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 2020-21 approved budget and the resultant effect on the Council’s balances and reserves for the General Fund and Special Expenses as set out below and in the attached Appendices for both revenue and capital;

2)    APPROVED £162k budget surplus for general expenses be carried forward into 2021-22 and added to the Covid contingency budget.

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, with the 2019/20 accounts also still required to be finalised.  The report also provided information on the implications on the Council’s balances and reserves.

Mrs. Garton confirmed that the accounts for 2020/21 were being finalised and the Council was yet to receive an audit date.  Regulations required the accounts to be published by a later date this year (30 of September), due to difficulties in the audit market.  It was anticipated that External Audit would not meet this later date and the accounts may not be submitted to Audit and Standards Committee on the 28 September, as intended.

Mrs Garton advised that comparison of the provisional outturn to both the original budget setting in February 2020 and the updated budget for supplementary estimates and carry forwards showed a surplus on General Expenses of £162k.  It was recommended that this surplus be carried forward into 2021/22 and added to the Covid contingency budget.  This would enable there to be full flexibility to respond to areas of need.

Mrs Garton highlighted that the primary reason for a healthy year end position was due to the significant budget reductions (£467k) identified early in 2020, which had contributed to the underspend.  As the financial year progressed, additional Government funding was provided but uncertainty regarding financial support and the pressure on services had caused a backlog of work in some service areas, which where possible had been addressed through new burdens funding.  Budget performance (excluding internal recharges) and explanations for any variations plus or minus £10k was detailed within Appendix A of the report.

Mrs. Garton advised that there was a surplus of £19k on Special Expenses Melton Mowbray.  As a result of lower spend, there had been no need to draw on the Corporate Priorities Reserve to meet non-recurring expenditure, as originally intended, resulting in a healthier position than anticipated.  A Financial Sustainability Plan was being developed and would be presented to Members later this year and there was also a large amount of spend approved by the Portfolio Holder, under delegation to be carried forward into the current financial year.

Councillor Ronnie de Burle, Portfolio Holder for Corporate Governance, Finance and Resources highlighted the work undertaken by budget holders to identify £450k savings.  Despite great financial uncertainty, as a result of the pandemic, the Council’s financial position was healthier than at budget setting.  However, the Council’s financial resilience had been tested to its limit and this showed the low level of the Council's reserves and how quickly these could be exhausted in a crisis. 

Councillor de Burle advised that the Council’s main revenue streams remained uncertain and the outcome of the Government's review into the financing of local councils was unknown.  The Council needed to continue to exercise patience and restraint, with regard to its finances, until it was more certain of its financial future.  Financial sustainability planning would need to include consideration of savings, income generated to replace that lost or to fund new priorities if necessary which services were lower priority and could be reduced or ended.

Cabinet:

1)    NOTED the provisional year end position, variations to the 2020-21 approved budget and the resultant effect on the Council’s balances and reserves for the General Fund and Special Expenses as set out below and in the attached Appendices for both revenue and capital;

2)    APPROVED £162k budget surplus for general expenses be carried forward into 2021-22 and added to the Covid contingency budget.

Reason for the decision

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