Agenda item

The Committee considered a report which summarised the emerging financial position against the approved 2022/23 budget and highlighted pressures on the already stretched Medium Term Financial Plan (MTFP). Several factors had affected the Council’s budget since it was approved in February 2022, most of which had had an adverse impact. Although the financial outturn in 2021/22 on the general fund and HRA had been positive overall, there were some concerning cost pressures and income shortfalls that were likely to continue into future years. This, coupled with the significant inflationary pressure experienced since April, presented a very challenging position for the Council.

The report presented a high-level summary of the position and proposed a series of actions for addressing the budget shortfall in this and future years. A more detailed financial monitoring report would be considered by the Committee at its special meeting on 6 October, and comments from the Committee would help inform the mid-year review of the MTFP which was now necessary. A similar exercise had been undertaken in 2021/22 and, as evidenced by the General Fund outturn report, this had been successful as the overall position at year end had been £138,000 under budget.

Officers were currently projecting a net overspend on the general fund revenue account of £3.1 million, a significant proportion of which related to current inflationary pressures, principally increasing utilities costs. The position was likely to worsen as forecasts were refined in the coming weeks. Part of the projected budget shortfall had arisen from growth bids which managers considered were necessary to meet service demands and address resource gaps. These bids would be subject to approval of a business case and funding.

The report had also alerted the Committee to the fact that officers were investigating a potential discrepancy in the staff cost budget which had come to light in July and appeared to have originated during the transition period of phase 2 of the Future Guildford programme. This could materially impact both the general fund and the HRA in 2022/23 and future years.   

In summary, the Council had spotted early an emerging budget shortfall and was taking steps to address this in the current and future years.

The Executive had also considered this report at its meeting on 22 September and had agreed:

(1)        To note the emerging position against the 2022/23 budget and the impact on the Council’s finances in future years.

(2)        To approve the high-level action plan set out in the report and to identify any further measures that should be taken.

(3)        To instruct officers to undertake a comprehensive mid-year review of the 2022/23 budget and to present this, and a revised Medium Term Financial Plan, to Council at its meeting on 6 December 2022.

During the debate, the Committee made the following points:

·       In response to concerns over the impact on the Council’s finances of the recent mini-budget statement by the Chancellor of the Exchequer, the Joint Section 151 Officer indicated that a briefing note of the elements of the mini budget that would effect in a positive or negative way both Guildford's finances and also our economically disadvantaged residents was being put together, and a copy of this would be circulated to councillors.

·       The Committee received assurance that the risk register was being used as a management tool to help manage the current financial situation.

·       It was suggested that officers assess the overall macroeconomic impact on the Council's financial position at such a point in the future when there was greater certainty and stability.

·       In response to a question as to the extent to which the Council was reviewing its treasury management arrangements, officers reported that a strategy meeting had been held recently with Arlingclose and such meetings would be held on a more frequent basis as the financial position and economic factors changed to enable our investments and borrowing to be kept under review.

 Having considered the report, the Committee

RESOLVED:  That the decisions taken by the Executive on 22 September 2022 and the comments referred to above be noted.