Agenda item

2024/25 Quarter Two Revenue and Capital Monitoring and Forecast Outturn

Decision:

ORDERED that Executive:

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

2. Approve the inclusion of additional expenditure budgets to the Capital Programme totalling £0.523m for 2024/25 which were externally funded and detailed in Appendix Eight of the report. Subject to approval, this would increase the approved 2024/25 Capital Programme budget to £106.711m.

3. Approve the 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 which was detailed in Appendix Eight of the report.

AGREED that Executive:

1. Note the forecast 2024/25 revenue outturn as at Quarter Two of £144.572m against an approved budget of £143.190m. This was an overspend of £1.382m (0.97%) as summarised below and detailed in Table one in the report. This was an improvement of £2.360m from the £3.742m forecast year-end overspend reported at Quarter One.

2. Note the progress on savings delivery set out in Tables three and four and Appendix four 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. The forecast use of EFS had been reduced to up to £8.2m, detailed in 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 Two forecast overspend, if realised, would potentially require further £1.382m of EFS borrowing to fund slippage in savings delivery. If the overspend increased in the remainder of 2024/25 this would require further use of EFS or 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 Two forecast outturn, the forecast revenue balances at 31 March 2025 would be at £18.914m which was in line with that recommended in the approved Reserves Policy:

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

· Council’s unrestricted usable earmarked reserves of £7.814m

6. Note the 2024/25 Capital Programme forecast year end outturn of £72.546m at Quarter Two was a reduction of £34.165m (32.02%) from the revised Quarter One budget of £106.711m comprising:

· An underspend on projects of £8.720m

· Slippage on projects of £25.445m into 2025/26 and 2026/27

7. Note the current forecast deficit of £5.935m for 2024/25 relating to the High Needs Block with the Dedicated Schools Grant which increased the forecast cumulative deficit to £20.228m at 31 March 2025. If the statutory override was removed by Government on 31 March 2026 without national funding solution in place for High Needs, then this presented a critical risk to the Council’s financial viability, given that it would wipe out the Council’s general fund reserves. The DSG recovery actions and risks to the Council’s financial resilience were set out in paragraph 4.39 and Appendix six of the report.

8. Note The level of Middlesbrough’s share of Collection Fund and General Fund Debtors at 30 September 2024 was as follows and detailed in paragraphs 4.56 to 4.58 and Table 11 of the report:

· Council Tax £34.713m

· Business Rates £6.592m

· Sundry Debt £14.299m

· Housing Benefit Overpayments £6.196m

Minutes:

The Executive Member for Finance submitted a report for Executive’s consideration. The purpose of the report discharges the responsibilities of the Executive to manage and control the revenue budget, capital programme and overall balance sheet position of the Council.

The Council’s Scheme of Delegation gave Executive collective responsibility for corporate strategic performance and financial management, monitoring and control.

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 within the approved policy framework.

The report enabled the Executive to discharge its financial management responsibilities by setting out the Council’s position at Quarter Two.

Financial Procedure Rule 18.38.3 of the Council’s constitution required Executive approval of revenue and capital programme budget virements over £250,000.Section 25 of the Local Government Act 2003 requires 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) issued her Section 25 Report to Council Members in presenting the 2024/25 Revenue Budget, Medium Term Financial Plan, and Council Tax setting report 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 table at paragraph 4.5 of the report.

Only up to £8.2m of this would potentially be required in 2024/25, comprising of those elements relating to balancing the 2024/25 budget (£4.7m) and the contingency for non-delivery of budgeted 2024/25 savings risk (£3.5m).

The Council’s financial position remained fragile 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 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 Mayor thanked all relevant officers and Members for their input into the report.