Agenda item

Finance Update: November 2020

Minutes:

Cabinet considered the report that set out the latest financial position of the Council in respect of the 2020/21 financial year at the end of Month 6.

 

The Chairman informed Cabinet that Mr Andrew Hill had registered to speak on this item and asked him to address the meeting.

 

Mr Hill mentioned the projected increase in general reserves and asked the Lead Member for Finance what the projection was for the following financial year.

 

The Lead Member for Finance and Ascot informed Cabinet that the finance update provided a narrative of financial activity in the Council.  He proposed to present the highlights of the report as further detail could be found within the report if required.

 

Cabinet were informed that paragraph 4.2 of the report informed that, excluding the impact of COVID-19, we would be reporting a favourable variance of £4.5 million, an increase of £1.66M from last month. This supported the statement made in the revised MTFS published in October which states, The Council approved a robust budget in February 2020, which would have stabilised the Council’s financial position.

 

The Lead Member asked what had changed to get such a turnaround and informed that  about a year ago this administration changed, the new leader had acted upon all the recommendations in the CIPFA Finance and Governance report He recruited a Director of Resources and Head of Finance to increase the capacity and capability of the finance team and re-established the administration’s financial competence.

 

The report forecasts the Council’s financial outturn based upon assumptions that are changed as we move through the year and circumstances change.  He highlight two services; forecasts on parking income had proven to be optimistic and in the light of income to date and the current lockdown, additional losses of £2.348M were forecast. For homelessness, unfortunately the number of residents requiring support continued to rise and the projected outturn was nearly 3 times the approved budget. He mentioning that the emerging homelessness strategy offered some solutions to this social problem that was so harmful to the families affected.

 

Cabinet were also informed that  the first Sales / Fees and Charges compensation return had been made to the MCHLG.  This amounted to just over £2.4M for the period from April to July 2020 and a further £3.4M was included in the report for the period July to March 2021. Under the rules the council could claim just over 71% of losses but nothing for income from commercial properties. However, when these sums were included in the non -service expenditure, at the end of month 6 we report a positive variance of £3.125M. This would be transferred to general reserves which increased to £9.138 million, nearly £2.8M above the minimum.

 

The Lead Member went on to say that a revised MTFS was presented to Council in October 2020. Based on the assumptions made the paper indicates a that for 2021/22 there would be a £8.4m gap between income and expenditure, 10% of current service expenditure. This was driven by Covid-19 and our low level of reserves was an unhelpful but historic issue.

 

The administrations obligation was to present a balance budget for 2021/22, work was ongoing and however challenging, the gap would be closed. However, we cannot know with certainty what Government will include for Local Authorities in the CSR, when the impact of COVID-19 would finally abate, what a new normal might be and the effect of this on the 2021/22 budget.

In paragraph 4.13 of the report the S151 officer is considering establishing a COVID-19 mitigation reserve and seeks approval to transfer any underspends into this reserve. The proposal is to use funds in the COVID-19 mitigation reserve as one-off funding to manage any future volatility in budgets. I am very supportive of what is a financially sound recommendation.

 

In response the Mr Hill’s earlier question the Lead Member informed that he was currently unable to say what the next financial years level of reserves would be as the budget build process was still in process.

 

The Chairman mentioned that they had approved a difficult budget and established a sound financial path that would have been better if not for C-19. 

 

Cllr Jones mentioned that it was an excellent report to monitor the budget.  She was concerned about the situation regarding parking income especial post C-19 and thus she supported the recommendations.  She also raised concern about the decrease in demand effecting some capital projects and recommended business cases should be reviewed.  With regards to the favourable variance some of this came from an underspend from services and she said that care needed to be taken that service delivery was not compromised.

 

The Chairman informed that business cases were reviewed looking at affordability and economic cases. He was pleased that Cllr Jones approved of the new report format as she had previously raised concerns.  The financial position was being re built.

 

Cllr Werner mentioned that the current financial position was in part due to support provided by Government; he asked how confident was the administration that the budget was sound.

 

The Director of Resources informed that  C-19 had effected the budget and there were loses.  With regards to the robustness of estimates she said that she had confidence in the services budget management.  There had been support from central Government to all authorities but we still needed to manage the rest of our finances.  Corporately there was better governance of the finances.

 

The Chairman said that without C-19 the finances would be in a better place and the report was testament to the soundness of the budget that unfortunately not all members had supported.

 

Resolved unanimously: that Cabinet:

 

i)     Notes the Council’s projected revenue & capital position for 2020/21;

ii)    Notes the budget movements;

iii)   Agrees the capital variances and notes the slippage which will be recommended to Council for formal approval;

iv)   Approves the setting up of a Covid-19 Mitigation Reserve from any underspends during the 2020/21 financial year.

 

 

 

Supporting documents: