Agenda item

The Portfolio Holder for Corporate Finance and Resources to submit a report providing financial progress information on the General Fund and Special Expenses for period 1 April 2019 to 30 September 2020.

Cabinet NOTED the year end forecast and financial position for the General Fund and Special Expenses at 30th September 2020

Dawn Garton, Director for Corporate Services introduced the report, the purpose of which was to provide financial progress information on the General Fund and Special Expenses for period 1 April 2019 to 30 September 2020.

Mrs. Garton highlighted the forecasted underspends of approximately £100k on the General Fund and £4k on Special Expenses.  A portion of Covid-19 costs to be charged to Special Expenses was being considered and would change the current position slightly.  The forecasts included the estimated impact of Covid-19 (additional expenditure, estimated lost income, reduced by government grants including the income support scheme).  The Council was awaiting information on the Leisure Grant Scheme and some outstanding new burdens funding but there may also be further costs arising from any local lockdowns and in response to the current national lockdown.  The forecasts did not take into account any bad debts, which may arise and need to be written off from council tax, business rates and other income streams (e.g. property rentals). 

Mrs. Garton advised that the more positive position (than previously forecasted) had been achieved as a result of over £400k of savings from delayed or halted work, alongside vacancy savings from held posts, which would impact some areas in work programmes and capacity.  If this had not been achieved, the shortfall would need to be met from limited revenue reserves, which would impact on the Council’s future financial sustainability.

Mrs. Garton drew Members attention to the risk section within the report and the overall strategic risk relating to the Council’s finances, which reflected the pressure of future financial sustainability, as a result of a number of years of funding reductions, the current uncertainty of future local government funding and the added pressure caused by Covid-19 both currently and in the future.  The budget setting process for 2021/22 had started and there were many unknown factors (the level of Government grant for Covid-19 and business as usual activities for later years, the impact on business rates and council tax collection and growth, when income levels will return to pre Covid-19 levels).  Setting a balanced budget for 2021/22, without significant additional Government support would be challenging and there was a high risk of savings having to be made to meet this challenge.  Against this background any surplus from this year would be essential to mitigate financial challenges in future years.

Councillor Ronnie de Burle, Portfolio Holder for Corporate Finance and Resources commented that the Council had responded well to challenges within this financial year.  He advised that although an estimated underspend on the General Fund was very positive, it must be noted that this had only been achieved due to the significant savings identified in year.  There remained much uncertainty on the level to which those finances would be challenged further by bad debts, the ongoing support to businesses and the community, as well as any impact of further national and local lockdowns.

Councillor de Burle reiterated that the Council would face significant financial challenges in budgeting for the next financial year.  There were numerous financial risks, which the Council would need to manage and a realistic budget would need to be set, with regard to affordability and difficult decision making to remain financially sustainable and deliver against priorities within the funding available.

During discussion, the following points were noted:

• Members thanked Councillor de Burle, the Finance team and other teams within the Council, which had fed into this work.
• Members noted that the Council would receive compensation from the Government for some of the shortfall in income, detailed at paragraph 4.4 of the report.
• The Council had given much consideration to the support it provided to the community and ending car parking charges had been suggested.  However, car parking income represented the greatest forecasted income shortfall (£457k), with £314k anticipated to be recovered through the Income Compensation Scheme.  This funding would not be available to the Council if it ended parking charges and without this income and the Council’s current financial position and future budget setting would be impacted greatly, resulting in an overspend rather than an underspend, which would need to be met through reserves.
• Members highlighted that with fewer people using Council owned car parks, the Council needed to consider alternative ways to raise income.

Cabinet NOTED the year end forecast and financial position for the General Fund and Special Expenses at 30th September 2020.

Reason for the decision

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.