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 November 2021.

Officers were projecting an underspend on the general fund revenue account of £0.2 million.  However, this position should be treated with caution as the introduction of the Government’s Covid Plan B was likely to worsen the position during the coming months particularly around expectations for the achievement of budgeted income.

The direct expenditure incurred by the Council on Covid-19 in the current financial year currently stood at £572,890.  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 for some of the income loss for the months of April to June, under the Sales, Fees and Charges (SFC) compensation scheme totalling £1.45 million.  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 November 2021, which would potentially be subject to movement depending on the success of the Government’s roadmap for lifting all Covid restrictions. 

The Council was currently forecasting to have £48.8 million in reserves at the end of the year, of which £9.340 million was usable.

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. 

Progress against significant capital projects on the approved programme as outlined in section 7 of the report was underway.  The Council expected to spend £59.74 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 £36.89 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 £211 million of investments and £344 million of external borrowing on 30 November, 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 and Investment Strategy.

In considering this report, the Committee made the following comments: 

·       Request for information on the monitoring of S106 funds in a manner comparable to the information provided in the ‘Reconciliation to Spend to RTB’ table provided in the report to ensure that the Council does not have to return S106 contributions to developers. The Chairman reminded the Committee that the first of the S106 Monitoring Reports was due to be considered at its April 2022 meeting, with further update reports every six months thereafter. Following consideration of the first of those reports, the Committee would be able to comment on the adequacy of the information provided.  The Committee also noted that:

(a)   the terms of the S106 agreements provided that monies were only required to be committed towards a project, not actually spent, to avoid having to repay those monies to a developer;

(b)   In many cases, S106 monies were handed to Surrey County Council as contributions towards infrastructure schemes; and

(c)   unlike CIL monies, S106 contributions were directly related to the specific area of the development.

·       In response to a question as to the extension of the SFC compensation scheme, the Director of Resources clarified that the scheme had been extended into the first three months of the 2021-22 financial year.

·       The Committee noted that the report had omitted to state that service managers were also required to report overspends, as well as underspends, at the earliest opportunity when carrying out monthly monitoring of income and expenditure.

·       In response to a question as to what contingencies were in place to avoid the risk of repayment of RTB receipts should there be any further delays in progressing either of the Guildford Park or Bright Hill schemes, officers reassured the Committee that there were contingencies to divert those receipts to other HRA capital schemes which could include purchasing properties or expenditure on infrastructure (as well as construction costs) in preparation for development of housing schemes.  In addition, the Right to Buy Policy would be introducing measures to avoid repayment of RTB receipts.

Having considered the report, the Committee

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