Agenda item

Budget Monitoring Report

To receive the report. – Link to Cabinet report.

Minutes:

Adele Taylor explained that the report had been considered by Cabinet the week and it had also been requested to be considered by the Panel. The report included financial information up until the end of July, but it was important to note that did not include information on sales, fees and charges. There was an overspend of £11.2 million but that did include Covid costs. Once the grant that had been received from the government had been included the reserves would be at £2 million. When the fees and charges scheme started, Adele Taylor predicted RBWM would be able to claim back anywhere between £2-4 million from the government. The report also included information on the capital budgets and the collection fund. RBWM was maing returns to government so that they could understand the financial impact that Covid had on the local authority.

 

Councillor Werner mentioned that the report claimed that car parking across the borough would be back to its original level over the next few months. However, he believed that they were not close to the capacity of pre-Covid. Regarding the free car parking that RBWM offered in the summer, would this amount claimed from the government be reduced or would it be covered by the Covid grant. Councillor Werner noted that RBWM could have had a £2.5 million surplus budget, and asked if this was realistic.

 

Adele Taylor said that the car parking levels were based on activity in July and lots of assumptions had been made about how much capacity levels would be at. These assumptions were not based on 100% occupancy of the car parks and were based on previous years, as well as the predictions at that point in time which is when the economy was starting to be opened up again. Other areas were looked at to find the saving needed to finance the free parking, as it could not be claimed back from the government. The £2.5 million surplus was not something that Adele Taylor had said so she could not comment on it, but said that there was underspend despite Covid rather than because of Covid.

 

Andrew Vallance, Head of Finance, said that the car parking was based on the daily usage bit they did not expect season ticket sales on parking to increase to the levels they were pre-Covid.

 

Councillor Baldwin left the meeting.

 

Councillor Werner said that the next budget monitoring report should be brought to scrutiny. Adele Taylor said that the number of budget monitoring reports would be increased.

 

Councillor L Jones said that RBWM had received £13 million in funding due to Covid and asked if it was favourable on the cash flow and borrowing costs, as she was seeing 100% of the adverse costs associated with Covid but not 100% of the favourable. Regarding Achieving for Children, she asked if there was an estimation of any uplift in activity after lockdown, and also what losses would be evident in future years.

 

Adele Taylor said that the cash flow had been slightly positive and that the grants had been helpful, with the cash flow being monitored on a daily basis. Uplifts were included in the costs, but it could be a grey area whether something would count as a Covid cost or not. All funding received had been a one off and it was difficult to predict what costs would be accumulated next year at this stage. Loss of income was currently more damaging for RBWM than immediate losses as commercial income was not covered in the loss of income. Regarding the question on Achieving for Children, Adele Taylor said that they were predicting that they would use all of the funding that had been made available.

 

Duncan Sharkey left the meeting.

 

Councillor Hilton said that the document showed where RBWM was in every area and that contingency was an important part of the budget that could be used if needed. There was a favourable variance and Councillor Hilton believed that if nothing changed then the reserves would be closer to £9 million than the £6 million they were currently at. The loss of income was a big impact and was what was causing the most issues, but Councillor Hilton believed that RBWM was in a better position than he thought the council would be in.

 

Councillor L Jones said that significant costs were not highlighted in the report and asked to reach that level of reserves what amount of general reserves would need to be put into the budget.

 

Adele Taylor said that officers were not aware of any significant costs but new burdens would be coming soon, for example the self-isolation payment. This needed to be thought about particularly how it was managed in the budget. The general fund reserve was currently at £8.2 million. Next year, the Medium Term Financial Strategy would be revised, with any additional costs needing additional resources. Dialogue with the Treasury had been good but officers would need to make predictions on costs and income, the assumptions made would be explained to all members.

 

Councillor Walters asked how much rental income was. He was told that it was the ability to enforce as RBWM was a ceremonial landlord and therefore the council needed to work with tenants closely as they could not enforce if the tenants were not paying rent. Councillor Hilton said that it was about £1.6 million and explained that a responsible approach was being taken by the council, it was better to have tenants than empty spaces.

 

Councillor Sharpe asked which areas of the report were a concern and ‘kept officers awake at night’. Adele Taylor said that it was the unpredictability, for example another national lockdown would provide more additional needs. The ending of furlough could also be a volatile area and could translate into costs in other services.

 

Councillor Hilton said that he slept better now than he did this time last year. He said that RBWM could only deal with what it knew about and that they had been doing well so far.

 

Councillor Price asked if there were any risks that members should be made aware of. She used the example of the council tax reduction scheme consultation being unlawful and having to be rerun, which would cost money. The report mentioned that there was an amount of £49,000 for wardens but this decision was taken in the previous financial year. Libraries had been referenced in the report and it was important to note that they provided more services to residents than just book loans. There was a children’s hub also referenced with a £185,000 slippage, despite there being two consultations and Councillor Price wanted to understand why. She asked for an explanation on how the sales, fees and charges worked.

 

Adele Taylor said that the risks around the consultation would flow through the collection fund and that the scheme would be going back out for consultation. There was a potential risk associated with the scheme but this would not fall within this financial year. The wardens cost had already been included in the budget. Regarding the libraries, Adele Taylor said that they had focussed on this as it was a part of the service that had successfully been restarted. Explaining the fees and charges system, Adele Taylor used an example of the registrars budget being £100,000, with RBWM having to bear the first 5%. However, any losses incurred after that for every £1 the government would cover 75p.

 

Councillor Davey mentioned the capital programme and that there was £13.8 million worth of slippage in the report. He asked for this to be explained to him.

 

Adele Taylor said that in the budget was the expenditure for the year, but some projects could have issues with either delivery or completion and therefore the cost would go into next year’s budget.

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