Agenda item

Cabinet Member: Cabinet Member Resources & Financial Governance, Councillor Callton Young OBE

Officer: Interim Corporate Director Resources, Richard Ennis

Key decision: No

The Leader of the Council delegated authority to the Cabinet to make the following decisions:

RESOLVED: To

1.         Note the General Fund is projecting a net favourable movement of £0.565m from Month 8. Service directorates are indicating a net £1.236m overspend (Month 8 £2.203m) but this is projected to be netted off against £3.050m underspend within the corporate budget. 

2.         Note that a further number of risks and compensating opportunities may materialise which would see the forecast year-end variance change and these are reported within Section 3 of this report.

3.         Note the Housing Revenue Account (HRA) is projecting a £1.725m (Month 8 £1.634m) overspend for 2021/22. If no further mitigations are found to reduce this overspend the HRA will need to drawdown reserves from HRA balances. There are sufficient balances to cover this expenditure.

4.         Note the capital spend to date for the General Fund of £51.394m (against a budget of £190.581m) and for the HRA of £10.147m (against a budget of £183.209m), with a projected forecast variance of £60.101m on the General Fund against budget and £113.039m forecast variance against budget for the Housing Revenue Account;

5.         Note, the above figures are predicated on forecasts from Month 9 to the year end and therefore could be subject to change as forecasts are refined and new and updated information is provided on a monthly basis. Forecasts are made based on the best available information at this time.

6.         Note that whilst the Section 114 notice has formally been lifted, the internal controls established as part of the S114, such as the Spend Control Panel and Social Care Placement Panels remain.  Restrictions have been lifted for ring-fenced accounts such as the Pension Fund, Housing Revenue Account and Coroner’s Expenditure as these are directly outside of the General Fund’s control. The Spending Control Panel which was set up at the beginning of November 2020 continues to meet on a twice daily basis.

7.         Note that, Croydon Borough has taken on c1000 asylum seekers who have been placed in eight hotels by the Home Office without consultation with the Council. The hotel costs are funded by the Home Office, however the Council is be responsible for further ancillary services particularly around safeguarding, public health, children & youth provision and broader community support. These additional costs, which are currently being calculated have been flagged within the unquantified risks section of this report, and could clearly result in further financial pressures for the Council

The Chair invited Richard Ellis, interim Director of Corporate Resources to introduce the report.

Mr Ellis outlined the current key financial position which shows:

•         Forecast of an underspend of £1.814million - moving favourably from last month.

•         Overspend by the HRA of £1.725million.

•         Calculable expenditure to date against the general fund budget of £191million is £51million.

•         HRA forecast is an underspend of £113million.

•         Delivery of the outturn of the budget for 2022/23 is expected.

Mr Ellis referred to impending confirmation from the Minister on the capitalisation direction and stated that there is nothing to suggest this will not happen. Members noted movement in some of the numbers seen – largely to repair costs - that need tighter control.

Cllr King reminded colleagues of the budget previously set and reports regularly submitted to compare progress. The final quarter indicates that the council is moving favourably with an underspend of nearly £2million.  He outlined details of other departmental spending and acknowledged the work of the council in endeavouring to fix its spending whilst providing essential services to its residents.

Members noted challenges around making decisions on how money is spent, with the priority being to drive costs down whilst providing a more efficient, improved service. This was in contrast to how management of the council’s budget had been dealt with previously.

Concerns were raised however, around staff vacancies and intended savings in procurement costs. It was important to not lose sight of possible risks and to ensure that the organisation is adequately equipped with the staffing resources it needs to provide frontline services.

In the following discussion, several comments were made, including:

•         More robust action and work has come around because of the due diligence of this administration, and residents recognise that improvement is happening.

•         Officers are working through repairs and a favourable change around the HRA overspend is expected in the next period.

•         The collective endeavour between Cabinet members and officers to work together to improve the budget performance was acknowledged.

•         Members welcomed the improved position - however it is worth remembering that the budget is supported by additional funding.

•         There were concerns around section 5.3 and the impact on the HRA budget and members asked for clarification on what is expected.

- Officers said that further work is ongoing to look at the actual level of claims and members noted that the level of disrepair is a universal issue which demonstrates the lack of social housing investment from the government.

Cllr King responded to comments raised and asked colleagues to note difficulties in making judgements upon spending forecasts until this time.

Members were concerned about additional costs referred to on page 55 of the agenda - Capital Programme Month 9, appendix 2 - regarding brick-by-brick Fairfield and a fixtures and fittings at Fairfield Halls at a cost of £4.5million in total. Greater clarification of what is entailed within these costs was provided by officers.

Additional comments were made around the new parking model indicated within Section 3.6 and members were assured that work around this would lead to a more robust model to enable greater mitigation of risks.

Members agreed the recommendations.

The Leader of the Council delegated authority to the Cabinet to make the following decisions:

RESOLVED: To

1.       Note the General Fund is projecting a net favorable movement of £0.565m from Month 8. Service directorates are indicating a net £1.236m overspend (Month 8 £2.203m) but this is projected to be netted off against £3.050m underspend within the corporate budget. 

2.       Note that a further number of risks and compensating opportunities may materialise which would see the forecast year-end variance change and these are reported within Section 3 of this report.

3.       Note the Housing Revenue Account (HRA) is projecting a £1.725m (Month 8 £1.634m) overspend for 2021/22. If no further mitigations are found to reduce this overspend the HRA will need to drawdown reserves from HRA balances. There are sufficient balances to cover this expenditure.

4.       Note the capital spend to date for the General Fund of £51.394m (against a budget of £190.581m) and for the HRA of £10.147m (against a budget of £183.209m), with a projected forecast variance of £60.101m on the General Fund against budget and £113.039m forecast variance against budget for the Housing Revenue Account.

5.       Note, the above figures are predicated on forecasts from Month 9 to the year end and therefore could be subject to change as forecasts are refined and new and updated information is provided on a monthly basis. Forecasts are made based on the best available information at this time.

6.       Note that whilst the Section 114 notice has formally been lifted, the internal controls established as part of the S114, such as the Spend Control Panel and Social Care Placement Panels remain.  Restrictions have been lifted for ring-fenced accounts such as the Pension Fund, Housing Revenue Account and Coroner’s Expenditure as these are directly outside of the General Fund’s control. The Spending Control Panel which was set up at the beginning of November 2020 continues to meet on a twice daily basis.

7.       Note that, Croydon Borough has taken on c1000 asylum seekers who have been placed in eight hotels by the Home Office without consultation with the Council. The hotel costs are funded by the Home Office, however the Council is be responsible for further ancillary services particularly around safeguarding, public health, children & youth provision and broader community support. These additional costs, which are currently being calculated have been flagged within the unquantified risks section of this report and could clearly result in further financial pressures for the Council.