Agenda item

A report of the Head of Financial Services setting out the (draft) revised budget for 2020-21, including the Medium Term Financial Strategy 2020-23 for scrutiny by the Panel.

Report to follow.

The Strategic Director of Environmental and Corporate Services presented a Finance Update setting out the details of the revised 2020/21 budget, the updated MTFS 2020-2023, the revised Capital Plan 2020-2023 and the Capital Strategy 2020-21.

Assisting with the consideration of the presentation: The Cabinet Lead Member for Finance and Property Services, the Strategic Director of Environmental and Corporate Services, the Strategic Director for Commercial Development, Asset and Leisure and the Head of Finance Services.

Summary, key points of discussion:

·         revenue contributions to capital of 213K for 2019/20 -  this was an indicator of the Council’s capital purchases and contributions from the revenue budget.  It was not proposed to budget for this in 2020/21.

·         less interest on balances - money earnt by the Council through investment in money markets was used as a balance to support returns, earn interest and undertake commercialisation.

·         changes from the original budget to revised budget highlighted - DCLG COVID income loss claim and DCLG COVID emergency grant approx. £3mill difference. The Council had received £2.1mill to cover additional COVID costs and anticipated a further £1.2mill from the Government.  This was based on estimates of the predicted total claim by the end of the year.  Three claims would be made (September, December and April) and with this support the budget position was more favourable.  With the Government grant, balances had not depleted significantly in the first half of the year, but interest received had reduced to £300K in comparison to previously stated £500K.

·         in-year cost savings – it was indicated that the Town Hall was expected to be closed for the remainder of this year and that the Panto for 2020 had been cancelled; this had been budgeted for.

·         salary savings of £700K – this did not impact service delivery. This had been calculated after a thorough exercise reviewing vacancy provision.  The Council usually budgeted for a 100% filled vacancy factor but over time as certain positions reduced in hours or were not filled, extra money had been carried over.  This has resulted in a history of underspend by the Council although the money had also been allocated towards agency costs.  The monitoring exercise completed in period 4 had resulted in the salary savings and would be taken forward into the following year’s budget.

·         Minimum Revenue Provision (MRP) would be paid to replenish borrowing. This was perceived as beneficial and it was noted that it related to a policy change whereby there would not be an MRP charge until a year after the asset had been acquired.

·         interest on General Account – the previous year had resulted in good interest gains.  It was noted that the ‘interest marketplace’ was volatile, would be monitored on a quarterly basis and that figures reflected a lower amount than previously conjectured.  Currently the Council had not seen a reduction in its cash holdings although interest rates had not risen as much as anticipated.  The Council had benefited from investments in the portfolio receiving a good rate of interest from before the pandemic and the decrease in national interest rates.

·         potential depletion in Council Tax -  the collection rate at present had diminished to 0.9% of its target.  The situation would be monitored, and it was likely that the end of the furlough scheme in the new year could impact this.

·         recruitment process – there was not an embargo on recruitment, but the process had been adjusted to allow the Senior Leadership Team oversight of all recruitment requests to approve/reject as required. It was not discounted that there may be a need to reduce headcount in the future.

·         supported living (Housing benefit)  - an explanation of how this affected the Borough was given.  It was noted that due to the introduction of Universal Credit the Council was unable to re-claim housing benefit unless the housing provider was a registered provider.  It was important to state that this was a national issue and the Council fully supported the provision of supported living, but the burden was applied unevenly across local authorities and added £0.4mill pressure on top of budgeted cost of £0.5mill to the Council’s finances. 

·         concerns were raised for people being affected by homelessness or ejections from rented accommodation – a budget had been allocated for additional spending this year, the MTFS projections included this.  It was currently unknown what additional Government support would be available and if the regulations would change.

·         the confidence of the Council in obtaining government funding for COVID losses – the bulk of the losses had been incurred in the first 4 months and the Council considered it reasonable to claim £700K in September. The Council would claim for less if its income improved with lockdown restrictions lessening, but the revised budget reflected income reductions for the whole year. 

·         whether costs for a second wave of coronavirus had been included in the budget -  a reasonable estimate of costs had been included going forward beyond 31st March, although it was noted it was a challenge to determine an accurate figure.

·         MTFS projections 2020-23 (Service Pressures, Planning) – the Planning service pressure of £332K was based on reduced fees and reduced numbers of applications.  There were no plans currently to reduce staff numbers but the ongoing service review and the recent changes to planning procedure indicated in the Planning White Paper could affect this.  Budgetary structural changes could be required, and the data provided by the Heads of Service would be challenged robustly before submission of a final draft MTFS projection.

·         substantial overspend – in previous years it had been challenging to make savings.  It was planned to continue to build cost savings going forward.  A Service Review programme was underway and a review of major contracts, asset procurement and the Council’s commercial approach would be progressed.

·         that the working balance was showing a negative position and that it would be beneficial in the meeting scheduled in December to look in more detail at savings proposals.

·         the draft revised budget presented was considered challenging and it was noted that not all issues highlighted were as a result of the pandemic. 

Councillor Harris left the meeting.

The Lead Member for Finance and Property Services noted that the budget was an honest appraisal of the current circumstances, reducing costs where possible, but acknowledged that there were many uncertainties and challenges to face.  The Cabinet was aware that the Council was moving into a high-risk environment and noted that although a report from the recent Audit Committee meeting had not been drafted to submit to Cabinet, Cabinet members were particularly aware of the situation.

The Director of Environmental and Corporate Services stated that the information presented to the Panel at this meeting of the revised budget for 2020-21 was to provide background information and aid the Panel in scrutinising the 2021-22 budget at its next meeting.

Cllr Bolton had issues with her connection and left the meeting partway through this item.

RESOLVED

1.    that the impact of Supported Living (housing benefit) on the Council’s finances is highlighted to members, and that an explanation of the process by which this had an impact is included, if appropriate, in the Council Tax Member training scheduled for November;

2.    that the Panel wished to acknowledge the work carried out by officers to draft the revised budget for 2020-21 and to express their full understanding of the seriousness of the decisions that had been made and would be required in the future for the Council regarding its finances.

Reasons

1.    Members wished to highlight this aspect of the Council’s finances and considered that all councillors would benefit from further awareness of the supported living financial position.

2.    Members of the Panel were mindful of the difficult financial decisions to be made by the Council in the near future and wished to acknowledge this.