Agenda item

The Executive Member for Finance and Governance submitted a report for Executive’s consideration. This purpose of the report was to discharge the responsibilities of the Executive to manage and control of the revenue budget, capital programme and overall reserves position of the Council.

 

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 the

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 enabled the Executive to discharge its financial management

responsibilities by setting out the:

 

·         General Fund Revenue Budget forecast outturn at Quarter One;

·         Statement of the Council’s projected reserves and provisions at Quarter One

·         Capital Programme forecast outturn at Quarter One;

·         Statement of the Council’s borrowing and prudential indicators;

·         Statement to monitor the level of debt owed to and to be recovered by the

·         Council;

·         Actions that the Council has taken and plans to take in order address the issues

·         Identified.

 

Financial Procedure Rule 1.37 required Executive’s approval of the proposed revenue budget virements as set out in Appendix 3 of the report.

 

Section 25 of the Local Government Act 2003 required the Chief Finance officer to report on the robustness of the budget estimates and the adequacy of the financial reserves to Council in agreeing its annual budget and precept for the forthcoming financial year. The Chief Finance Officer was as defined in S151 of the Local Government Act 1972 and was fulfilled by the Director of Finance.

 

The Director of Finance (S151 Officer) presented her Section 25 Report to the Executive as part of the 2024/25 Revenue Budget, Medium Term Financial Plan, and Council Tax setting report to Executive on 28 February 2024 which was then approved by Council on 8 March 2024. The report set out the basis upon which the revenue budget was considered to be robust and the basis upon which reserves were considered adequate, being dependent upon the approval of Exceptional Financial Support (EFS) by the Ministry of Housing, Communities and Local Government (MHCLG) (formerly DLUHC) as summarised in the report:

 

The Council’s financial position remained critical and its ability to control expenditure within the approved 2024/25 budget, whilst developing further savings and income generating opportunities through the Recover, Reset, Deliver Transformation Portfolio in order to balance the MTFP, would be crucial to stabilising the Council’s financial position and rebuilding its financial resilience. This required the delivery of all approved £13.9m of 2024/25 savings plans in full.

 

The Council had achieved significant improvement in its financial position from that which existed at the start of the 2023/24 financial year. However, it continued to spend above its available income sources as reflected by the forecast year end overspend of £3.742m for 2024/25, after using £4.7m of EFS to balance the budget. The further challenges of delivering a balanced budget in 2025/26 to 2028/29 were set out in the Medium-Term Financial Plan (MTFP) report, with a projected budget gap currently of £7.864m in 2025/26 rising to £8.749m in 2028/29. It was advised both the MTFP report, and this report, should be read together to fully understand the context within which the Council is operating and the challenges it faces.

 

The Executive Member for Finance and Governance advised Executive that a slight amendment to Appendix 3 had been made concerning proposed Revenue Virements over £250,000. The virement of £0.732m for the Integrated Transport Unit should read from Education and Partnerships to Central Budgets rather than Environment & Community Services to Central Budgets

 

ORDERED That Executive:

 

1.    Approve the amendment to Appendix 3 of the report.

2.    Approve the proposed revenue budget virements over £250,000 as detailed in paragraph 4.13 and Appendix 3 of the report.

3.    Approve the inclusion of additional expenditure budgets to the Capital Programme totalling £8.973m for 2024/25 which were externally funded (detailed in Appendix 9). Subject to approval this would increase the approved 2024/25 Capital Programme budget to £106.188m.

4.    Approve proposed virements over £250,000 between schemes in the 2024/25 Capital Programme approved by Council in March 2024 which were funded from within existing Council resources (detailed in Appendix 9 and paragraph 4.37).

 

AGREED That Executive:

 

1.    Note the forecast 2024/25 revenue outturn as at Quarter One of £146.932m against an approved budget of £143.190m, a forecast year-end overspend of £3.742m (2.6%) summarised below and detailed in Table 1 of the report,

2.    Note the progress on savings delivery set out in Tables 2 and 3 and Appendix 4 of the report.

3.    Note that the Council was dependent upon Exceptional Financial Support (EFS) in 2024/25, approved in principle by the Ministry of Housing, Communities & Local Government (MHCLG) of up to £13.4m of one-off borrowing, the costs which were factored into the MTFP. Of this sum £4.7m had been utilised to achieve a balanced budget in 2024/25 (paragraph 4.5) of the report.

4.    Note that it was essential that all available measures were taken by management to control revenue expenditure within the approved budget, given that the Quarter One forecast overspend, if realised would require further £2.498m of EFS borrowing to fund slippage in savings delivery and £1.244m call upon revenue reserves. Both EFS and reserves could only be used once, and the financial pressure would remain in 2025/26 to be addressed.

5.    Note that based upon the Quarter One forecast outturn, the forecast revenue balances at 31 March 2025 would be lower than recommended in the approved Reserves Policy at £17.670m:

·         General Fund Reserve of £11.1m (minimum recommended)

·         Council’s unrestricted usable earmarked reserves of £6.570m

6.    Note the 2024/25 Capital Programme forecast year end outturn of £99.698m at Quarter One, which was a reduction of £6.490m (6.1%) from the revised £106.188m budget for 2024/25 comprising:

·         An underspend on projects of £3.223m

·         Slippage on projects of £3.267m into 2025/26 and 2026/27

7.    Note that a full review and reprofiling of the Capital Programme would be undertaken during Quarter Two including the establishment of a Capital Programme Board to provide improved management of the Council’s Capital Programme and its financing.

8.    Note the Treasury Management forecast outturn position with respect to the Council’s prudential indicators as set out in paragraphs 4.46 to 4.54.

9.    Note the current forecast deficit of £5.501m for 2024/25 relating to the High Needs Block with the Dedicated Schools Grant which increases the forecast cumulative deficit to £19.794m at 31 March 2025.

10.  Note the recovery actions and risks to the Council’s financial resilience set out in paragraph 4.30 to 4.33 and Appendix 8.

11.  Note the level of Collection Fund and General Fund Debtors at 30 June 2024 as follows (paragraph 4.57 to 4.59):

·         Council Tax £35.790m

·         Business Rates £6.731m

·         Sundry Debt £11.565m

·         Housing Benefit Overpayments £6.427m

 

OPTIONS

 

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

 

REASONS

 

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