query as to how the aged debt figures quoted in respect of HRA (Appendix 2) compared with previous years, the Interim Joint Strategic Director for Finance indicated  ...  view the full minutes text for item 77

The Committee considered the Financial Monitoring Report for Period 8 which summarised the projected outturn position for the Council’s General Fund (GF) revenue account and Housing Revenue Account (HRA), based on the latest actual and accrued data.

The revised budget had been adjusted to reflect the changes agreed to bring the budget back into a balanced position.  Officers were projecting an underspend within services on the GF revenue account of £0.467 million, which included specific reserves transfers.  Corporate adjustments, provisions and external interest receivable, was forecast to overachieve by £0.629 million to give an overall favourable variance of £1.096 million.  Any surpluses or deficits would impact reserves at year end.

Within the forecast of external interest was a budget of £0.800 million which was expected to be received from North Downs Housing (NDH), which had been highlighted as being a risk based on past performance, and a provision of £0.300 million had been included to reduce the risk to which the Council was exposed.  However, the Committee noted that latest information available had indicated that the monies due from NDH would be received.

Officers were projecting an overspend on the HRA of £0.616 million, details of which were highlighted in the report.

The Orchard housing management system contained a number of jobs which had not been invoiced and therefore not shown in Business World. 

GF reserves were forecast to be £34.819 million at year end, of which £31.622 million were earmarked and £3.198 million were available and classed as usable, although this excluded the GF working balance.

Progress against the capital programme was underway, and the Council was expected to spend £81.85 million on its capital schemes by the end of the financial year against a budgeted expenditure of £228.66 million. This forecast supported the report of the Interim Director of Finance reducing the Capital programme by £99.6 million.

The Committee was reminded that the Month 6 report considered at the last meeting (29 November 2023) had contained a number of errors.  A corrected report had been circulated to the Committee on 1 December.  For transparency purposes, the corrected report was attached, for information, as Appendix 5 to the current report.

The Committee’s attention was drawn to an error in the table in paragraph 10.1 of the report showing the variances within each directorate’s spending.  The total variance should have indicated a favourable variance, or an underspend, of £467,000.

The Lead Councillor for Finance and Property, Councillor Richard Lucas commented that this monitoring report was a significant improvement on previous reports, as it helped officers to better manage their operations, and associated risks and improved transparency, so that the Committee had greater visibility of what was going on. 

During the debate, the following points were raised:

·      Concern regarding the volatility in the reporting of financial monitoring from one meeting to the next, for example the Month 6 monitoring report had indicated a projected £200,000 surplus on the General Fund at year end, and this report had indicated that the surplus  ...  view the full minutes text for item 62

The Committee’s attention was drawn to an error in the table in paragraph 10.2 of the report (General Fund Summary).  The projected outturn for 2023-24 on the Net General Fund Cost should have read: £11,065,909, which would leave a surplus of £186,791 rather than a deficit of £613,209.  There were also errors in Appendix 1 to the report (Summary of Directorate Variances) where the comments at the beginning of each Directorate’s variances had incorrectly summarised the variances even though the figures in the tables were correct.

The chairman suggested that consideration of this report be deferred to the next meeting to enable a corrected version of the report to be circulated to the Committee.

The Lead Councillor for Finance and Property advised that it was proposed to bring a further financial monitoring report (for Period 7) to the Committee at its next meeting and its focus at that meeting ought to be the most up to date monitoring report rather than a corrected version of the report on this agenda.

Officers would circulate the corrected version of the Period 6 report to the Committee and invite members to discuss any part of it.

The Committee

RESOLVED: That consideration of the corrected Period 6 Monitoring Report be deferred to the next meeting of the Committee.

Reason:

To enable the Committee to note the corrected report.

Report to follow.

The Committee considered a report which was attached to the Supplementary Information Sheet and which summarised the projected outturn position for the Council’s General Fund (GF) revenue account and Housing Revenue Account, based on the latest actual and accrued financial data.

The Original Budget approved at Council in February 2023 had included a budget gap of £3.1 million.  A revised budget had been presented to the Committee in July with a reduced budget gap of £1.6 million, following review of budgets with services.  Further work had been undertaken, since July, jointly by the Corporate Management Board (CMB), finance and services to close this gap and savings had been made to reduce this ensuring that the Revised Budget was balanced.  Several areas had been identified as a financial risk to the Council.  Budgets had been increased to reflect this and were listed in the report.  The month 4 forecast included these budget changes.

The revised budget had been adjusted to reflect the changes and officers were projecting an overspend within services on the General Fund revenue account of £0.676 million which was offset by transfers from reserves and corporate adjustments to give a forecast surplus of £0.331 million.  The Committee noted that any surpluses or deficits would impact on reserves at year end.

The CMB was implementing measures to address the budget gap in 2023-24 through a “Financial Recovery Plan” and the initial actions had been set out in the budget report considered by Council at its extraordinary meeting held on 30 August 2023.  Some of those measures would be one-off, in-year adjustments which would not help the budget in 2024/25 and future years.  This would be prioritised in the mid-year review of the Medium-Term Financial Plan to be reported in November 2023.

The report noted that officers were projecting an overspend on the HRA of £1.966 million and had set out the detail behind this variance.

Progress against the capital programme was underway and the Council expected to spend £124.4 million on its capital schemes by the end of the financial year against a budgeted expenditure of £196.8 million.

The Lead Councillor for Finance & Property apologised to the Committee for the lateness of publication of the report, but emphasised the importance of ensuring that the Committee had an opportunity of commenting on it prior to the full Council meeting in October.   The Lead Councillor acknowledged the huge level of effort that had been put in towards achieving the budget savings, but noted that this was only the first step in the process towards financial stability. 

During the debate, the Committee made the following comments:

·      Assurance was sought that the processes in place for monitoring future expenditure were sufficiently robust as the setting of next year’s budget was less than six months away. Officers commented that revenue accounts and capital accounts, and the balance sheet would be robustly monitored going forward.

·      In relation to the variance of £58.3 million on the capital programme for 2023-24, there was a query  ...  view the full minutes text for item 30

The Committee considered a report which summarised the projected outturn position for the Council’s General Fund (GF) revenue account and Housing Revenue Account, based on the latest financial data to January 2023.

There was a projected net overspend on the General Fund revenue account of £3.2million resulting primarily from utility price inflation and the payroll budget correction. Due to the relatively short-term inflation pressures and an establishment budget adjustment, it was more appropriate to resolve the deficit through the use of revenue reserve rather than putting additional pressure on the already stressed service delivery capacity by cutting back on expenditure to save money.

The surplus on the Housing Revenue Account would enable a projected transfer of £7.1 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 Committee noted that the Council was expected to spend £39 million on its capital schemes by the end of the financial year. 

During the debate, the Committee made the following comments:

·       Concerns over the accuracy of some of the information in the table showing the Approved Capital Programme (e.g. Scheme ED27 – North Street Development)

·       Request for clarification as to whether the Council would be entitled to funding announced by the Government in the Budget for supporting swimming pools.

·       In response to a request for clarification as to the nature of the correction to the Town Centre Management budget in the table on Fees and charges budget variances, the Executive Head of Finance confirmed that this was merely a budget income correction.

·       In relation to the variances to budget in Appendices 1A (salaries) and 1B (non- staff expenditure), clarification was sought as to why waste and refuse appeared as a considerable overspend in both areas, what was being done to address it, and whether it would impact adversely on the service.  The Executive Head of Finance confirmed in respect of waste that this was how the services had operated up until now, but that changes were being put in place that would set budgets to correctly reflect the true cost of operating those services. No assurance could be given at this stage that there would be no adverse impact on the service.  The Committee was reminded that £3.2m would need to be found in 2023-24 and that the Council in July would be asked to consider options as to how that deficit could be addressed. The Medium-Term Financial Plan had also identified the need to find a further £8m in the following financial year, and £6m in the financial year after that.

Having considered the report, the Committee

RESOLVED: That the Council’s financial forecast outturn for the financial year 2022-23 be noted, together with the comments and observations referred to above.

Reason:

To allow the Committee to undertake its role in relation to scrutinising the Council’s finances.

To receive a verbal update.

The Committee received an oral update from the Section 151 Officer on the financial monitoring for the period April to November 2022. It had not been possible to produce a written report due to other pressures and priorities associated with managing the current anticipated budget deficit and ongoing budget preparation work.

The Committee noted that the period 4 position reported in October 2022, had shown a £3.1m net deficit in the current year.  In response, a budget pressures and MTFP report, which included an action plan with 17 points, was considered and put into place in October.  Due to staff resourcing issues, work on implementing the action plan took some time to get underway, particularly bearing in mind the ongoing budget preparation work.  The finance team capacity had been increased to enable this work to be carried out.

Further detailed work would be undertaken reviewing the financial position with reports expected for consideration by Council in July 2023.  In the meantime, budget monitoring had continued with ongoing discussions with management.  The Committee was advised that the current position had shown the deficit to be somewhere between £2m and £3m, although there were caveats to that around some of the movement on the capital programme, and the Minimum Revenue Provision, which was quite a significant amount of money for Guildford in its capital programme, together with adjustments for interest estimates.

The Section 151 Officer also referred to income adjustments around car parking and utility costs. The Joint Management Team had been looking at what action it needed to take in response to the financial position, and the most appropriate action taken was simply a voluntary holding back on spend where possible.  That was considered to be an appropriate action because anything further than that would have been damaging to service delivery and particularly to the most vulnerable in the community.  It was noted that some of the inflationary pressures would be picked up through reserves, as that was their purpose in these circumstances, and that there were sufficient reserves to enable that to happen.  These cost pressures were also reflected in the 2023-24 budget.

The Section 151 Officer assured the Committee that a written financial monitoring report would be presented to the next meeting on 15 March 2023.

The Deputy Leader of the Council and Lead Councillor for Finance and Planning Policy commented that work has had to be prioritised as indicated by the Section 151 Officer, and that the additional staffing resources in the Finance team would alleviate the position.

The Committee

RESOLVED: That the oral update on the results of the Council’s financial monitoring for the period April to November 2022 be noted.

The Committee considered the Financial Monitoring Report, which summarised the projected outturn position for the Council’s General Fund (GF) revenue account and Housing Revenue Account (HRA), based on the latest actual and accrued data to date.

This was an early insight mid-way through the financial year during a period of macro-economic uncertainty caused by seismic global and domestic factors which were changing rapidly.  The report identified issues which must be immediately addressed, but also pressures which would vary in intensity during the year and would require a flexible and evolving response.

Officers were projecting a net budget shortfall on the GF revenue account of £3.3 million, which could potentially be met in year by financial discipline and a transfer from unearmarked reserves.  £1.7 million of the shortfall related to current inflationary pressures and of that £1.6 million related to projections of utility costs on leisure centres.  The report had set out: the detail behind these variations; areas for concern including a potential salary budget discrepancy and economic uncertainty; and actions to mitigate these risks.

The Corporate Management Board was currently implementing measures to address the budget gap in 2022-23 and the initial actions were set out in the budget pressures report considered by this Committee at its meeting on 29 September.  As some of those measures would be one-off in-year adjustments, further action would be prioritised in the mid-year review of the Medium-Term Financial Plan which would be reported to the Committee in November.

The Council was currently forecasting to have £46.4 million in General Fund reserves at the end of the year and currently, £3.6 million of this was not earmarked for other purposes.

The surplus on the HRA would enable a projected transfer of £7.2 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 £97 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 £50.84 million by 31 March 2023, against an estimated position of £104.28 million.  The lower underlying need to borrow was a result of slippage on both the approved and provisional capital programme, as detailed in paragraphs 7.2 to 7.7 of the report.

The Council held £131 million of investments and £279 million of external borrowing on 31 July, which included £147 million of HRA long-term loans.  Officers confirmed that the Council had complied with its Prudential indicators in the period, which were set in February 2022 as part of the Council’s Capital and Investment Strategy.

During the debate, the Committee noted the following comments:

·       In response to a request for clarification of the likely impact on utility costs of the Government’s announcement on 21 September of a cap on the unit price for electricity for businesses and whether  ...  view the full minutes text for item 36

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 November 2021.

Officers were projecting an underspend on the general fund revenue account of £0.2 million.  However, this position should be treated with caution as the introduction of the Government’s Covid Plan B was likely to worsen the position during the coming months particularly around expectations for the achievement of budgeted income.

The direct expenditure incurred by the Council on Covid-19 in the current financial year currently stood at £572,890.  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 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 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 November 2021, which would potentially be subject to movement depending on the success of the Government’s roadmap for lifting all Covid restrictions. 

The Council was currently forecasting to have £48.8 million in reserves at the end of the year, of which £9.340 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 £36.89 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 £211 million of investments and £344 million of external borrowing on 30 November, 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: 

·       Request for information on the monitoring of S106 funds in a manner comparable to the information provided in the ‘Reconciliation to Spend to RTB’ table provided in the report to ensure that the Council does not have to return S106 contributions to developers. The Chairman  ...  view the full minutes text for item 53