Agenda item

Revenue and Capital Budget Monitoring Report - 2021/22 (Period 6 - September 2021)

Decision:

Cabinet noted the following information:

 

·  Based on the S114 notice as at 2nd July 2021 the General Fund balance is currently forecast to be a cumulative deficit of £111m as at 31/3/22. 

 

·  The current forecast for 2021/22 planned savings is a net overspend position of £0.02m.

 

·  The DSG balance is forecast to be a cumulative deficit of £24.2m as at 31/3/22, this forecast deficit position has increased recently by circa £0.238m compared to month 5.

 

·  At 30 September 2021, the HRA was forecasting a net surplus of £0.950m for 2021/22, however this may change as work progresses on the Business Plan.

 

·  The forecast capital programme outturn for the General Fund for 2021/22 is currently £50.6m, of which £19.4m is to be financed from new borrowing.

 

·  The forecast capital programme outturn for the HRA for 2021/22 is currently £12.9m

 

It should also be noted however that there are significant Council wide uncertainties in the current forecasts, which as well as being subject to ongoing monitoring, verification and challenge are also heavily dependent on the accuracy of information and continued emerging issues. Service specific risks are noted in section 3.3.  In particular Council wide issues are:

 

·  year-end Statements of Accounts for 2018/19, 2019/20 and 2020/21 have yet to be finalised and audited. Further adjustments to these accounts may impact on the financial position as currently reported.

 

·  the capitalisation direction as previously reported has been under continuous review since July and remains so.  At this stage the work is ongoing but it is highly likely that the £111m cumulative deficit as at 31/3/22 will be increased as will the total forecast deficit previously reported as £174m in the S114 notice and updated to Council as likely to be above £200m.  The impact on corporate budgets remains to be determined as part of this review.  The emerging issues that will need to be funded by an additional capitalisation direction are likely to include by way of example:

 

o  further funding of the Council’s Minimum Revenue Provision

o  pay award of 1.75% for the Council and Children’s Company and other revenue pressures

o  inadequate provisions and contingencies

 

·  Covid-19 is an ongoing issue and a £6.4m contingency was built into the 2021/22 GF budget to cover any additional expenditure or loss of income as a result of ongoing lockdown measures. It is assumed that any additional expenditure will be compensated for with COVID grants, but this has yet to be confirmed by DLUHC.

Minutes:

The Director of Finance summarised the revenue and capital budget monitor which set out the current financial position as at the end of September 2021, and forecast for the 2021/22 financial year.  The report also highlighted the key financial risks.

 

The current forecast for the 2021/22 planning savings was a small net overspend of £0.02m, although it was recognised that based on the Section 114 notice as at 2nd July 2021 the General Fund balance was forecast to be a cumulative deficit of £111m at 31st March 2022.

 

Lead Members commented that the significant amount of work that had gone in the deliver the planned savings for 2021/22, and to close the savings gaps for 2022/23, was demonstrating progress in stabilising the financial position.  The Leader highlighted that work on the Medium Term Financial Strategy had commenced.  It was noted that there would be parts of corporate services, such as IT, which would need investment to support service delivery and wider savings plans.

 

The Cabinet noted the report.

 

Resolved –  That Cabinet note the following information:

 

·  Based on the S114 notice as at 2nd July 2021 the General Fund balance was currently forecast to be a cumulative deficit of £111m as at 31/3/22. 

 

·  The current forecast for 2021/22 planned savings was a net overspend position of £0.02m.

 

·  The DSG balance was forecast to be a cumulative deficit of £24.2m as at 31/3/22, this forecast deficit position has increased recently by circa £0.238m compared to month 5.

 

·  At 30 September 2021, the HRA was forecasting a net surplus of £0.950m for 2021/22, however this may change as work progresses on the Business Plan.

 

·  The forecast capital programme outturn for the General Fund for 2021/22 is currently £50.6m, of which £19.4m was to be financed from new borrowing.

 

·  The forecast capital programme outturn for the HRA for 2021/22 was currently £12.9m

 

It was noted, however, that there were significant Council wide uncertainties in the current forecasts, which as well as being subject to ongoing monitoring, verification and challenge were also heavily dependent on the accuracy of information and continued emerging issues. Service specific risks were noted in section 3.3.  In particular Council wide issues were:

 

·  year-end Statements of Accounts for 2018/19, 2019/20 and 2020/21 had yet to be finalised and audited. Further adjustments to these accounts may impact on the financial position as currently reported.

 

·  the capitalisation direction as previously reported had been under continuous review since July and remains so.  At this stage the work was ongoing but it was highly likely that the £111m cumulative deficit as at 31/3/22 would be increased as would the total forecast deficit previously reported as £174m in the S114 notice and updated to Council as likely to be above £200m.  The impact on corporate budgets remained to be determined as part of that review.  The emerging issues that would need to be funded by an additional capitalisation direction were likely to include by way of example:

 

o  further funding of the Council’s Minimum Revenue Provision

o  pay award of 1.75% for the Council and Children’s Company and other revenue pressures

o  inadequate provisions and contingencies

 

·  Covid-19 was an ongoing issue and a £6.4m contingency was built into the 2021/22 GF budget to cover any additional expenditure or loss of income as a result of ongoing lockdown measures. It was assumed that any additional expenditure would be compensated for with COVID grants, but this had yet to be confirmed by DLUHC.

Supporting documents: