Agenda item

Cabinet is invited to consider the attached report, which provides the Council’s annual forecast as at Month 5 (August 2022) for the Council’s General Fund (GF), Housing Revenue Account (HRA) and the Capital Programme (CP).

The report forms part of the Council’s financial management process for publicly reporting financial performance against its budgets on a monthly basis.

RESOLVED: To

1.1  Note the General Fund is projecting a net overspend of £10.547m as at Month 5, or £3.6m assuming the budgeted contribution to reserves is moved from opportunities into the projected outturn. Service directorates are indicating a £25.316m overspend with a £14.769m underspend corporately.

1.2  Note that a further number of risks and compensating opportunities may materialise which would see the forecast year-end variance change. These indicate a net opportunity of £1.838m (risks £10.769m and opportunities of £12.607m) and are reported within Section 3 of this report. Should all these risks materialise, and none of the mitigations be effective, the Council is forecast to overspend by £21.316m. However, if none of the risks materialise and all the opportunities are delivered, the Council will underspend by £2.060m.

1.3  Note the further actions being taken, through development of the Deficit Recovery plan, to mitigate the projected overspend with a view to eliminating it by the end of the financial year. Further details are in paragraph 2.15.

1.4  To approve the non-delivery of the MTFS savings as indicated within Table 2b.

1.5  Note the Housing Revenue Account (HRA) is projecting an end of year position of a £3.210m overspend, mainly due to inflation in energy costs.

1.6  Note the Capital Programme spend to date for the General Fund of £7.644m (against a budget of £112.069m) with a projected forecast underspend of £7.715m for the end of the year.

1.7  Note the Housing Revenue Account Capital Programme spend to date of £4.978m (against a budget of £22.083m), with a projected forecast underspend of £3.050m for the end of the year.

1.8  Note, the above figures are predicated on forecasts from Month 5 to the year end and therefore could be subject to change as forecasts are made based on the best available information at this time.

1.9  Note, the Council continues to operate a Spend Control Panel to ensure that tight financial control and assurance oversight are maintained A new financial management culture is being implemented across the organisation through increased scrutiny, such as the Assurance meetings, improved communication and budget manager training from CIPFA.

Cabinet considered a report, whichprovided the Council’s annual forecast as at Month 5 (August 2022) for the Council’s General Fund (GF), Housing Revenue Account (HRA) and the Capital Programme (CP).

The report formed part of the Council’s financial management process for publicly reporting financial performance against its budgets monthly.

In introducing the report, the Executive Mayor said that the Council faced massive in year problems, such as the Borough’s parking revenue shortfall of c.£10m and that the Council was ill-prepared to handle these financial problems.

The Cabinet Member for Finance, Councillor Cummings, said that the Council was now forecasting a £10.4m overspend at financial year-end but there were opportunities identified also.

He said that whilst the Children and Young People and Assistant Chief Executive’s Directorates had reported improvements, there had been negative movement in Housing.

Councillor Cummings said that there was a £9.2m resources overspend and that the previous Administration had known about this for 18 months.  He added that the Capital Programme continued to forecast an underspend position.

In response to questions put by Councillor Callton Young (Shadow Cabinet Member for Finance) in respect of variances and the provision of £700k additional money, the Executive Mayor said that the Council’s finances had clearly gotten out of control under the previous administration and that he did not yet know what the risks would be. 

Councillor Cummings said that there were figures that were wrong and unachievable and the pressures the Council faced this year were because the figures were simply unachievable and almost impossible to have gotten any worse. 

He said that there was an additional £700k provided for inflation, which the Council had to allow for.

Having listened to the contributions and considered the detail in the report, the Executive Mayor, in Cabinet, RESOLVED:

1.            To note that the General Fund was projecting a net overspend of £10.547m as at Month 5, or £3.6m assuming the budgeted contribution to reserves was moved from opportunities into the projected outturn. (Service directorates were indicating a £25.316m overspend with a £14.769m underspend corporately.)

2.            To note that a further number of risks and compensating opportunities may materialise, which would see the forecast year-end variance change. (These indicated a net opportunity of £1.838m (risks £10.769m and opportunities of £12.607m) and were reported within Section 3 of this report. Should all these risks materialise, and none of the mitigations be effective, the Council was forecast to overspend by £21.316m. However, if none of the risks materialised and all the opportunities were delivered, the Council would underspend by £2.060m.)

3.            To note the further actions being taken, through development of the Deficit Recovery Plan, to mitigate the projected overspend with a view to eliminating it by the end of the financial year. (Further details were in paragraph 2.15 to the report.)

4.            That the non-delivery of the MTFS savings, as indicated within Table 2b to the report, be approved.

5.            To note the Housing Revenue Account (HRA) was projecting an end of year position of a £3.210m overspend, mainly due to inflation in energy costs.

6.            To note the Capital Programme spend to date for the General Fund of £7.644m (against a budget of £112.069m) with a projected forecast underspend of £7.715m for the end of the year.

7.            To note the Housing Revenue Account Capital Programme spend to date of £4.978m (against a budget of £22.083m), with a projected forecast underspend of £3.050m for the end of the year.

8.            To note, the above figures were predicated on forecasts from Month 5 to the year end and therefore could be subject to change as forecasts were made based on the best available information at this time.

9.            To note, the Council continued to operate a Spend Control Panel to ensure that tight financial control and assurance oversight were maintained.  (A new financial management culture was being implemented across the organisation through increased scrutiny, such as the Assurance meetings, improved communication, and budget manager training from CIPFA.)