Agenda item

To provide an overview of the financial outturn for the year 2021/22 and to seek approval of associated financial decisions related to the end of year accounting processes.

RESOLVED that Cabinet –

(a) notes the financial outturn position for 2021/22, as set out in the Portfolio Holder’s report and its appendices;

(b) approves the financing of General Fund capital expenditure for 2021/22, as detailed in Appendix D to the Portfolio Holder’s report;

(c) approves the movement in uncommitted and earmarked General Fund reserves for 2021/22, as set out in Appendix E to the Portfolio Holder’s report;

(d) notes the requested carry forwards totalling £17.890m (£12.948m Revenue, COVID Funding £1.077m (net) and £3.865m Capital), as as set out in Appendix K to the Portfolio Holder’s report;

(e) authorises the Section 151 Officer, in consultation with the Portfolio Holder for Corporate Finance and Governance, to approve the carry forwards with the outcome to be reported to Cabinet in September 2022;

(f) in respect of the HRA, approves the movement on HRA balances for 2021/22 including any commitments set out within Appendices H and/or I to the Portfolio Holder’s report, along with recharges to the HRA from the General fund of £2.543m for the year and the financing of the HRA capital expenditure set out in Appendix I to the Portfolio Holder’s report;

(g) approves the use of £0.050m from HRA General Balances to meet the cost of additional improvements to the Council’s Housing Repairs and Maintenance system in 2022/23;

(h) notes the various COVID 19 grant funding amounts set out in Appendix K (ii) to the Portfolio Holder’s report and approves the use of the funding as set out in that same Appendix and main body of the report and authorises the Portfolio Holder for Corporate Finance and Governance to agree further allocations from this funding where it supports the on-going recovery from the COVID19 pandemic;

(i) approves the overall General Fund Outturn Variance for the year of £0.252m being transferred to the existing contingency budget for further consideration as part of the updated Financial Forecast and Quarter 1 position for 2022/23 that will be presented to Cabinet in September 2022;

(j) approves the use of £0.900m from the funding received from Local Health Partners to deliver the improvements set out in the Portfolio Holder’s report, and authorises the Corporate Director (Operations and Delivery), in consultation with the Portfolio Holder for Housing, to implement the associated schemes and projects;

(k) approves an additional exemption from procurement rules to regularise the additional cost of £0.033m to deliver the Octopus Ahoy sculpture trail in 2021/22;

(l) delegates approval of the identification of the necessary additional funding to support the delivery of the new artificial pitch at Clacton Leisure Centre to the Portfolio Holder for Corporate Finance and Governance; and

(m) authorises the Council’s Section 151 Officer, in consultation with the Corporate Finance and Governance Portfolio Holder, to adjust the outturn position for 2021/22 along with any corresponding adjustment to earmarked reserves as a direct result of any recommendations made by the Council’s External Auditor during the course of their audit activities relating to the Council’s 2021/22 accounts.

Cabinet considered a detailed report of the Corporate Finance & Governance Portfolio Holder (A.6) which provided it with an overview of the financial outturn for the year 2021/22 and which sought its approval of associated financial decisions related to the end of year accounting processes.

It was reported that there had been a significant adverse impact on a number of budget areas in 2021/22 some of which would have been highlighted in the quarterly financial performance reports presented to Members earlier in the year. However, a number of further adverse budget issues within Services had only come to light as part of finalising the outturn position for the year. This had had potential major consequences on the Council’s financial position. Although the issues had been accommodated within the overall outturn position for the year, they had significantly reduced the available outturn variance at the end of 2021/22. This had had a ‘knock on’ impact on the ability to respond to significant financial issues the Council faced in 2022/23 and beyond along with the ability to timely invest in its priorities and objectives going forward. A repeat of this situation had to be avoided in 2022/23.

Given the severity of this situation, the Chief Executive had established regular Budget, Performance and Delivery Review meetings with Senior Managers. Assurances around this issue had also considered by the Audit Committee at its meeting on 30 June 2022. Those regular Budget, Performance and Delivery Review meetings would consider the following key issues throughout the year:

· high level review of the in-year budget position for each Directorate / Department, which needed to draw out any potential financial issues ahead of the associated impact on the budget e.g. potential overspends, underspends and / or other financial issues / pressures;

· following on from the point above, to promote and oversee any associated decision making / governance processes;

· to identify financial pressures that might impact on the Council’s long term financial plan;

· to promote connections / linkages with the recently implemented Corporate Investment Plan;

· to review the in-year performance against the Council’s key aims and objectives and other key delivery targets;

· to identify and oversee any other key governance issues; and

· set against all of the above, keep under on-going review the level of resources / capacity to meet the various demands on the Council’s departments and services.

Further updates would be presented to Members as part of the quarterly Financial Performance monitoring reports during 2022/23.

Outturn 2021/22

Following the completion of the comprehensive end of year processes, the financial outturn position for 2021/22 had been prepared across the various areas of the budget with a summary of the position set out below:-

Summary by Key Areas of the Budget

Key Area

Outturn Position

General Fund

General Fund Revenue - Overall favourable variance after allowing for the carry forwards requested by services

(£0.252m)

Capital Programme – Overall adverse net variance after allowing for carry forwards requested by services.

£0.148m

Housing Revenue Account

Net Deficit for the year met from calling money out of HRA General Balances (over and above the budgeted use of the reserve)

£0.079m

General Fund Reserves (excluding requested carry forwards)

Earmarked Reserves –

Reduced use of reserves compared to budget

Additional Contributions to reserves compared to the budget (excluding carry forwards)

There was no change in the level of the Uncommitted Reserve which remained at £4.000m

nil

£0.337m

Reserves

Cabinet was made aware that the Council’s overall general fund reserves totalled £38.071m as at 31 March 2022. However, £34.071m was in respect of earmarked reserves, which related to future years’ commitments (including the 2021/22 carry forwards requested by services). The total earmarked reserves also included the balance on the Forecast Risk Fund of £3.205m, which was in-line with the amount required to support the long-term financial sustainability plan. Earmarked reserves were predominantly for previously identified priorities of the Council.

The balance of £4.000m was the level of uncommitted reserves, which included a working balance requirement of £1.600m. This level of uncommitted reserves matched that previously approved.

It was highlighted that, in addition to the earmarked reserves figures highlighted above, there were also various COVID 19 funding streams received by the Council during the year, which would need to be carried forward into 2022/23 to meet any associated costs, or to be repaid to the Government. Appendix K (ii) to the Portfolio Holder’s report,provided a high level summary of the most up-to-date position against the various COVID 19 grant funding schemes.

In respect of the HRA, further details behind the variance set out in the table above were reported in more detail in the Portfolio Holder’s report along with a request to utilise £0.050m from HRA General Balances in 2022/23 to fund improvements to the Council’s Housing Repairs and Maintenance System.

Financial Challenges 2022/23 and Beyond

Cabinet was aware that global factors were continuing to have a major impact on the economy and, in turn, the financial position of the Council. A number of challenges lay ahead including local issues, some of which were likely to not only have an impact in 2022/23, but were also likely to continue into 2023/24 and beyond. Some examples of the financial pressures faced by the Council included:

· the on-going impact from the closure of the Crematorium;

· Utility / Fuel costs;

· General Inflation;

· Increases in the cost of delivering capital projects – key issues relating to supply chain / commodity price pressures. This might also have an impact on ‘usual’ operational costs of the Council; and

· Increases in salary costs.

Members were advised that, although there were likely to be additional financial pressures over and above the items listed, this relatively limited list of items could alone see additional costs in excess of £2.000m over current budgets. This could result in a significant impact on not only day-to-day service delivery but also on the scale and speed that the Council could invest in its priorities.

It was also highlighted that the Council’s suppliers and contractors were also likely to experience similar cost pressures, which could have a ‘knock on’ impact on their ability to continue to fulfil contractual obligations. With this in mind, Departments were being asked to review their business continuity plans to ensure that they were robust and effective if faced with such events.

Cabinet was informed that the 2022/23 financial forecast would be supported by a zero based approach to budget setting, which would be an even more important element of the budget setting process going forward and would also need to reflect the outturn position for 2021/22.

It was reported that additional costs associated with the delivery of the new artificial pitch at Clacton Leisure Centre were already being anticipated. To provide the flexibility to respond to this issue whilst maintaining momentum behind the timely delivery of this project that was being undertaken in partnership with the Football Foundation, a delegation had been included within the report’s recommendations to enable the Portfolio Holder for Corporate Finance and Governance to explore with Officers how those additional costs could be met.

It was also proposed to use £0.900m of funding received from Local Health Partners to deliver a range of projects within Jaywick Sands in 2022/23.

In addition to the above, an additional exemption from procurement rules was included in the report’s recommendations to regularise the additional costs of the Octopus Ahoy Sculpture Trail in 2021. An original procurement exemption had been agreed earlier in the year based on expected costs of £0.100m, with the proposed additional exemption decision now covering the final cost of £0.133m.

Use of Outturn Variance for the Year

Given the position highlighted above, it was proposed to allocate the overall favourable variance for the year of £0.252m to the existing contingency budget of £0.322m. This would therefore form part of the Council’s financial planning going forward, with the next update being presented to Cabinet in September 2022.

The Chief Executive (Ian Davidson) participated via MS Teams in the discussion of this item.

In order to assist careful planning to ensure financial stability underpinned the Council’s capacity to deliver against its priorities and that both the capital and revenue budgets of the authority continue to be prepared and monitored with the aim of supporting key objectives:-

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