Agenda item

Cabinet Members' Items - Report of the Corporate Finance and Governance Portfolio Holder - A.3 - Financial Performance Report - In-Year Performance against the Budget at end of the Third Quarter 2019/20 and Long Term Financial Forecast Update

To provide an overview of the Council’s financial position against the budget as at the end of December 2019 and to present an updated long term forecast.

Decision:

RESOLVED that –

(a) in respect of the financial performance against the budget at the end of December 2019:

(1) the current position be noted;

(2) the proposed adjustments to the budget, that include a contribution to the Forecast Risk Fund of £0.446m, as set out in Appendix H to item A.3 of the Report of the Corporate Finance and Governance Portfolio Holder, be agreed; and

(3) the use of £0.041m of the contribution to the Forecast Risk Fund of £0.446m to fund the cost in 2019/20 of the changes to the Members’ Scheme of Allowances agreed by Full Council on 21 January 2020 be agreed.

(b) in respect of the Updated Long Term Forecast:

(1) the updated forecast be agreed, which includes the commitment to on-going support to external organisations within the principles set out in the Portfolio Holder’s report; and

(2) the Resources and Services Overview and Scrutiny Committee be consulted on the updated long term forecast.

Minutes:

The Cabinet gave consideration to a comprehensive report of the Corporate Finance and Governance Portfolio Holder (A.3) which provided it with an overview of the Council’s financial position against the budget as at the end of December 2019 and also presented it with an updated long term forecast.

In respect of the in-year financial position as at the end of December 2019:

It was reported that the position to the end of December 2019, as set out in more detail within the appendices, showed that, overall, the General Fund Revenue Account was underspent against the profiled budget by £2.864m. As had been the case in previous quarters, the variance to date primarily reflected the timing of expenditure and income although any significant issues arising to date had been highlighted and comments provided as necessary within the Portfolio Holder’s report.

Cabinet was 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.

Members were informed that any emerging issues would be monitored and updates provided in future reports which would include their consideration as part of updating the on-going long term financial forecast.

Cabinet was advised that some necessary changes to the budget had been identified which were set out in Appendix H to the Portfolio Holder’s report, with an associated recommendation included within the report. The net impact of all of the budget adjustments was a surplus of £0.446m.

Members were further advised that, in addition to the adjustments included within Appendix H, it was also proposed to fund the cost of the changes to the Members’ Scheme of Allowances that had been approved at Full Council on 21 January 2020. The total cost was £0.041m in 2019/20 and it was proposed to fund this from the net surplus of £0.446m reported above.

It was reported that, after taking the above into account, the net budget surplus at the end of December 2019 had been revised to £0.405m, which was proposed to be contributed to the Forecast Risk Fund.

Cabinet was informed that, subject to the recommendations set out in the report, as at the end of the third quarter a total of £0.335m would have been contributed to the fund over the course of the whole year. This was £0.165m short of the required target of £0.500m set out in the long term forecast, which hopefully was a gap that could be closed over the remaining quarter of the year.

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 might remain at the end of the year and would contribute to the overall outturn position. Also 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.

In respect of the updated long term financial forecast:

It was reported that the long term financial forecast had been reviewed based on the position considered by Full Council at its meeting held on 11 February 2020 and was attached as Appendix Jto the portfolio Holder’s report. Although the figures set out within that appendix would change as part of updating the forecast on a regular basis during 2020/21, there had been no issues that had significantly increased the risks in future years with the forecast position remaining broadly in-line with original expectations.

Members were made aware that a review of the risks associated with the long term approach to the forecast was also subject to on-going review and was separately reported within Appendix K to the report.

As mentioned during the year, it was important to continue to deliver against the new 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.

Members were advised that the long term forecast and on-going base budget continued to reflect support to external organisations, such as those who would benefit from the CAROS scheme. As included in the report’s recommendations, this commitment would remain in place but might need to be revisited in the later years of the forecast as was the case with all other budget lines.

The forecast remained an on-going task going into 2021/22 and beyond with work therefore remaining on-going across the 5 key work strands of:

1) Increases to underlying income;

2) Controlling expenditure / inflationary increases;

3) The identification of savings / efficiencies;

4) Delivering a positive outturn position each year; and

5) The mitigation of cost pressures wherever possible.

Having considered all of the information and advice contained within the report and its appendices:-

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