Agenda item

To set out the current financial position for the Council at the end of the third quarter of 2023/24 (report of the Deputy Chief Executive – Corporate (S151) enclosed).

Consideration was given to the report of the Deputy Chief Executive – Corporate (S151 Officer) which set out the current financial position for the Council at the end of the third quarter of 2023/24.

The Portfolio Holder for Finance, Commercialisation, UKSPF and Levelling Up presented the report.

This year continued to be challenging with high inflation impacting on contract uplifts, power, pay and fuel. Pressures within homelessness continued to be an area of concern, and market downturn generally as the economy reacted to high interest rates and cost of living increase impacts fed through. The impact of the pay award had now been included in the outturn forecast.

Revenue Outturn

The revenue outturn forecasted a deficit position of £340,000 at the year-end (Table 1 in Appendix A provided the detail).

The following issues were raised for the Cabinet’s attention:

·       The largest change since Q1 was within the Finance area of the budget. A £426,000 movement had taken place in respect of Finance, this related mainly to £186,000 rent allowances, and £80,000 rent rebates as a result of not being able to reclaim full subsidy for Homelessness cases in particular Bed and Breakfast. The Portfolio Holder for this area had been supporting the officer team to investigate opportunities for minimising and mitigating this impact.  These movements could be subject to further change at the end of the financial year. In addition, there has been some duplication of income streams that were previously separately funded, totalling £98,000, that had now been adjusted for. Plus, there has been an increase in external audit fees - this was an increase being seen across all audit areas.

·       In relation to General Fund Assets, car parking income was not performing as well as expected. However, with changes to working practices in the service and the procurement of new car parking machines, improvement going forward was expected. Work was currently being undertaken to look at Garage sites and their income generally and new tenants for Priory Road were being investigated.  The overspends were largely offset by an underspend in Programmed Building Maintenance.

·       In Leisure and Culture, there was a pressure from the loss of a tenant at the South Holland Centre and again the service was looking at options for addressing this budget impact.

·       With regards to Neighbourhoods, there had been additional pressures from Agency Staff and the impact of the pay award - this has been partly offset by unbudgeted income. The service was continuing to look at options for managing Agency Staff pressures.

·       With regards to Planning, members were reminded of a recent increase in fees and charges. This income stream was always an area that struggled during an economic downturn and would continue to be monitored closely.

·       Homelessness continued to be an area of significant focus and attention.

·       On a positive, Investment Income continued to over-perform due to better than anticipated interest rates.

·       Adjustments for Minimum Revenue Provision relating to vehicles had been made.

The 2023/24 budget included a savings efficiency target of £887,000 - savings achieved to date, totalling £656,000 were detailed in table 1b. Further work was planned to look at other opportunities to address the £276,000 outstanding.

In addition, in order to assist the budget, a release from reserves of £300,000 of the New Homes Bonus received had been approved at Quarter 2. The Quarter 3 reserves position reflected this approval.

HRA

In Table 3a there were budget variances taking place again due to inflationary pressures, demand for services, and due to new more demanding statutory responsibilities, in addition to some budget adjustments that were taking place. The overall position was a surplus of £1.598 million.

Capital: General Fund/HRA

Tables 4 and 7 provided details of all capital schemes. The revised capital budget as at Q3 for the General Fund was £8.865 million, slippage for the capital schemes was approved as part of the 2024/25 budget setting process and for the HRA the revised capital programme was £23.897 million. Changes to the capital programme were now also being clearly tracked to provide transparency of changes between one report to another. Slippage continued to be carefully monitored and considered and budgets refined as the budget setting process progressed.

Treasury

The Council’s cash continued to perform well with £298,000 achieved in excess of budget.

Finally, members were advised of an additional recommendation, requesting approval of an addition to the Capital Programme of £100,000 to support Parish Loan applications, to be funded through internal borrowing.  The Portfolio Holder believed that this was a positive, outward-looking proposal that would allow actions to be undertaken in communities within the District.  The Leader agreed and advised that it was a way forward that had always been available previously, but with little take-up.  It was a good way of levelling up funding across the District.   

The following points were raised:

·       The covering report referred to emerging revenue pressures – what were these?

·       With regard to the pay awards, an estimate of 5% had been made – what was the mean figure?

·       Within Appendix A, Section 2.1 (Key Financial Issues) stated that homelessness remained consistently above projected levels for the quarter – with this in mind, should the projected levels be reviewed or increased, and what was being done to address the issue?

·       Within Appendix A, Section 2.2 (Revenue Budget), Table 1 stated that there had been a £98,000 underspend due to warranty cover and postponed upgrades – what would be the knock-on effect of this, when would the upgrades be undertaken and what would the cost implication be?

·       Could an update on the current status of the depot at Wardentree Lane be provided?

DECISIONS:

1)    That Cabinet notes the forecast revenue position of a £340,000 overspend for 2023/24 as detailed in Table 1;

2)    That Cabinet notes the forecast revenue position of the HRA for 2023/24 (surplus of £1.598m) as detailed in Table 3a;

3)      That Cabinet approve an addition to the Capital Programme of £100,000 to support Parish Loan applications to be funded through internal borrowing.

RECOMMENDATIONS TO COUNCIL

4)      That Cabinet recommends to Full Council to amend the Capital Programme at Appendix A – Table 4 to take into account the changes set out in this report.

(Other options considered:

·       To not approve the reserve movements outlined.

Reasons for decision:

·       To ensure the Council’s forecast financial position for 2023/24 is considered and related decisions approved. It is important that the Cabinet are aware of the financial position of the General Fund to ensure that they can make informed decisions that are affordable and financially sustainable for the Council).