Agenda item

The Head of Financial Planning and Support presented the Board with information in respect of the Revenue Budget Outturn Year-End 2020/2021. The following points were made:

● As reported previously, the Covid-19 pandemic has had a significant impact on the Council’s financial position. This has also made the management of the Council finances more difficult in 2020/21 due to the constantly evolving situation, including the receipt of Government grant funding at short notice throughout 2020/21.

●Covid-19 financial pressures were being monitored separately from the normal non-Covid-19 financial position, and these were reported separately in paragraphs 53 to 84.

● The Council underspent its revenue budget by £355,000 on non-Covid elements (following approval by Executive on 15 June 2021 of the following transfers to reserves:-

1)    Public Health Grant underspend to Public Health Reserve (£438,000)

2)    Adult Social Care underspend to an Adult Social Care Covid Recovery Reserve (£1,598,000)

3)    Ofsted Improvement Plan Budget underspend in 2020/21 to carry forward to 2021/22 via an Ofsted Support Reserve (£188,000)

4)    Net saving from the clearance of holding and other codes, which are no longer used within Education, to a Children’s Services Improvement Reserve (£175,000)

5)    School contributions to capital schemes to a Children’s Services Demand Reserve (£732,000)

6)    Saving in Adult Social Care in 2020/21 due to the reduction in demand for long-term residential care to a Social Care Demand Reserve (£500,000)

7)    Section 31 Business Rates Relief Grant to a Business Rates Deficit Reserve to fund 2020/21 Collection Fund deficit (£10,555,000)

● It had been proposed to transfer £438,000 of the Public Health Grant underspend to a Public Health reserves and £1,598,000 of the Adult Social Care underspend to an Adult Social Care Covid Recovery Reserve, in order to help to fund future costs arising from Covid-19 recovery in these areas. Executive had approved these transfers to reserves on 15 June 2021.

● Paragraphs 74-81 detailed the revenue budget spending controls, which included a vacancy control process; checks against expenditure over £5,000; and strong controls over staff travel, stationery and first class post. Agency staff were also being looked at, but this had been difficult to implement fully (although was being minimised). The predominant area for agency staff was Children’s Services, which was due to difficulties in recruiting staff.

● Paragraph 7 provided a breakdown of spend per directorate with Children’s Care having the greatest overspend of £4,233 million (excluding Covid-19). Savings in other areas of the Council had resulted in a net underspend overall.

● The £355,000 underspend on non-Covid-19 elements had been transferred to the General Fund Reserve.

● The financial impact of the Covid-19 pandemic in 2020/21 was summarised in a table at paragraph 83, which showed that there had been a financial pressure due to Covid-19 of £416,000 in 2020/21. A breakdown of the funding split between the Government grant funding and the Council was also provided. 

● Due to delays on major schemes resulting from the COVID-19 pandemic,

the 2020/21 capital budget final outturn was £42.078m against a revised budget of £45.195m. Full details were provided in the report.

● Regarding borrowing and reserves, the Council’s balance of borrowing had

decreased from £242.7m at 31st March 2020 to £218.8m at 31st March 2021. This decrease reflected the repayment of £20m of short-term borrowing taken out in the early weeks of the Covid-19 pandemic in March 2020 to ensure sufficient liquidity on emergency business grants. The remaining decrease of £3.9m related to the repayment of principal on annuity loans held by the Council. No external borrowing had been needed for Investment Strategy purposes due to much of the Covid-19 funding being paid in advance of need by central government and cash balances being healthy. This position was expected to unwind during the 2021/22 financial year.

● The table shown at paragraph 123 set out a summary of the balance of reserves and provisions at the start of 2020/2021 and at Year-End.

A Member of the Board commented that the Finance Officers had performed a remarkable job throughout 2019/20 and it was fantastic that the Council’s budget had been underspent at the year end. However, it was emphasised that borrowing needed to further reduced and the interest rates payable needed to be brought down.

A Member of the Board commented that the report was particularly comprehensive and it was encouraging to see that the number of looked after children in Middlesbrough had reduced. However, further emphasis needed to be placed on the importance of using internal provision to ensure the cost effectiveness of placements. 

A Member of the Board queried the £538,000 repairs to the Captain Cook Pub and it was explained that the Council’s plans had always been to renovate the building prior to work commencing on the adjacent housing development. The Director of Regeneration advised that a breakdown of the costs would be provided.

A Member of the Board made reference to the Council’s balance of borrowing and the weekly interest accrued. The Head of Financial Planning appreciated the concerns raised but reassured the Board that the Council’s current debt level was both affordable and manageable.

AGREED the information provided be noted and more detailed information in respect of the financial pressures facing Children’s Care Services be provided at the next meeting.