Agenda item

2020/21 Draft Outturn Report - Revenue and Capital


Cabinet considered the report that set out the final outturn position of the Council in respect of the 2020/21 financial year.


The Cabinet Member for Finance and Ascot informed that Cabinet Members to cast their minds back to June last year when in the face of the impact of Covid general reserves stood at less than £2 million and there were calls from some quarters for the director of resources to issue a section 114 notice.  How this had changed as this outturn report is in a favourable variance with general reserves above £7 million.  But these headline figures did not tell the full story of this administration’s management of a very challenging financial year.


As a consequence of the impact of Covid a revised MTFS was published in October last year. This projected a need for savings of £8.7 million in 2021-22. With considerable foresight, in November last year the Director of Resources proposed establishing a Covid earmarked reserve to smooth any cost increases and income loss in 2021-22. The budget report to Council shows that £3.17M would be required from the reserve in order to balance this year’s budget. The reserve stood at £3.8 million providing a buffer of just over £600k, although some of this is for specific newly acquired responsibilities.


There was also the opportunity to improve the resilience of our finances by adding to our reserves and provisions.  Having funded some IT provision through existing budgets that was required due to COVID changes in working practices, £300k of funding was set aside to replace business as usual IT work that will be delivered during 21/22, and a £300K Optalis reserve is established to manage some uncertainties in overhead costs. 


Provisions had also been increased with £400K set aside for potential redundancy costs related to the budget setting process, in conformance with prudential advice from our external auditors that the provision for debt should be reviewed an additional £1.7 million provision is made for Adult Social Care and Housing benefit bad debt provision that has been recognised as an area of risk throughout the financial year, and £393K is set aside for adult social care, a total upside approaching £7M.  


The outturn report tells us that stripping out covid we would have achieved a favourable variance of £4.2M in service expenditure. Government have been helpful and funded all but £630K of Covid revenue losses so we were able to bank £3.6M of this. As a result of a capital slippage of £44M interest charges are £900K less than budget. There were several other upsides the most significant were the receipt of £500K compensation for loss of rent at Sienna Court and invaluable assistance from the Frimley CCG and better Care Fund with funding for Adult Social Care to facilitate hospital discharges and to prevent hospital admissions. 


We have come through 2020/21 in much better shape than I thought possible. He acknowledged the support received from Government without which all Councils would have been in severe financial difficulties, but our administration’s achievement was made possible by setting a robust budget and with great work from officers delivering services and our finance team capitalising on all opportunities to not only save money but opportunities for additional funding.


The administration’s financial capacity and competence has grown and in a difficult year we have also been thinking and planning for next year and beyond, ensuring that whilst managing the immediate and urgent we have our eyes firmly fixed on the important, which augers well for the future.  He thanked all Council Officers and specifically the Finance team for an incredible job well done.


On behalf of Government in the past year our Revenues and Benefits team have made financial awards totalling £46 million to small businesses from more than 30 different grants. They did so whilst being just marginally above target in their day job of processing a Covid driven surge in new and changed circumstance benefit claims.


Cllr Jones asked with regards to the revenue outturn statement there were some very large inward movements over the last two months.  One of these was nearly £1 million from property services, this could be because an asset was sold or leases sold back.  In the DSG there was also a significant amount that has come in over the last two month.  Without these one-off payments the outturn would be worst.  There was also a number of capital slippage and it was not known if this was due to poor monitoring. 


The Cabinet Member responded that with regards to the property payment this was made up of payment from Sienna Court and companies buying out of their leases.  It was not known which years budget these would have fallen into. 


The Director of Resources reiterated that in terms of property it was not clear which year the money would fall into.  Due to transparency we were showing the movements coming in even though some are set aside for future years.  A tenant asking to walk away from a lease is not unusual.  A property provision has been set up to recognise incoming funds that is used in other years.  With regards to the DSG page 65 shows that the movement is the transfer in the reserves, this was money we were expecting in but are now only getting it in for 2021/22 and were only informed this in March.  With regards to Capital there has been some slippage coupled with low borrowing / interest rates.  The paper also showed the level of general reserves as well as other reserves put aside.


Cllr Jones asked if the money going into reserves had been allocated or if there was room to use some of it to offset savings within this year.  She was informed that now was not the time to take money out to cover savings given the uncertainty of the future.


The Chairman endorsed what has been said many times that we need to build back our reserves.  They were committed to do this and now was not the time to go soft on these plans.  Having strong sustainable reserves was important.


Cllr Baldwin said he wished to thank the officers who had made the financial position happen especially during the difficult 15 months.  There demotion and commitment to residents should not be lost in the numbers. The Chairman agreed with this statement and said that is why they were backing staff with a pay rise. 


Mr Wilson addressed Cabinet ad said that the report showed that the Council had underspent by £4.2 million, he asked if this was due to better budgeting and financial controls or the council doing less due to Covid.  There was an extra £6 million going into reserves.  This was residents money, so if financial competence was improving why was some of this money not being used to re-introduce parking discounts that would help the highstreets.  The Cabinet Member reiterated that now was not the time to spend this money as reserves needed to be built back up.  It was important to get through the uncertainties in a good financial position.


Mr Hill addressed Cabinet and said that with regards to paragraph 6.9 facilities, it mentioned the £28k pressure on the Desborough Suite.  He asked if this was linked to the vaccination role out and if this could be recovered from the Government.  Paragraph 13.26 says the general fund reserve starts at £8 million and goes down to £7 million, in the next five years will the reserves need to be prioritised over say a day centre.  Paragraph 13.28 it mentions that the council was borrowing temporarily pending capital receipts, are these receipts from the golf club as he had already raised concern about the validity of that project.  There was also reference to over £300k from the Nicholson’s Centre and he asked what this was.  There was also zero spending from CIL allocation. 


The Cabinet Member responded by saying that £500k had been spent from CIL with further spend expected when appropriate, the reserves had reduced but this was to offset the budget, in terms of borrowing that was just a statement of fact and behind this was the capital cash flow that showed when we would be expecting capital receipts.  The Director of Resources also mentioned that the pressure on the Desborough Suite was down to loss of income from hall hire where possible this has been recovered.  With regards to reserves they can only be used as a one off spend and a minimal level does not equate to an optimal level.


Resolved unanimously:  that Cabinet:


i)       Notes the report including:

a.     The final Net Revenue Outturn position for the year showing an underspend of £1,043,000 including Sales, Fees and Charges compensation of £8,016,000 (Appendix A) and the implications for the authority’s reserves position (Appendix H).

b.     The delivery against the savings approved within the 2020/21 base budget (Appendix B)

c.     Net Capital Outturn figures showing a net £44,890,000 underspend (Appendices C – E) and the subsequent impact on Borrowing (Appendix F)

d.     The Outturn position on the Schools Budget (Appendix G)

e.     The summary of the Covid-19 funding and expenditure during 2020/21 (Appendix I).

f.       The level of Aged Debt as at 31 March 2021 (Paragraph 14.11 Table 25 within the report).

g.     The in-year collection levels for both Council Tax and NNDR (Paragraph 14.3 Table 24 within the report).

h.     The levels and return on the cash investments (Paragraph 14.28 Table 28 within the report).

ii)     Approves the following:

a.     Creation of new Earmarked Reserves totalling £3,485,000 reflecting the service underspends to be carried forward into 2021/22, as shown in Appendix A.  This includes the earmarked reserve in relation to Covid-19 expenditure that will be utilised in 2021/22 as approved as part of the budget in February 2021

b.     Movements in existing Earmarked Reserves following the review of the S151 Officer.

c.     The Capital variances and slippage. Slippage will be carried forward into 2021/22.


Supporting documents: