Agenda item

To provide an overview of the Council’s financial position against the budget as at the end of December 2020 and to present an updated long term forecast.

RESOLVED that –

(a)    in respect of the financial performance against the budget at the end of December 2020 the in-year position for 2020/21 be noted and the updated long term forecast agreed;

(b)    the proposed in-year adjustments to the budget, as set out in Appendix H to the Portfolio Holder’s report, be agreed;

(c)    the balance of £0.138m, that represents this Council’s unspent contribution to the NEGC project, be transferred and committed to the Tendring & Colchester Borders Garden Community project and that the Corporate Director (Place and Economy), in consultation with the Portfolio Holder for Corporate Finance and Governance, be authorised to approve the use of this funding as part of the associated local authority partnership arrangements; and

(d)    the Resources and Services Overview and Scrutiny Committee be consulted on both the in-year position for 2020/21 and the updated long-term forecast.

Cabinet gave consideration to a report of the Corporate Finance & Governance Portfolio Holder (A.9) which sought to provide it with an overview of the Council’s financial position against the budget as at the end of December 2020 and which presented it with an updated long term forecast.

The report was split over two distinct sections as follows:

(a)    the Council’s in-year financial position against the budget at the end of December 2020; and

(b)    an updated long term financial forecast.

(a)    In respect of the in-year financial position at the end of December 2020:

Cabinet was informed that the position to the end of December 2020, as set out in more detail within the report’s appendices, showed that overall the General Fund Revenue Account was underspent against the profiled budget by £12.867m (£10.000m of which related to the timing of expenditure from COVID funding received from the Government, including the accounting treatment of business rate reliefs). It was acknowledged that other expenditure or income trends might still be emerging with the position also largely reflecting the timing of other general expenditure and/or income budgets. However, any significant issues arising to date had been highlighted and comments provided as necessary within the Portfolio Holder’s report.

Members were made aware that in respect of other areas of the budget such as the Housing Revenue Account, capital programme, collection performance and treasury activity, apart from additional details set out in the report, there were no major issues that had been identified to date.

Cabinet was reminded that any emerging issues would be monitored and updates provided in future reports which would include their consideration as part of updating the long term financial forecast.

Members were advised that some necessary changes to the 2020/21 budget had been identified which were set out in Appendix H to the Portfolio Holder’s report. The same appendix also set out the necessary changes to the budget that reflected the on-going impact of COVID 19, the costs of which to date had been met by the general financial support provided by the Government.

It was reported that the net impact of the budget adjustments would be moved to, or from, the Forecast Risk Fund. At the end of the third quarter, it had been possible to make a contribution to the fund of £245k. As at the end of the third quarter a total of £0.286m had been contributed to the fund to date. This was £0.214m short of the required target of £0.500m set out in the long term forecast, which was a gap that could potentially be closed at the end of the year as part of the overall outturn position.

As in previous years, it was recognised that a number of smaller variances within services emerged over the course of the year that would not necessarily be specifically highlighted or discussed within the in-year finance reports. It was still therefore possible that a range of smaller variances could still remain at the end of the year and contribute to the overall outturn position. In addition, a number of budgets that related to schemes / initiatives or earmarked for specific purposes might not be fully spent by the end of the year and might be subject to end of year processes such as carry forward requests and therefore remain committed. However, at this stage and after taking into account the current position and information available it was anticipated that any adverse issues would be offset by favourable variances elsewhere within the overall budget at the end of the year, which included general COVID 19 support from the Government.

In addition to the above, the report highlighted the development of the Tendring & Colchester Borders (TCB) garden community project and the most up to date funding position. The report also set out a proposal to enable unspent funding from the NEGC project to be transferred to support the delivery of the TCB scheme.

(b)    In respect of the updated long term financial forecast:

Members recalled that a summary of the most up to date position for 2021/22 had been considered by Full Council on 16 February 2021 as part of agreeing the detailed budget.

It was reported that there had been no changes made to the forecast position mentioned above, but for completeness, the more detailed long-term position was attached as Appendix I to the Portfolio Holder’s report, with the associated review of risks set out in Appendix J thereto. Although the figures set out within Appendix I would change as part of updating the forecast on a regular basis during 2021/22, there had been no issues arising that indicated that the long-term approach was unsustainable.

Cabinet was made aware that following the impact of COVID 19, 2021/22 was now seen as a transitional year and it remained unclear as to the speed and scale of the economic recovery. It was therefore important to highlight that the money set aside in the Forecast Risk fund should not be seen as overly cautious as sensitivity testing had indicated that the fund could be deleted within as little as 3 years if a number of factors arose during the same period.

Members were reminded that the identification of on-going savings remained an important element of the long-term financial plan. The framework in which to identify and develop the required level of savings formed part of the key priority actions set out in the Council’s adopted Corporate Plan.

It was also important to continue to deliver against the longer-term approach to the budget as it continued to provide a credible alternative to the more traditional short-term approach, which would require significant additional savings to be identified much earlier in the financial cycle.

Having considered the comprehensive report and appendices of the Portfolio Holder:-

It was moved by Councillor G V Guglielmi, seconded by Councillor McWilliams and:-

RESOLVED that –

(a)    in respect of the financial performance against the budget at the end of December 2020 the in-year position for 2020/21 be noted and the updated long term forecast agreed;

(b)    the proposed in-year adjustments to the budget, as set out in Appendix H to the Portfolio Holder’s report, be agreed;

(c)    the balance of £0.138m, that represents this Council’s unspent contribution to the NEGC project, be transferred and committed to the Tendring & Colchester Borders Garden Community project and that the Corporate Director (Place and Economy), in consultation with the Portfolio Holder for Corporate Finance and Governance, be authorised to approve the use of this funding as part of the associated local authority partnership arrangements; and

(d)    the Resources and Services Overview and Scrutiny Committee be consulted on both the in-year position for 2020/21 and the updated long-term forecast.