Agenda item

- Period 5 - Quarter 2 Finance Update Report (Cabinet Decision Pathway Report and appendices).

- Period 7 Finance Update Report for 6^th December Cabinet is ‘to follow’

The Commission considered the Quarter 2 finance report (as submitted to the 4 October Cabinet) and the Period 7 finance report (as submitted to the 6 December Cabinet).

Summary of main points raised:

1. It was noted that key points highlighted in the Period 7 finance report included:

General Fund:

a. The General Fund was currently forecasting a risk adjusted overspend of £12.2m (2.8%) on the approved gross budget of £431.1m (an improvement of £0.1m) attributed to Adults and Children Social Care, Education and Skills - Home to School Transport and a delay in the reporting of expected vacancy freeze savings, all amounting to a new £1.6m pressure, offset however by a £1.7m improvement in the 2022/23 pay award position previously forecast.

2. The General Fund savings programme of £24.4m for 2022/23 as agreed by Council reported £4.6m (19%) at risk.

Ring-fenced accounts:

 a. The Housing Revenue Account (HRA) was forecasting no material movement in adverse variance against its £112.6m net expenditure budget (forecast at P6 was £2.0m, 1.8%).

b. The Dedicated Schools Grant (DSG) net budget was forecasting no material movement in deficit against its £421.5m ring-fenced budget in-year (forecast at P6 was £19.9m, 4.7%) taking the total accumulated carry-forward opening deficit for 2023/24 to £44.6m.

c. The Public Health Grant allocation for 2022/23 was £34.6m and no variation was forecast.

Capital Programme:

a. The Capital Programme forecast variation was a net underspend of £7.3m (2.8%). This primarily comprised of a £5.7m underspend within the Growth and Regeneration directorate and a £1.7m underspend within the People directorate.

b. The total funding for heat networks was £53.4m. This comprised PWLB of £22.7m, grants of £22.5m and connection fees of £8.2m. The estimated funding requirement to 31 March 2023 was £26m of borrowing (£24m to 31 December 2022).

Pay award:

Agreement had been reached in early November on local government pay awards. The budget shortfall impact on the General Fund was £4.7m. The HRA, DSG and Public Health grant funded account would contain the impact of the pay award within their ring-fenced funds and their ring-fenced reserves.

2. Cllr Fodor drew attention to delays in delivery of elements of the capital programme, referring also to the impact of delays (resulting in associated local resident frustration) in implementing some relatively small schemes / projects in communities.  The Chair reminded members that the Council’s external auditor had previously raised issues about the Council’s cycle of spend in relation to the capital programme, including concerns about the large amount / proportion of Q4 capital spend compared to the first 3 quarters.  Cllr Dyer advised that the Audit Committee had also indicated concerns about aspects of the management of the capital programme, including the issue of the Council’s capacity to deliver the programme. 

In discussion, it was noted that a number of factors impacted on capital programme delivery, including the impact of increased costs of construction, general economic conditions and inflationary impacts. Capital programme governance arrangements  were due be reviewed. Careful assessment of project lead-in /delivery timelines continued to be a key issue and as part of the review, further consideration may need to be given to delaying the start of or pausing particular capital projects. 

3. In relation to the HRA, it was noted that there were particular issues around energy and insurance costs.  It was noted that on 6 December, the Cabinet would be asked to note the emergency decision taken to approve the use of HRA reserves to enter into a contract for £2.0m to secure the service of a company or companies to carry out Waking Watch provision at the Council’s high-rise blocks. This emergency action had been taken in light of a review of fire safety policies following two major fire incidents in Council high-rise blocks.  The Chair suggested, and it was agreed, that the Commission wished to indicate its support for this emergency measure, given the health and safety considerations.

4. The Chair noted that as part of the Third Party Spend Savings Programme, it had been agreed the Council would stop paying for non-statutory or non-mandatory subscriptions. He suggested that it may be appropriate to consider introducing a related salary sacrifice arrangement to try to reduce the impact of this measure on relevant individual postholders.

The Commission RESOLVED:

- To note the reports and the above information.