Agenda item

Report from the Strategic Director of Finance and Customer Services.

Recommendations:

That Cabinet:

1.    Note the revenue outturn position. 

2.    Note the budgeted transfer from HRA reserves was reduced by £2.1m following the revenue and capital outturn positions.

3.    Note the carry forward of the combined schools balance of £3.794m in accordance with the Department for Education regulations.

4.    Note the reduced DSG deficit following receipt of Safety Valve funding, as set out in paragraph 2.13.

5.    Note the reserves position set out in paragraphs 2.50 to 2.59.

6.    Note the capital outturn and funding position as set out in paragraphs 2.60 to 2.82.

7.    Refer the report to Council for information and recommend to Council approval of the updated Capital Programme as set out in paragraphs 2.83 to 2.86 and Appendices 1 to 4 of this report.

Consideration was given to a report which outlined the final revenue and capital outturn position for 2021/22. It was reported that the Revenue Budget 2021/22 was approved by Council on 3rd March, 2021.  A budget of £235.7m was set for General Fund services, which excluded schools’ budgets and Housing Revenue Account (HRA).

The 2021/22 Budget was supported by the use of £7.5m from the Budget and Financial Strategy Reserve. However, given the availability of the £14m of Covid Funding covering the majority of the Council’s Covid related costs, the use of this reserve had not been required. The Council had also been able to deliver a final outturn position of a £2.4m underspend, not through delivering fewer services but by being able to apply more Government funding to the outturn position than had originally been planned.

This was a helpful outturn position that included a positive trend of necessary cost reduction within some of the Council’s key services, including an increase of £2.4m into the Budget and Financial Strategy Reserve along with some planned savings for 2022/23 already being achieved. It placed the Council in a more robust position heading into the financial year 2022/23, more able to mitigate against cost pressures and the financial challenges that were not evident at the time of setting the 2022/23 Budget such as the war in Ukraine, the significant rise in energy prices and inflation and to be more able to manage the impact rather than needing to consider making cuts in services.

The financial challenges were being considered as part of the Council’s ongoing Medium Term Financial Planning. The energy price rises and inflation would impact the Council’s costs in the provision of services. However, some of the cost impact would be mitigated in future years by increased core funding as business rates income was indexed to the rate of inflation. It was currently expected that the period of high inflation would last for around 2 years before returning to a more normal level. As such, the Council would face short term financial pressures that would need to be managed and mitigated through the Medium Term Financial Strategy and the Council’s reserves.

The Council’s General Fund minimum balance had remained at £25m as planned and set out within the Council’s Reserves Strategy reported in the Budget and Council Tax Report 2022/23. The reserve was held to protect the Council against unforeseen events and realisation of contingent liabilities.

The Housing Revenue Account had an underspend of £2.1m, along with the revenue contribution to capital outlay remaining at the budgeted level of £6.5m. As a result of this the HRA was able to reduce the budgeted transfer from reserves by £2.1m. This reduction in planned use of reserves would help the HRA to mitigate the financial challenges presented by rising inflation and energy costs over the medium term.

The capital outturn shows slippage and underspend of £39.4m against the estimated spend for 2021/22 included within the Capital Programme. The Pandemic had significantly impacted the delivery of a number of schemes, in the main due to Covid restrictions impacting how works were undertaken as well as a knock on effect on the cost of materials and supply and demand in the market. However, capital expenditure (programme delivery) in the year had achieved a higher level than in previous years.

Resolved:-

That Cabinet:

1.    Note the revenue outturn position.

2.    Note the budgeted transfer from HRA reserves was reduced by £2.1m following the revenue and capital outturn positions.

3.    Note the carry forward of the combined schools balance of £3.794m in accordance with the Department for Education regulations.

4.    Note the reduced DSG deficit following receipt of Safety Valve funding, as set out in paragraph 2.13.

5.    Note the reserves position set out in paragraphs 2.50 to 2.59.

6.    Note the capital outturn and funding position as set out in paragraphs 2.60 to 2.82.

7.    Refer the report to Council for information and recommend to Council approval of the updated Capital Programme as set out in paragraphs 2.83 to 2.86 and Appendices 1 to 4 of this report.