Agenda item

Revenue and Capital Budget - Forecast Outturn position at Quarter Two 2023/24


The Executive Member for Finance and Governance submitted a report for Executive’s consideration.


The report set out the Council’s forecast 2023/24 financial position at Quarter Two and highlighted the areas of particular financial challenge. The report also set out the management actions taken to control expenditure within the General Fund budget approved by Council in February 2023.


The report also sought Executive endorsement of the management actions that were planned in the form of Financial Recovery Plans in order to control expenditure within the approved budget and to develop more financially sustainable solutions for future years. Finally, the report sought approval of the Executive in relation to revenue budget virements and revisions to the Capital programme.


The Council’s Scheme of Delegation gave the Executive collective responsibility for corporate strategic performance and financial management / monitoring, together with associated actions. Standing Orders and Financial Procedures required Executive’s approval for major virements between revenue budgets, and in-year changes to the Council’s Capital Programme within approved Council resources.


The report would enable the Executive to discharge its financial management responsibilities which included setting out the General Fund Revenue Budget forecast outturn at Quarter Two as well as the statement of the Council’s projected reserves and provisions at Quarter Two.


ORDERED that Executive:


In respect of the General Fund Revenue Budget:


1.    Note the forecast 2023/24 net revenue budget outturn as at Quarter Two of £134.910m against an approved budget of £126.354m, a forecast overspend of £8.556m (6.8%). This represented an improvement of £3.007m from that forecast at Quarter One.

2.    Note that the forecast overspend of £8.556m related primarily to a combination of forecast demand and inflationary pressures as outlined in the table at paragraph 79 of the report.

3.    Note and endorse the management actions taken in consultation with Executive Portfolio Holders over the year to date to control expenditure within the approved budget and to develop more financially sustainable solutions for future years as was set out in paragraphs 7 to 14 of the report.

4.    Note that further work was continuing with a view to fully mitigate the forecast overspend and that further reports would be submitted to Executive for noting and approval of management actions when appropriate.

5.    Approve the proposed revenue budget virements over £250,000 as detailed in Appendix 4 of the report.


In respect of the Council’s Reserves and Provisions:


1.    Note that the interim s151 Officer had undertaken a review of the balance sheet which had resulted in the release of £0.758m from the Revenue Grants Received Unapplied account that would be transferred to the Change Fund for which the balance would be re-stated as at 31 March 2023.

2.    Note the interim s151 Officer had determined that the uncommitted 2023/24 Change Fund Reserve of £1.488m would 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 interim s151 Officer was in discussion with the External Auditor in relation to the audit review of the Council’s methodology to calculate the Collection Fund Bad Debt provision in the 2021/22 financial statements. This may result in favourable adjustments affecting the 2022/23 and 2023/24 accounts and impact upon 2024/25 budget setting. This would be reported upon conclusion of that work.


In relation to the Council’s financial recovery and resilience:


1.    Note the Quarter Two forecast of usable revenue reserves of £6.273m available at 1 April 2024 based on the Quarter Two forecast outturn position of £8.556m, a reduction from the already critically low level of £14.829m at 31 March 2023 reported in the Quarter One report. Those would comprise of the General Fund Reserve of £6.273m and the Council’s unrestricted usable earmarked reserves of £NIL.

2.    Note that the risk of a s114 Notice under the provisions of the Local Government Finance Act 1988 in relation to setting a legally balanced budget for 2024/25 remained. A further report setting out the proposed 2024/25 draft budget and MTFP for the period 2024/25 to 2026/27 for consultation would be presented for consideration at Executive’s meeting of 20 December 2023.

3.    Note that Statutory Officers remained in dialogue which the Department for Levelling Up Housing and Communities (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:


1.    Note that a full review of the Capital Programme had been undertaken since Quarter One including a review of profiling and alignment of funding sources in order to optimise the use of grants and external funding and mitigate the revenue impact of debt financing as far as possible.

2.    Approve the inclusion of additions to the Capital Programme for 2023/24 totalling £4.330m, as detailed in paragraph 60 of the report, 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 have increased the 2023/24 Capital Programme budget to £67.334m from the £63.004m revised Capital Programme budget for 2023/24 approved at Quarter One.

3.    Note the 2023/24 Capital Programme forecast outturn of £54.595m at Quarter Two, which was a reduction of £12.739m (19%) from the revised £67.334m budget for 2023/24. The forecast outturn against the revised capital programme was a favourable variance comprising, an underspend of £0.076m and slippage of £12.663m into 2024/2.

4.    Note the Treasury Management forecast outturn position with respect to the Council’s prudential indicators as set out in paragraphs 69 to 79 of the report.


In respect of the Dedicated Schools Grant (DSG), the Executive is requested to:


1.    Note the current forecast in-year deficit of £3.231m for 2023/24 relating to the High Needs Block, which was an increase of £1.451m from the £1.780m reported at Quarter One.

2.    Note the forecast total cumulative deficit of £9.795m at 31 March 2024, including £10.252m relating to the High Needs Block, as was set out in Table 7 and paragraphs 51 to 57 of the report.

3.    Note that under existing government regulations this deficit could not be funded from the General Fund, and the Council was required to deliver a recovery plan to the Department for Education (DfE).

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.




No other options were put forward as part of the report.




To enable the effective management of finances, in line with the Council’s Local Code of Corporate Governance, the Scheme of Delegation and agreed corporate financial regulations.

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