Agenda item

The Executive Member for Environment and Finance & Governance and the Director of Finance submitted a report for the Executive’s consideration. The purpose of the report was to advise of the Council’s financial position at Quarter Two 2021/22, including the projected effect of Covid-19 on the Council’s finances.

As reported in previous reports, the Covid-19 pandemic was continuing to have a significant impact on the Council’s financial position. That had made the management of the Council’s finances more difficult due to the constantly evolving situation and also the level of uncertainty regarding the financial effects of Covid-19 in 2021/22 and future years. Covid-19 financial pressures were being monitored separately from the normal non-Covid-19 financial position, and those were reported separately in paragraphs 50 to 78 of the submitted report.

The 2021/22 Revenue budget for the Council was £116,492,035. During Quarter One there had been a number of transfers of services between directorates due to managerial changes, and the financial position was reported against the new directorate budgets. The Council’s outturn position for 2021/22 for non-Covid-19 elements was projected to be an overspend of £2.605m (2.2%). The split by directorate was shown in the table below paragraph 7 of the submitted report, with the Quarter One position also included for information.

The detail of the variances contained in the table at paragraph 7 were set out in the submitted report (paragraphs 17 to 49). At Quarter Two, 29 areas were projected to be spent +/- £150,000 of the agreed budget. Where appropriate, the on-going effects of variances would be considered as part of future updates of the Council’s Medium Term Financial Plan.

The overspend of £2.605m, when added to the estimated Covid-19 pressures of £1.550m detailed in paragraphs 50 to 78, resulted in a total projected outturn pressure at year-end 2021/22 of £4.155m, an increase of £402,000 from the position reported at Quarter One.

It was proposed that the total projected overspend in 2021/22 would be covered by the full utilisation of the Social Care Demand Reserve of £0.5m and the Children’s Services Demand Reserve of £0.732m, which were created at the end of 2020/21. It was proposed that the remaining £2.923m of the total projected outturn pressure was funded from the £4.512m Covid Recovery Reserve, which was created during 2020/21 to cover the potential costs arising from the Covid-19 recovery in 2021/22 and future years.

The level remaining after the use of those reserves was shown in the Reserves and Provisions section of the submitted report (see paragraphs 113 and 114) and in Appendix 2.

The revised Investment Strategy to 2023/24 was included at Appendix 1 for approval. It was noted that capital receipts assumptions had been re-evaluated in light of Covid-19 and the Revised Investment Strategy took account of that.

The split by directorate was shown in the table below paragraph 91 of the submitted report, which also showed the “real” projected outturn variance if all of the additional new schemes, increased schemes, reduced schemes, and transfers between directorates were excluded.  Explanations for variances of +/- £150,000 across sixteen schemes were set out in paragraphs 92 to 105 of the submitted report. Those variances required movement within the Council’s four-year Investment Strategy, but did not affect the overall investment or cost of borrowing.

ORDERED

1.      That the 2021/22 revenue budget Quarter Two total projected outturn of £4.155m, representing a £2.605 m (2.2%) overspend on non-Covid-19 elements, and the estimated financial effect of Covid-19 in 2021/22 of £1.550m, and the proposed actions to address that be noted.

2.      That the proposed use of the following reserves to fund the total projected overspend of £4.155m in 2021/22 be noted:

·        Social Care Demand Reserve (£0.5m)

·        Children’s Services Demand Reserve (£0.732m)

·        Covid Recovery Reserve (£2.923m)

3.      That the 2021/22 capital budget Quarter Two predicted outturn of £64.814m against a budget of £82.029m be noted, and the proposed revised Investment Strategy to 2023/24 at Appendix 1 be approved.

REASON

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.