Agenda item
Financial Monitoring 2021-22 Period 4 (April to July 2021)
- Meeting of Corporate Governance and Standards Committee, Thursday, 23rd September, 2021 7.00 pm (Item CGS33)
- View the background to item CGS33
Minutes:
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 July 2021.
Officers were projecting an increase in net expenditure on the general fund revenue account of £3,043,550.
Covid-19 continued to impact the Council. The direct expenditure incurred by the Council in the current financial year currently stood at £236,022. 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. 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 would be able to make a claim for some of the income loss for the 3 months of April to June, under the Sales, Fees and Charges (SFC) compensation scheme; however, officers were waiting for the government to issue guidance on this scheme for 2021-22. An estimated claim of £300,000 was 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 31 July 2021 and would potentially be subject to substantial movement depending on the success of the Government’s roadmap for lifting all Covid restrictions.
There was a reduction (£217,940) 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 £7.9 million to the new build reserve and £2.5 million to the reserve for future capital at year-end. The transfer to the New Build reserve was £501,000 lower than budgeted due to a forecast reduction in rental 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 £116.573 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 £71.686 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 £190 million of investments and £348 million of external borrowing on 31 July 2021, 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 Strategy.
In considering this report, the Committee made the following comments:
· In response to concerns over possible repayment of Right to Buy receipts in respect of further delay in progressing the proposed Guildford Park Road and Bright Hill developments, the Committee noted that a number of pipeline HRA capital projects and mandates were being progressed. The Leader of the Council noted that reporting around all of the capital projects to the Major Projects Board was now in a very consistent, dashboard format which included Gantt charts setting out key project milestones. The Leader suggested that in order to provide reassurance to the Committee regarding the work being undertaken to address the slippage in the capital programmes, a presentation could be made to the Committee at a future meeting. On behalf of the Committee, the Chairman welcomed the suggestion.
· Suggestion that installation of more electric car charging points could be a revenue source for the Council.
· In the Schedule of Investments (Appendix 14 to the report), it was explained that Money Market Funds (“MMF”) were same-day liquid funds that were heavily diversified with strict investment criteria. It was suggested that, given the significant sums invested, additional information could be provided in terms of a breakdown of the various investments
· In response to a query as to why there was an overspend of £3.4m in Off-Street and On-Street parking income on the one hand yet the Committee had been informed in the previous item on Performance Monitoring that town centre car parks had made a good recovery, the Director of Resources commented that parking income had fluctuated during the year. In April 2021, parking income had reduced to 20-30% of its normal level; it improved to around 70% in June but fell back again in July and August. It had been assumed that car parking capacity would return to approximately 85% of pre COVID levels from September 2021 to March 2022.
· A request that future reports show in the executive summary what the excess of expenditure over income was before any transfers from reserves, as showing the gross figure would assist in understanding of the justification for the savings strategy.
· It was noted that the interest rate on the call account and Money Market Funds, was around 0.01%, and interest on the notice account were around 0.05%. Recognising the need to maximise yield from investments, officers confirmed that they were looking at all available options, including longer-term covered bonds, to improve yield.
· Repeated request for more detailed commentary from service leaders in relation to explanations for variances in the detailed service summary (Appendix 2 to the report).
·
Having considered the report, the Committee
RESOLVED: That the results of the Council’s financial monitoring for the period April to July 2021 be noted, subject to the comments referred to above.
Reason:
To allow the Committee to undertake its role in relation to scrutinising the Council’s finances.
Supporting documents:
- Item 07 - Financial Monitoring Report (April to July 2021), item CGS33 PDF 709 KB
- Item 07 (1) - Financial Monitoring Report (April to July 2021) - App 1 - General Fund Summary P4, item CGS33 PDF 371 KB
- Item 07 (2) - Financial Monitoring Report (April to July 2021) - App 2 - Service detail summary, item CGS33 PDF 237 KB
- Item 07 (3) - Financial Monitoring Report (April to July 2021) - App 3 - HRA Summary, item CGS33 PDF 40 KB
- Item 07 (4) - Financial Monitoring Report (April to July 2021 - App 4 - Approved Capital programme, item CGS33 PDF 177 KB
- Item 07 (5) - Financial Monitoring Report (April to July 2021) - App 5 - Provisional Capital programme, item CGS33 PDF 88 KB
- Item 07 (6) - Financial Monitoring Report (April to July 2021) - App 6 - Schemes funded from S106, item CGS33 PDF 36 KB
- Item 07 (7) - Financial Monitoring Report (April to July 2021) - App 7 - Capital Reserves, item CGS33 PDF 68 KB
- Item 07 (8) - Financial Monitoring Report (April to July 2021) - App 8 - Capital Resources, item CGS33 PDF 63 KB
- Item 07 (9) - Financial Monitoring Report (April to July 2021) - App 9 - HRA Approved Capital programme CGSC, item CGS33 PDF 44 KB
- Item 07 (10) - Financial Monitoring Report (April to July 2021) - App 10 - HRA Provisional Capital programme CGSC, item CGS33 PDF 34 KB
- Item 07 (11) - Financial Monitoring Report (April to July 2021) - App 11 - HRA Capital Resources, item CGS33 PDF 66 KB
- Item 07 (12) - Financial Monitoring Report (April to July 2021) - App 12 - Summary of HRA Capital Expenditure and Financing CGSC, item CGS33 PDF 134 KB
- Item 07 (13) - Financial Monitoring Report (April to July 2021) - App 13 - Loans Schedule, item CGS33 PDF 24 KB
- Item 07 (14) - Financial Monitoring Report (April to July 2021) - App 14 - Investment Schedule, item CGS33 PDF 81 KB