Agenda item

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 September 2021.

Officers were projecting an increase in net expenditure on the general fund revenue account of £1,762,936, which was down from £3m reported at the last meeting after transfers to and from reserves.   This was predominantly due to the review of the interest receivable and payable which had resulted in a net increase in interest receivable.

Covid-19 continued to impact the Council.  The direct expenditure incurred by the Council in the current financial year currently stood at £299,597.  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 of £1.45 million in respect of some of the lost income for the three months April to June, under the Sales, Fees and Charges (SFC) compensation scheme.  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 September 202, which would potentially be subject to movement depending on the success of the Government’s roadmap for lifting all Covid restrictions. 

Whilst a £17 million transfer from reserves had originally been budgeted, this was now expected to be £24 million. The Committee noted that reserves generally were running at dangerously low levels of approximately £5.8 million, whereas officers would normally recommend reserve levels at around £12 million.

There had been a reduction of £178,097 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 £8.4 million to the new build reserve and meet the forecasted £2.5 million to the reserve for future capital at year-end.  The transfer to the New Build reserve was £7,372 higher than budgeted due to lower total expenditure over 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 £60.444 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 £37.78 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 £204 million of investments and £339 million of external borrowing on 30 September, 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:

·       Acknowledgement of the severe state of the Council’s finances, the dangerously low levels of reserves and the need for tight financial management to ensure that the position does not worsen, but also to begin a process for re-building reserves.

·       It was noted that the in-year savings plan to mitigate the current overspend, which would be presented to the Executive at its meeting on 23 November 2021, would only mitigate the impact in the current financial year and could not be replicated in future years.

·       Appreciation of the improvements in the monitoring and reporting of the impact of slippage in progress with major capital projects to ensure greater awareness of the potential risk of funding having to be returned. 

·       In response to a request for additional information in the main report on S.106 developer contributions, the Committee was reminded that a more detailed and regular monitoring report on S.106 contributions would be submitted to the next meeting and every six months thereafter

·       Suggestion that the Council invests in electric car charging points and the need to explore alternative payment methods for parking in order to maximise income.  It was noted that there was a project in the pipeline to replace “pay on foot” equipment in the Council’s car parks

·       In response to concerns over the level of investments in other local authorities and associated returns, and the extent to which those investments were secure given the significant financial difficulties that all local authorities were experiencing, officers confirmed that the returns were higher than could be achieved by way of investment in banks. It was also noted that no local authority had defaulted on any loan.

Having considered the report, the Committee

RESOLVED: That the results of the Council’s financial monitoring for the period April to September 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.