Agenda item

The Portfolio Holder for Corporate Finance and Resources to submit a report providing Members with information on the provisional year end for the General Fund accounts, the final position for which is still subject to external audit approval for 2019-20 and providing information on the implications on the Council’s balances and reserves.

Cabinet

(1)  NOTED the provisional year end position, variations to the 2019-20 approved budget and the resultant effect on the Council’s balances and reserves for the General Fund;

(2)  RECOMMENDED to Council that £300k of the business rates equalisation reserve be allocated to support any unfunded Covid-19 expenditure.

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 the General Fund accounts, the final position for which was still subject to External Audit approval for 2019-20 and to provide information on the implications on the Council’s balances and reserves.

Mrs. Garton advised that the external audit would commence in August and results would likely be submitted to Audit and Standards Committee on 24 November 2020, rather than 29 September 2020, due to a delay in the audit of the pension fund accounts, which fed into the Council’s Statement of Accounts.

Mrs. Garton highlighted that performance of individual budgets, including budget holder comments on significant variations was detailed at Appendix A of the report.  The General Fund was underspent by £126k against the approved budget and Special Expenses was underspent by £81k.  Paragraph 4.6 of the report detailed the position on the reserves, excluding any impact as a result of COVID-19.

Mrs. Garton commented that the provisional year end position being close to the approved budget and the overall underspend of funds was positive.  However, the accuracy of in year forecasting needed to be improved, especially in light of the anticipated results of COVID-19 (the potential impact of which on the Council’s finances was detailed paragraphs 9.2, 9.3 and 9.5 of the report).  The report had been drafted without anticipated information from the Government on a third tranche of funding.  Should this funding not be sufficient, the Council would need to meet any residual shortfall from its own reserves.  The Council would be severely restricted in its ability to invest in future projects if its reserves were depleted as a result of COVID-19 and officers were aiming to mitigate this risk by identifying savings options.  The impact on finances was in constant review and officers would continue to lobby Government for sufficient resources to cover the additional expenses and loss of income.

Councillor Ronnie de Burle, Portfolio Holder for Corporate Finance and Resources thanked the Director for Corporate Services and her team for their work on closing the 2019/20 accounts, commenting that there had been conflicting demands on time over recent months and this was a tremendous achievement.

Councillor de Burle reiterated that the Council’s performance against the approved budget had been very good and he highlighted the importance of the Council improving its forecasting.  The impact of Covid-19 was a significant concern and support from Government was vital but may not be enough to mitigate the total loss in Council revenue.  There was massive uncertainty on the Council’s long-term financial position.  It was imperative that the Council exercised maximum diligence so that next year’s budget was minimised to ensure there was no unfunded financial demands on reserves and improve the Council’s financial sustainability.

During discussion, the following points were noted:

·         COVID-19 had a massive financial impact on the Council.  Two tranches of funding had been received from the Government, with a third anticipated and a ‘mopping up’ tranche expected in late autumn.

·         Thanks to Alicia Kearns MP for her work in lobbying the Secretary of State for Housing, Communities and Local Government on behalf of the Council.

·         It was noted that the impact of COVID-19 on Council services could last for a number of years and concerns were raised over the possible increased demand and the financial impact this would have (homeless, Universal Credit etc).  Projections had been made in relation to all services up to March 2021s and these projections had been included in the report.

·         Projections on homelessness related primarily to bed and breakfast accommodation (£250k).  There would potentially be lobbying of Government for direct financial support and to highlight the long-term impact on communities.  The Council had a focus on this issue.  It was working with Chief Housing Officers across Leicestershire and it also formed part of the Council’s Corporate Strategy.

·         Highlighted that council tax alone did not raise enough revenue to fund all Council services.  There was a shortfall and Council’s struggled to raise their own finances.

·         With reference to the significant reduction in Planning income, due to uncertainty over the UK’s departure from the EU, as detailed at paragraph 4.6.2 of the report, the vital importance of accurate budget forecasting was highlighted and reiterated.

·         Members thanked the Portfolio Holder for Corporate Finance and Resources, the Director for Corporate Services and her team for their work, noting that the Council would continue to work cohesively for the benefit of the community.

·          

Cabinet

(1)  NOTED the provisional year end position, variations to the 2019-20 approved budget and the resultant effect on the Council’s balances and reserves for the General Fund;

(2)  RECOMMENDED to Council that £300k of the business rates equalisation reserve be allocated to support any unfunded Covid-19 expenditure.

Reason for the decision

It is important that Cabinet are aware of the financial position of the General Fund, in order to ensure they can make informed decisions that are affordable and financially sustainable for the Council.