Agenda item

A report of the Head of Financial Services covering General Fund and HRA to the end of July 2021, Period 4.

The Head of Financial Services presented a report covering General Fund and HRA to the end of July 2021, Period 4. (Item 5 on the agenda filed with these minutes).

Assisting with the consideration of the presentation: The Cabinet Lead Member for Finance and Property Services and the Strategic Director.

Summary, key points of discussion:

·         In Period 4, the actual spend was £6.73million which meant a £7k underspend against the profiled budget of £6.737million.  The General Fund managed vacancy saving annual target was £527.7k.  There had been a small shortfall of 32k in savings recovered.

·         Financial pressures were highlighted including Planning related pressured that had been discussed with the Senior Leadership Team (SLT) and a projected shortfall of 107k in car park fee income.  To mitigate some income losses were put in a claim to the DCLG for Quarter 1 of £275k, however, it was clarified that claims could only be made for Quarter 1 as part of the government initiative.  It was added that staff working from home had saved the Council some expenditure and that there had been some income from the Vaccination Centre.  The Council were looking to reserve funds for shortfalls in the future.

·         The Housing Revenue Account (HRA) had an underspend of £81k.  Some void rents were currently falling behind profile and voids were in a shortfall position and garages were not hitting targets. 

·         A 30-year HRA business plan was being considered and would be coming forward in the autumn.

·         In relation to concerns about the fluctuations in costs that made up the £7k shortfall, it was noted that budgets were set as closely as possible.  The Covid-19 pandemic had affected income streams such as Car Park fees, however, some decisions had been made to try and encourage people back to town centres which would have an effect on the budget.  Local transport costs had been incurred since the budget had been set.  It was further added that there had been unexpected costs such as the £100k overspend forecast for Planning and this may not have been seen at the beginning of the year.  Currently the budget setting for the 2022/23 financial year was underspent, but issues were being highlighted going forward.  It was added that resilience was fairly robust.

·         The car allowance saving scheme had a potential shortfall of £200k as an estimate.  This figure had been developed over time and proposals would be going to a Trade Union meeting which would potentially save approximately £100k per annum.  In terms of implementation it was hoped that the proposals would go to Personnel Committee before the end of 2021 and a three-month implementation period would follow with proposals coming into effect from 1^st April 2022.  It was clarified that no savings were expected this year but subsequently there would be around £100k of savings per annum thereafter.

·         It was clarified that ‘Commitments’ were orders placed on the system and captured Period 4 contract expenditure not yet paid.  A breakdown of spending and commitments would be put in reports going forward.

·         A virement policy existed and Heads of Service could follow virement policy rules.  Budgets were closely examined for the new financial year with patterns of overspends and underspends.  The largest amounts had been flagged up.

·         The one-off £50k Brexit grant had been allocated to the Council prior to the Brexit deal being finalised.  There was no particular plan for this money at this stage and the money was not ringfenced.

·         Many of the postings to accounting ledgers happened automatically each month.  These figures were examined and then issues such as commitments were calculated, views were then sought from Heads of Service and the SLT.  Certain factors and decisions such as car parking were not budgeted for at this stage, however, a detailed exercise would take place for Period 7.   A view needed to be taken on car parking income and to what extent it would return to pre-Covid levels.

·         It was clarified that the issues discussed were more of a finance function than a legal function and as such the involvement of the legal team was minimal.  It was further clarified that performance issues on housing, particularly voids, were a matter for Landlord Services and the relevant Director and Head of Services were working on it.

·         In terms of financial pressures for the rest of the financial year, there were £658k in potential pressures, with £275k from the DCLG this figure was reduced to £383k and with the estimated Essential Car User allowance of £100k this figure was further reduced to £183k.  With the estimate overspend of £100k on Planning this was brought down to £83k.  This was seen as a realistic projection up until March 2022 and members of the Panel would be kept informed.

·         Rent arrears had decreased since July 2020 and former tenant arears had also decreased.  However, there were concerns going forward that tenants may struggle to pay rent as Universal Credit was being reduced by £20 per week and the furlough scheme was coming to an end.  It was noted that this didn’t affect those on Housing benefit.  So far Council Tax arrears had not been affected, however, factors may affect them in future.  Going forward the situation would become more refined.

·         Concern was raised about sums of money in Planning where there was an overspend or no income.  It was clarified that officers were asked for information as part of budget monitoring and a £100k overspend on Local Plan transport costs had been reported as part of this and this money had been committed, however the figure was not yet in the ledgers.  In terms of the end-of-year forecast, Leicestershire County Council had required money for additional highways monitoring.

·         In terms of clarity over how much money had been spent and how much was committed, there was a £7k underspend up to Period 4, however, £100k of costs had been added on to that projection.  The £100k was the figure that Heads of Services had brought to SLT and was committed to be spent.

·         It was clarified that the comparisons on rent arrears between 2020/21 and 2021/22 were taken at a point in time at the end of Period 4 and as such were a year-on-year comparison for Period 4.

·         It was clarified that performance issues on voids were being scrutinised by the Finance and Performance Scrutiny Committee and were also examined by the Housing Management Advisory Board, although the latter was not a decision-making meeting.

·         It was requested that headings be updated on the Period 7 to show how the £100k for Planning had been used.

The Cabinet Lead Member for Finance and Property Services stressed that the figures were intended to make the Panel aware of what could come forward in the financial year.  The table showed what was included in the budget to date whether spent or not.  The report had tried to show a summary of what had contributed to the underspend.  He further clarified that if the £100k committed to Planning had not been included, then the underspend would have been shown at £100k more when it was known that this money would be spent.

RESOLVED

1.    that the Report be noted.

2.    that the subsequent Period 7 Monitoring Report would be clarified with a breakdown of commitments and expenditure.

3.    that the subsequent Period 7 Monitoring Report would be clarified to show the distinction for income due and income received in the HRA.

4.    that the subsequent Period 7 Monitoring Report have updated headings to show how the £100k for Planning had been used.

Reason

1.    To acknowledge the Panel’s consideration of the matter.

2.    To clarify to the Panel what was committed to be spent and what had actually been spent.

3.    To clarify to the Panel the income actually received by the HRA.

4.    To provide the Panel with information about how committed money was being spent.