Agenda item

The Committee considered a report that set out the financial monitoring position for period April to May 2020.

The report summarised the projected outturn position for the Council’s general fund revenue account, based on actual and accrued data for this period. Officers were projecting an increase in net expenditure on the general fund revenue account of £9,158,977.  The main reason for such a large increase was due to the impact of Covid-19.

Covid-19 had impacted on the Council in several ways including the inability to maintain income levels at those budgeted for in February 2020.  The direct expenditure incurred by the Council in the current financial year stood at £514,913 (£250,769 in 2019-20) with support from the Government of £1,954,748.  The Government support received was to cover both the direct and indirect costs of the Covid-19 pandemic.

The indirect costs of Covid-19 were reflected in the services forecasting.  As the pandemic continued estimates for losses in income and increased costs had been made with the best information available, which were subject to change as the year progressed.

The Council, at its meeting on 5 May 2020, approved an emergency budget to deal with the impact of Covid-19 should government support fall short of the final costs of the pandemic.  Government had since announced further support for local authorities and figures would be updated to reflect this support once the detail had been received.

There had been a reduction of £351,107 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 £8.53 million to the new build reserve and £2.5 million to the reserve for future capital at year-end.  The transfer was projected to be £97,384 higher than budgeted assumption and reflects modest variations in repair and maintenance expenditure and staffing costs.

Officers were making progress against a number of major capital projects on the approved programme as outlined in section 7 of the report.  The Council was expected to spend £138.151 million on its capital schemes by the end of the financial year. The expenditure was higher than it had been for many years and demonstrated progress in delivering the Council’s capital programme.

The Council’s underlying need to borrow to finance the capital programme was expected to be £118.463 million by 31 March 2021, against an estimated position of £125.956 million, which was due to slippage on both the approved and provisional capital programme, as detailed in the report.

The Council held £118.8 million of investments and £238.9 million of external borrowing as at 31 May 2020, which included £192.8 million of HRA loans.  Officers confirmed that the Council had complied with its Prudential indicators in the period, which had been set in February 2020 as part of the Council’s Capital Strategy.

Comments from the Committee raised the following points:

·       During the Covid-19 crisis, the Council had provided operator support to Freedom Leisure as Spectrum had to close all of its facilities with a resulting loss of all income.  Spectrum was due to reopen on 1 August 2020, albeit with a very limited leisure provision due to the need to continue with social distancing measures.  This would mean that the Council would need to continue providing operator support, provisionally until October 2020 and possibly into 2021.  In addition, the Council had waived the management fee that it would normally receive from the contractor. The overall cost to the Council had been approximately £365,000 for each month that Spectrum had been closed.

·       In relation to G Live, it was noted that the Council had continued to pay HQ Theatres its management fee and a small additional monthly payment of approximately £21,000 to help support them through the Covid crisis.

·       In relation to the Yvonne Arnaud Theatre, the Council had continued to support the Trust with an annual revenue grant and had deferred payment of ground rent for the Theatre and Mill Studio.

Having considered the report, the Committee

RESOLVED: That the results of the Council’s financial monitoring for the period April to May 2020 be noted.

Reason:

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