Decision Maker: Executive
Decision status: Recommendations Approved
Is Key decision?: Yes
Is subject to call in?: No
The report advises the Executive of the Council’s financial position as at Quarter Three 2023/24.
ORDERED
1.
In respect of the General Fund Revenue
Budget that Executive approve the proposed revenue budget virements over
£250,000 as detailed in Appendix 4. These were technical adjustments.
2.
In respect of the Capital Programme and
Treasury Management that Executive approve the inclusion of additions to the
Capital Programme for 2023/24 totalling £0.297m (summarised in Table 9) which
were externally funded or funded from within existing Council resources for the
2023/24 Capital Programme as approved by Council in February 2023. These had
increased the 2023/24 Capital Programme budget to £67.631m from the £67.334m
revised Capital Programme budget for 2023/24 approved at Quarter Two.
AGREED
In respect of the General Fund Revenue Budget that
Executive:
1.
Note the forecast 2023/24 net revenue budget
year-end outturn as at Quarter Three of £131.898m against an approved budget of
£126.354m, a forecast year-end overspend of £5.544m
(4.4%). This represented an improvement of £3.012m from that forecast at
Quarter Two.
2.
Note that the forecast year-end overspend
of £5.544m related primarily to a combination of forecast demand and
inflationary pressures as detailed in the table on page 39 of the agenda pack.
3.
Note and endorse the management actions taken in
consultation with Executive Members over the year to date to control expenditure
within the approved budget and to develop more financially sustainable
solutions for future years as set out in paragraphs 4.6 to 4.13 of the report.
4.
Note that work would continue to try to mitigate
further the forecast year-end overspend before the end of 2023/24 and the final
position would be reported as part of the final 2023/24 outturn report to
Executive in June 2024.
In respect of the Council’s Reserves and Provisions
Executive:
1. Note
that the s151 Officer had undertaken a review of the balance sheet which had
resulted in the release of £0.757m from the Revenue Grants Received Unapplied
account that has been transferred to the Change Fund and the balance had been
re-stated as at 31 March 2023 from £0.730m to £1.487m.
2. Note
that the s151 Officer had determined that the 2023/24 Change Fund Reserve of
£1.487m, should be available to fund expenditure on transformation and
efficiency as part of an agreed financial recovery plan.
3. Note
that, as a result of the balance sheet review, the
s151 officer was in discussion with the External Auditor in relation to the
audit of the Council’s methodology to calculate the Collection Fund Bad Debt
provision in 2021/22 financial statements. This was estimated to result in a
favourable adjustment of approximately £8.3m affecting the 2022/23 and 2023/24
accounts and impact upon 2024/25 budget setting – this would be used to
replenish the usable unrestricted revenue reserves and General Fund balance
that would be used to fund the final 2023/24 overspend. This sum was not available to balance the
2024/25 budget.
In relation to the Council’s financial recovery and resilience
Executive:
1. Note
the Quarter Three forecast of usable revenue reserves of £9.036m available at 1 April 2024 based on the Quarter Three forecast outturn
position of £5.544m, a reduction from the already critically low level of
£15.586m at 31 March 2023. These would
comprise of:
·
General Fund Reserve of £9.036m.
·
Council’s unrestricted usable earmarked
reserves of £NIL (with the exception of a £0.055m
Election Costs Reserve which whilst technically is unrestricted and usable had
planned committed spend against it on election costs in future years).
2. Note
that in order to set a legally balanced and robust
budget whilst maintaining adequate revenue reserves for 2024/25, Executive on
17 January 2024 approved an application for Exceptional Financial Support (EFS)
to the Department for Levelling Up Housing and Communities (DLUHC). The
s151Officer’s advice was that without securing External Financial Support via
DLUHC, it would not be possible for it to:
·
Balance the 2024/25 budget.
·
Secure financial recovery and sustainability
over the medium term.
3. Note
that the formal EFS application was made to DLUHC on 17 January 2024 and the
result of the application was expected in the period from 26 February to 1
March 2024. Further details would be provided as part of the 2024/25 budget and
Medium-Term Financial Plan (MTFP) report to Executive on 28 February 2024 and
Council on 8 March 2024.
4. Note
that depending on the decision taken by DLUHC in relation to the EFS
application, the risk of a s114 Notice under the provisions of the Local
Government Finance Act 1988 remained. Further details would be provided as part
of the 2024/25 budget and Medium-Term Financial Plan (MTFP) report to Executive
on 28 February 2024 and Council on 8 March 2024.
5. Note
that Statutory Officers remained in dialogue with DLUHC, the External Auditor
and the Middlesbrough Independent Improvement Advisory Board (MIIAB) in
relation to the development and delivery of the Council’s Financial Recovery
and Resilience plans.
In respect of the Capital Programme and Treasury Management Executive:
1. Note that a full
review of the Capital Programme had been undertaken since Quarter Two including
a review of profiling and alignment of funding sources to optimise the use of
grants and external funding and mitigate the revenue impact of debt financing upon
the revenue budget position as far as possible.
2. Note
the 2023/24 Capital Programme forecast outturn of £47.129m at Quarter Three,
which was a reduction of £20.502m (30%) from the revised £67.631m budget for
2023/24. The forecast outturn against the revised capital programme was a
favourable variance comprising:
·
An underspend of £1.611m.
·
Slippage of £18.891m into 2024/25.
3. Note
the Treasury Management forecast outturn position with respect to the Council’s
prudential indicators as set out in paragraphs 4.73 to 4.81 of the report.
In respect of the Dedicated Schools Grant (DSG)
Executive:
1. Note
the current forecast in-year deficit of £6.644m for 2023/24 relating to the
High Needs Block, which was an increase of £3.323m from the £3.321m reported at
Quarter Two. The increase was mainly due to higher demand for specialist
provision as inclusion of pupils within mainstream settings had remained a
challenge. A range of management actions were being taken to address the
increase in expenditure alongside the DBV (Delivering Best Value) programme
(paragraph 4.54)
2. Note
the forecast total cumulative deficit of £13.208m at
31 March 2024, including £13.665m relating to the High Needs Block, as set out
in Table 7 and paragraphs 4.52 to 4.53 of the report.
3. Note
that under existing government regulations this deficit cannot be funded from
the General Fund, and the Council is required to deliver a recovery plan to the
Department for Education (DfE). This position presents a long-term risk to the
Council’s financial position which is dependent upon how central government
ultimately resolve the spending pressures arising in High Needs, given the
nationwide financial pressures being experienced by local authorities in this
area.
4. Note that the Council was part of the DFE Delivering Better Value (DBV) scheme which aimed to support financial recovery of the DSG position.
Report author: Andrew Humble
Publication date: 24/12/2024
Date of decision: 14/02/2024
Decided at meeting: 14/02/2024 - Executive
Accompanying Documents: