Agenda item

The Director of Finance introduced a report that set out the revenue and capital financial monitoring position for the first quarter of the financial year to the end of June 2021.

The Council’s General Fund was currently forecasting a cumulative deficit of £111m as at 21^st March 2022 as per the s.114 notice, which included an assumed in-year deficit of £6.9m although it was noted this figure was continually being refined and would change.  The current forecast in-year overspend for 2021/22 was £5.575m, which was therefore an improvement of £1.325m.  The Dedicated Schools Grant was forecasting a cumulative deficit of £23.775m as at 31^st March 2022, which was an improvement of £3m on the previous figure.  The Housing Revenue Account (HRA) position was forecast as breakeven, although it had not been fully reviewed and would therefore change.  The forecast capital programme outturn for the General Fund was £122.358m and £55.077m for the HRA.  Work on the collection fund was commencing and due for completion in October, and in addition to the HRA review was likely to highlight further issues.

The overall position was therefore that the Council was continuing the intensive work to address the severe financial challenges it faced.  The Cabinet and Council would be receiving a report later in September on the progress of the financial action plan, which included work on the matters above, plus the commercial companies, accounts and other issues.  Enhanced financial controls had been put in place, such as expenditure control panels, with business cases being required before expenditure was approved.

Members asked about the progress in delivering the Council’s agreed savings plans for 2021/22.  The Director of Finance stated that detailed work was being carried out the verify the savings proposals approved by Council in March 2021.  It was very important that these savings plans were achieved to demonstrate that the Council could deliver them.  Scrutiny of the 2022/23 savings proposals would take place from November 2021 onwards, much earlier and more robust than previous years.

The Committee asked a number of other questions about the position at the end of the first quarter, including the DSG deficit, reserves and the capital overspends referred to in paragraph 8.5 of the report of £17.5m on the Moxy hotel and the Herschel Street car park refurbishment.  The Director of Finance commented that the issues had been identified as part of the detailed work being undertaken and had been reported to Cabinet at the earliest opportunity.  Further information was requested outside of the meeting on the budgeted revenue expected from the Moxy Hotel; the reasons for the overspend; and the justification for the extra £4m spent on Herschel car park.  The Capital Programme was being reviewed and was likely to be significantly reduced in scale, before being represented to Members for approval.

Further detail was also requested on the loan to GRE5 referred to in paragraph 8.14 of the report.  In particular, it was queried whether the £2.3m stated in this report was included in, or additional to, the £10m figure reported to Council in July 2021.  The current position on James Elliman Homes was also raised and whether further acquisitions were still being made despite the Council’s financial position.

At the conclusion of the discussion the report was noted.

Resolved –  The Committee noted the current management position on the 2021/22 accounts:

(a)  The council’s forecast cumulative deficit and improvement as at the end of June 2021/22 of £1.325m.

(b)  The forecast General Fund revenue position for 2021/22 as at the end of June 2021 is a £5.575m overspend;

(c)  The progress towards the 2021/22 savings programme;

(d)  The work being done by all parties across the Council to verify the savings identified in the 21/22 budget and action being taken to mitigate the budget gap in the current financial year by 30/9/21;

(e)  The current DSG cumulative deficit is £23.775m and in-year forecast as at the end of June 2021/22 was £4.885m deficit.

(f)  The current forecast spend on Transformation to deliver savings;

(g)  The Housing Revenue Account (HRA) was forecast to spend to budget for as at the end of June 2021.

(h)  Approval of the capital budgets carry forward from 2020/21

(i)  Note that the current capital programme was unaffordable, and a number of schemes are being reviewed to determine whether they can be stopped or their scope reduced.

(j)  Note that funding assumptions in some schemes that had been included in the capital programme as funded from capital receipts had been updated.

(k)  Note the forecast capital spend for 2021/22, pending review of the programme.

(l)  Note that the capital schemes that had been missed in the 2021/22 budget process will be passed to Council for approval in November 2021.

(m)Note that a number of capital schemes in the programme had already commenced without business cases going to Cabinet for approval. These would go to future Cabinet meetings for retrospective decisions as financial governance was improved.