Agenda item

The Committee considered a report summarising the projected outturn position for the Council’s general fund revenue account, based on actual and accrued data for the period April to July 2020.

Officers had projected an increase in net expenditure on the general fund revenue account of £12,308,497 which, in the majority of cases, was a result of 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 £948,881 (2019-20 £250,769) with support from the Government of £1,954,748.  The Government support received was intended 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, and these were subject to change as the year progressed.

The Committee noted that the Council, at its meeting on 5 May 2020, had approved an emergency budget to deal with the impact of Covid-19 should government support fall short of the final costs of the pandemic.  The 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 (£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 reflected modest variations in repair and maintenance expenditure and staffing costs.

Progress was being made against significant capital projects on the approved programme as outlined in the report.  The Council expected to spend £135.808 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 £116.110 million by 31 March 2021, against an estimated position of £125.956 million.  The lower underlying need to borrow was a result of slippage on both the approved and provisional capital programmes as detailed in the report.

The Council held £131.5 million of investments and £275.2 million of external borrowing at 31 July 2020, which included £192.7 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.

There was a query regarding the breach of an investment limit (referred to in para 6.16 of the report). It was explained that the council held a lot of liquidity at the time of the breach due in its current account to essential Covid-19 expenditure and for this reason there was a cashflow issue for a day or two.

The meeting heard that Future Guildford was an ‘invest to save’ project and was funded from reserves and so showed as a variance.

It was noted that the Capital Expenditure Plan ran up to £36 million. It was explained that the underlying need to borrow did not necessarily mean that this borrowing should come from an external source. Capital had to be shown as reserves. It could be expected that a smaller amount of perhaps £40-50 million could be externalised and this had been included in the Medium-Term Financial Plan. The capital programme was currently being reviewed due to Covid-19 and would feature in the next report.

The Committee

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

Reason:

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