Agenda item

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

 

The report advised Executive of the Council’s financial position as at Quarter One 2023/24. It also advised of the management actions taken and underway to establish a firmer grip upon the Council’s financial position. Endorsement was also sought from Executive of the management actions that were planned in the form of Financial Recovery Plans to control expenditure within the General Fund Revenue Budget approved by Council in February 2023. The report also sought Executive approval in relation to the revisions to the Capital Programme.

 

The Council’s Scheme of Delegation gave 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.

 

The report enabled Executive to discharge its financial management responsibilities by setting out the:

·         Forecast outturn on the General Fund Revenue Budget and Capital Programme at Quarter One of 2023/24;

·         Statement of the Council’s borrowing and prudential indicators, and its reserves and provisions; and

·         Actions that the management has taken and plans to address the issues identified.

 

Financial Procedure Rule 10.5 required Executive’s approval of the proposed revenue budget virements set out in Appendix four. A revised Capital Programme for the period 2023/24 to 2025/26 was also attached at Appendix six for Executive’s consideration and approval.

 

The Executive Member for Finance and Governance advised Executive that an all-Member briefing on this subject had taken place the evening before.

 

A non-Executive Member suggested that Councillors not take their Basic and Special Responsibility Allowances so they could contribute to any budget savings. The Member also recommended the Council address any peppercorn rents that existed in the town. It was proposed that any suggested budget savings be directed to the email address circulated to all Members.

 

It was agreed that in Appendix two of the report several items be withdrawn from the information submitted to be considered further. Those items were: Review provision of charging for junk job services; Review charges for replacement bins; Review schedule of green waste collection and savings associated with the Warden Service.

 

ORDERED that Executive (in respect of the General Fund Revenue Budget):

 

1.    Note the forecast 2023/24 net revenue budget outturn as at Quarter One of £137.917m against an approved budget of £126.354m, a forecast overspend of £11.563m (9.2%);

2.    Note that the Council’s usable revenue reserves position is critically low at £14.8m comprising the General Fund Reserve of £12.041m and the Council’s unrestricted usable earmarked reserves of £2.788m at 31 March 2023;

3.    Note that if the current forecast overspend of £11.563m was actually incurred, it would exhaust the Council’s unrestricted usable earmarked reserves and also significantly draw upon the Council’s General Fund Reserve as shown in Table two. Therefore, urgent management action was required to reduce expenditure and the forecast outturn within budget;

4.    Note that if it appeared to the Director of Finance (s.151) Officer that total expenditure could not be managed within the approved budget of £126.354m by 31 March 2024, there was a statutory requirement for the Director of Finance to issue a s.114 Notice to the Council under the provisions of the Local Government Finance Act 1988. In practice, prior to this occurring, the Director of Finance would seek Exceptional Financial Support from DLUHC in order to meet unmanageable financial pressures in the short term whilst the Council’s financial position was recovered;

5.    Note the implications of an application for Exceptional Financial Support and the issuing of a s.114 notice (paragraphs 17 to 22) upon the Council;

6.    Note the management actions that had already been implemented from the start of the 2023/24 financial year in order to exercise enhanced budget management and control (paragraph 10), and the further actions outlined in paragraph 28 which had been implemented by the Director of Finance and the Leadership and Management Team (LMT) in response to the emerging overspend position that was identified during June in relation to accounting period two (month end 31 May);

7.    Note that rigorous spending restrictions had been implemented with effect from 1 July 2023 and would remain in effect until further notice;

8.    Note that Chief Officers within LMT were working in consultation with their relevant Executive Member to develop and deliver robust Financial Recovery Plans (paragraph 28) in order to contain expenditure within the Council approved budget;

9.    Note and support the actions taken by the Director of Finance and wider LMT including the initial Financial Recovery Plans totalling £2.557m that had been identified and quantified to date (as shown in Table one and Appendix two);

10.  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 as appropriate; and

11.  Approve the proposed revenue budget virements over £150,000 as detailed in Appendix four.

 

That Executive (in respect of the Capital Programme and Treasury Management):

 

1.    Note the 2023/24 Capital Programme forecast outturn of £63.004m at Quarter One against a revised capital Programme Budget of £80.474m, an underspend of £17.470m (22%);

2.    Approve the revised Capital Programme to 2025/26 summarised at table eight and detailed at Appendix six, including £183.570m for financial years 2023/24 to 2025/26;

3.    Note that £19.839m of funds that were assumed to be spent in 2023/24 had now been slipped to 2024/25 and later years (Appendix five);

4.    Note that a full review of the Capital Programme would be undertaken and reported at Quarter Two with a view to ensure realistic profiling of expenditure and alignment of funding. This would incorporate a challenge to reduce and reprioritise the utilisation of Council resources to mitigate or reduce any revenue budget impact within the context of controlling the Council’s revenue financial position; and

5.    Note the Treasury Management forecast outturn position with respect to the Council’s prudential indicators as set out in paragraphs 64 to 72.

 

That Executive (in respect of the Dedicated Schools Grant (DSG)):

 

1.    Note the current forecast in-year deficit of £1.780m for 2023/24 relating to the High Needs Block;

2.    Note the forecast total cumulative deficit of £8.344m at 31 March 2024, including £8.801m relating to the High Needs Block, as set out in Table five and paragraphs 45 to 51;

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); and

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.

 

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 agreed corporate financial regulations.