Agenda item

To provide a general update and overview of the Council’s financial position against the 2022/23 budget and looking ahead to 2023/24 and beyond.

RESOLVED that Cabinet –

(a)    notes the Council’s in-year financial position at the end of September 2022 along with the updated financial forecast for 2023/24 and beyond;

(b)    approves the proposed adjustments to the 2022/23 budget, as set out in Appendix 1A and agrees that the budget adjustments for 2023/24 as set out within the same appendix be included as part of developing the forecast and detailed estimates for further consideration by Cabinet at its December 2022 meeting;

(c)    requests the Resources and Service Overview and Scrutiny Committee to comment on the latest financial position of the Council set out in this report; and

(d)    in respect of the Council’s Treasury Management Practices, the aggregate amount of money that can be placed overnight with the Council’s bankers be increased temporarily from £1.000m to £1.500m over the Christmas break.

Cabinet considered a report of the Corporate Finance & Governance Portfolio Holder (A.5), which provided it with a general update and overview of the Council’s financial position against the 2022/23 budget and looked ahead to 2023/24 and beyond.

At the invitation of the Leader of the Council, the Council’s Section 151 Officer (Richard Barrett) presented to Members a summary of the contents of the report and its implications going forward for the Council’s financial position.

Section 1 – Items for inclusion in the budget / forecast for both 2022/23 and 2023/24. 

In consultation with Services, forecasts had been made of potential variances that would remain at the end of 2022/23 along with their impact in 2023/24. For 2023/24, further items had been included as part of developing the longer term forecast.

Although the budget remained subject to further updates as the forecast continued to be developed over the next few months, the current estimated net additional costs in 2022/23 totalled £3.389m, with a forecast budget ‘gap’ of £4.079m in 2023/24. Further details were set out in Appendix 1Ato the Portfolio Holder.

Section 3 of Appendix 1A set out how those budget ‘gaps’ were proposed to be funded, which included the refocusing of existing budgets / reserves.

Section 2 – Detailed commentary on the in-year financial position 2022/23.

The position to the end of September 2022, as set out in more detail within Appendix 2, showed that overall the General Fund Revenue Account was underspent against the profiled budget by £10.960m.As usual at this time of the year, a key influence on the position to date was the timing of general expenditure and/or income budgets, although it was acknowledged that further variances could emerge over the second half of 2022/23. In terms of the timing against expenditure budgets, a significant level of the variance to date reflected the COVID 19 Business Grant Schemes, where a final reconciliation process remained in progress in consultation with the Department for Business, Energy and Industrial Strategy (BEIS).

As highlighted above, rather than reporting / adjusting the position at the end of Q2, Services had been asked to estimate if any variances to date were likely to remain at the end of the year rather than being due to timing issues. Although variances to date were set out within Appendix 2, the proposed budget adjustments for 2022/23 set out in Appendix A1aimed to address the expected year-end position.

As highlighted within previous related reports to Cabinet, the Chief Executive continued to chair the regular Budget, Performance and Delivery meeting of Senior Managers where any emerging issues were discussed.

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 Portfolio Holder report, there were other no major issues that had been identified to date.

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.

A half year treasury management review had been carried out with a summary set out in the Portfolio Holder’s report along with an associated recommendation to temporarily increase the aggregate limit of funds that could be placed overnight with the Council’s bankers for the period that Officers might not be available over the Christmas break.

Section 3 – Detailed commentary on the updated long term forecast from 2023/24.

Appendix 3 set out the detailed forecast for 2023/24 and beyond. For 2023/24, the current budget ‘gap’ was estimated to be £4.079m,with the main elements of this forecast position being translated into itemised figures within Appendix 1A.

The forecast / budget setting process remained a ‘live’ process and so work remained on-going in consultation with the various Services across the Council in order to identify further savings opportunities or other potential unavoidable cost pressures that might need to be considered as the detailed budgets were finalised for reporting to Cabinet in December 2022 / January 2023.

The long term forecast still provided an effective method of managing financial risks. The on-going impact from various financial challenges was still evolving and it was therefore important to highlight that the money set aside in the Forecast Risk fund reflected a balanced and realistic approach, and as set out in Section 3 of the Portfolio Holder’s report, this fund provided additional flexibility and time in considering how the Council could deliver the required savings from 2024/25 onwards.

A detailed review of risks associated with the long-term forecast was subject to an on-going review and was separately reported within Appendix 3B.

As highlighted in the report considered by Cabinet at its previous meeting on 7 October 2022, given the scale of the financial challenges that the Council faced, it was proposed to engage all Members as early as possible in this process to add resilience to the Council’s financial position heading into 2023. At the time of finalising the Portfolio Holder’s report, invites were being prepared to send to all Group Leaders to enable meetings to be arranged with relevant Officer(s), who would be able to provide additional detail around the forecast and approach set out in this report.

As highlighted in earlier financial performance reports, the Corporate Investment Plan would continue to play an important role in supporting the response to the financial challenges ahead. Given the scale of the on-going financial challenge faced by the Council the Corporate Investment Plan remained under review in parallel with the work highlighted above, but it would be presented to Cabinet later once the Council’s underlying financial position had become clearer before further investment opportunities could be considered.

Notwithstanding the above, a number of mostly unavoidable items had been identified via the Corporate Investment Plan process, which were included within Appendix 1A, some of which related to both 2022/23 and 2023/24.

As set out within Section 3 and Appendix 3A, the on-going savings required to deliver financial sustainability going forward totalled £1.150m in 2024/25 rising to £4.250m in 2025/26 before falling back to the underlying longer-term target of £0.450m in 2026/27. The scale of the savings was significant and would present a major challenge for the Council.

In order to set out the latest financial position for the Council; to respond to emerging issues in 2022/23; and to develop the budget and long term forecast from 2023/24:-

It was moved by Councillor Stock OBE, seconded by Councillor P B Honeywood and:-

RESOLVED that Cabinet –

(a)    notes the Council’s in-year financial position at the end of September 2022 along with the updated financial forecast for 2023/24 and beyond;

(b)    approves the proposed adjustments to the 2022/23 budget, as set out in Appendix 1A and agrees that the budget adjustments for 2023/24 as set out within the same appendix be included as part of developing the forecast and detailed estimates for further consideration by Cabinet at its December 2022 meeting;

(c)    requests the Resources and Service Overview and Scrutiny Committee to comment on the latest financial position of the Council set out in this report; and

(d)    in respect of the Council’s Treasury Management Practices, the aggregate amount of money that can be placed overnight with the Council’s bankers be increased temporarily from £1.000m to £1.500m over the Christmas break.