Issue - meetings

Report by Portfolio Holder for Corporate Finance and Resources to give an indication of the challenge created by current and anticipated inflationary pressures.

Cabinet NOTED the year end forecast and financial position for the General Fund and Special Expenses at 30 September 2022 for both revenue and capital.

The Director for Corporate Services, Mrs Dawn Garton, provided details of the quarterly service and financial performance. It was noted that this is a requirement of the budget monitoring procedure.

The Director highlighted the forecast overspend and the reasons for this. She said that officers are looking for options for savings to reduce this forecast overspend, however the situation is extremely challenging. In addition, attention was drawn to the risk section in the report and that it is at the highest risk on the council risk register due to existing financial pressures as a result of several years of cuts in funding, the uncertainty regarding the future funding of local government and the added pressure caused by inflation.

In moving the recommendations, the Portfolio Holder for Corporate Governance, Finance and Resources, Councillor Ronnie de Burle, said the report sets out the challenges that have been made worse by inflation, and added that it is expected that these will run into next year. He added that the budgets for the next financial year are currently being worked out however as the budget holders have already reduced their budgets as much as possible all areas will be looked at to reduce spending.  Councillor de Burle said that we have always been proud of our ability to manage our finances previously, but the situation is extremely precarious as we will have to use our reserves to meet costs.

The Leader commented that the Council needs to have an agreed budget and ensure that it is delivered. He also thanked Councillor de Burle for his work in this area.

Cabinet:

NOTED the year end forecast and financial position for the General Fund and Special Expenses at 30 September 2022 for both revenue and capital.

Reason for Recommendations

The Council, having set an agreed budget at the start of the financial year, needs to ensure that the delivery of this budget is achieved. Consequently, there is a requirement to regularly monitor progress so that corrective action can be taken when required, which is enhanced with the regular reporting of the financial position.

The Portfolio Holder for Corporate Governance, Finance and Resources to submit a report providing Members with information on the provisional year end for General Fund services and the subsequent implications on the Council’s balances and reserves.

Cabinet

(1)  NOTED the provisional year end position variations to the 2021-22 approved budget and the resultant effect on the Council’s balances and reserves for the General Fund and Special Expenses for both revenue and capital;

(2)  APPROVED the transfer of £116k in 2022-23 from the Corporate Priorities Reserve to the General Fund Working Balance to bring the level to £850k.

Dawn Garton, Director for Corporate Services introduced the report, the purpose of which was to provide Members with information on the provisional year end for General Fund services and the subsequent implications on the Council’s balances and reserves.

Mrs Garton advised that the report showed a comparison of the provisional outturn to the latest approved budget, originally set in February 2021.  There was a £94k underspend on General Expenses, due to the prudent decision to carry forward a Covid contingency of £162k from underspends in 2020-21.  A new £1m target for the working balance was agreed and Council approved that any underspend for 2021/22 be added to the working balance to achieve the new approved level.  It was recommended that during 2022/23 a further amount of £116k be moved from Corporate Priorities to the working balance, to result in a new balance of £850k, with consideration to the remaining amount required to reach the new target to be considered at budget setting for 2023-24.

Mrs Garton confirmed that the report showed the impact in the last financial year of the pandemic.  This resulted in a surplus of £50k, which contributed to the overall underspend of £94k.  This was the last specific Covid financial impact reporting, as this was now mainstreamed as part of the main budgets, which would be reflected in service costs etc.

Mrs Garton confirmed that Special Expenses Melton Mowbray had an overspend of £11k, which increased to £28k with approved carry forwards.  The impact of the provisional outturn on key reserves showed that the corporate priorities reserve had remained relatively stable.  The business rates equalisation reserve was at a healthy level and there could be scope to release some of the funds elsewhere from other areas of business.  However, business rates remained a difficult area to predict.  The collection fund had ended the year in a deficit position which would need to be addressed using the reserve.  The level on the reserve would be considered further at budget setting 2023-24. the council's own resources will be added back to the reserves appropriate.

The Portfolio Holder for Corporate Governance, Finance and Resources, Councillor Ronnie de Burle commented that the report provided a comprehensive overview of the Council’s year end position.  The year had ended with a small underspend and this was always welcome.  It must be noted that this was only possible because of the prudent decision taken this time last year with a general carry forward of £162k from the previous financial year’s Covid Contingency Reserve.  The Council’s position remained precarious and such prudent decisions were needed until the Council's finances were certain.  A boost to reserves by increasing the working balance would greatly assist in meeting unexpected challenges.  Certainty was needed to invest confidently in ongoing projects and activities.  An assessment of the inflationary pressures on the Council's finances was underway and this would feed into a high-level review of the Medium Term Financial Strategy.  However, restraint was needed until the outcome of the 2 year  ...  view the full minutes text for item 21