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

RESOLVED –

 

(1)    That in respect of the financial performance against the budget at the end of September 2020 -

 

(a)    the position be noted;

 

(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 Corporate Director (Place and Economy), in consultation with the Portfolio Holder for Leisure and Tourism, be agreed to amend leisure membership fees in response to the national lock down period and the resumption of a phased approach to reopening up leisure facilities later in the year;

 

(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 for each day the offices are closed over the Christmas break; and

 

(e)    the Council continues to be a member of the Essex Business Rates Pool in 2021/22 if it remains financially advantageous to do so.

 

(2)    That in respect of the Updated Long Term Forecast -

 

(a)    the updated forecast be agreed and that the Resources and Services Overview and Scrutiny Committee be consulted on the latest position.

 

 

 

 

 

 

 

 

The Cabinet gave consideration to a report of the Corporate Finance & Governance Portfolio Holder (A.5) which sought to provide it with an overview of the Council’s financial position against the budget as at the end of September 2020 and which presented it with an updated long term forecast.

 

The report was split over two distinct sections as follows:

 

1)  the Council’s in-year financial position against the budget at the end of September 2020; and

 

2)  an updated long term financial forecast.

 

1)     In respect of the in-year financial position at the end of September 2020:

 

It was reported that this report was the first detailed financial performance report for 2020/21 but it built on the report presented to Cabinet in May 2020, which had provided a timely assessment of the impact of COVID 19 on the Council’s financial position.

 

Cabinet was informed that the position to the end of September 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 £6.858m (£4.137m of which related to the timing of expenditure from COVID funding received from the Government). 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 to reflect the 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 second quarter, it had been possible to make a small contribution to the fund of £41k, which supported the requirement set out in the long term forecast of identifying in-year savings of £500k each year.

 

Cabinet was informed that a half year treasury management review had been carried out with an associated recommendation to Members to temporarily increase the aggregate limit of funds that could be placed overnight with the Council’s bankers for the period that the offices would be closed over the Christmas break.

 

It was proposed by the Portfolio Holder to continue to be a member of the Essex Business Rates Pool if it remained advantageous to do so and if the opportunity was still made available by the Government in 2021/22.

 

2)  In respect of the updated long term financial forecast:

 

Members were advised that the forecast had been reviewed and updated at the end of September 2020 and reflected an early assessment of the impact of COVID 19. The updated forecast was set out in Appendix I to the report.

 

It was reported that the savings target for 2021/22 had been removed from the forecast with work resuming on this line of the budget as part of the medium / longer term recovery in response to COVID 19.

 

Cabinet was informed that work remained on-going in consultation with the various Services across the Council in order to identify unavoidable cost pressures, which would be assessed for inclusion or otherwise in the detailed budget report that would be presented to Cabinet in December 2020.

 

It was considered that, overall, the revised forecast could still provide an effective method of managing financial risk but that the annual deficit or surplus position for each year of the forecast had been amended. However, the medium to long term impact from the COVID 19 crisis remained unclear and 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 indicated that the fund could be depleted within as little as three years if a number of factors arose during the same period.

 

Members were reminded that a detailed review of risks associated with the long term forecast was subject to on-going review and was separately reported within Appendix J to the report. However, it was felt important to continue to deliver against this plan as it continued to provide a credible alternative to the more traditional short term approach, which would require significant savings to be identified in 2021/22.

 

Cabinet was advised that in terms of delivering against the forecast for 2021/22 and beyond, work remained on-going across the various strands set out in Appendix I.

 

The Corporate Finance & Governance Portfolio Holder made the following statement:-

 

“The approach we have taken to financial reporting continues to provide a comprehensive view of both the in-year position against the budget and the development of the long term forecast.

 

With that in mind I won’t go through the report in too much detail but rather highlight some important points.

 

Unsurprisingly the first point is reflecting on the impact from COVID 19.

 

We considered a report back in May that set out the initial impact, which was fairly positive in terms of our financial position.

 

This remains relatively stable, and the figures in front of us do take account of the latest period of national restrictions that we are currently in the middle of.

 

One of the underlying factors supporting what seems on paper a satisfactory position is the support that the Government are providing which includes:

 

1.    General financial support, where the first tranches of funding have been allocated within the budget as set out in Appendix H.

2.    Providing a sales, fees and charges compensation scheme that recognises losses in income in areas of the budget such as leisure facilities.

 

The report includes reference to recycling credit income which is ahead of the profiled position by £114k at the end of September. It is fair to say that the new waste and recycling service was always designed around increasing recycling rates so this is no surprise, and fully justifies the decision that was taken at the time when the contract was renewed.

 

In terms of collection performance for Council Tax and Business Rates, some key figures are set out in the report. At the present time it is expected that these can be managed within the overall collection fund position for the year and the long term forecast, but it is worth noting that these are respectively 3.38% and 4.55% behind. If however the collection rate worsens, there may be a negative impact on Tendring’s share of the Council Tax Sharing Agreement, which although it has shrunk in recent years, it still is a considerable income line in our Budget.

 

Although more detailed information is set out in the report, I must mention the support that we have provided to businesses since April. This has included administering mandatory schemes set out by the Government but also our own local discretionary scheme. Through various phases of this grant scheme we have been able to support a range of different businesses across the district including those that missed out on the mandatory schemes – examples of which include those working from home, supply chain businesses supporting the retail, hospitality and leisure sectors and those with rateable values above £51k who play an equally important part in our local economy.

 

As highlighted earlier on, we are now administering 4 new business support schemes over the coming weeks to help our businesses through these difficult times.

 

The second half of the report sets out the most up to date longer term forecast which also reflects the impact of COVID 19. A true picture of the impact so far cannot be really assessed until the end of the financial year next April.

 

Although information is provided in the report against the various lines of the forecast, it is worth highlighting a couple of points.

 

The first is the savings target. The forecast now reflects my earlier commitment to relax the target for 2021/22 to enable the Council to focus on its response to COVID 19 and its priorities, such as the Back to Business initiative, and how to best support our Tendring Businesses. However we still need to make up for this in later years but ithe way we set up our Financial Strategy allows us the flexibility to do so, thus giving some breathing space.

 

The second is the forecast risk fund – as set out in the report, if there is a long term impact from COVID 19, and a number of things go against us, the fund could be used up in just three years. If that was the case we would have to revert back to the more traditional approach we have tried to avoid of taking a short term view of the budget, which requires significant savings to be identified on a yearly basis, and then real possibility of service cuts.

 

We need to avoid this, so the money set aside in the fund should not be seen as too cautious at this stage, or a ready available pot, it therefore needs to be protected, at least in the short term to see how the economy responds to COVID 19. 

 

In terms of the Council having to respond to COVID 19, projects and initiatives may not have been able to be progressed as quickly as hoped this year.

 

However with this in mind I have asked Officers to identify the additional resources we need to deliver the range of projects we have already identified and included in the budget. Let’s not forget that our commitments are cash backed with money in the bank rather than just promises that are dependent on being able to afford them at some time in the future.

 

Work is now underway to identify the additional capacity we need which could include a mix of skills such as surveyors, engineers, project managers or administrators for example. This work is being undertaken by an external provider to avoid having to ask our Officers to accommodate it within their existing workloads

 

Although we are in a seemingly encouraging place, the short to medium term impact of COVID 19, both nationally and locally remains very unclear, including the shape and speed of economy recovery, and the current spike in infections, deaths and hospital admissions, which have prompted the current lockdown is obviously the biggest threat to this recovery.

 

Further updates will be provided as part of developing the long term forecast and the detailed budget over the remainder of the year with the next key milestone being in December when we will see the latest budget forecast for 2021/22.

 

Finally, Mr Chairman, it is also timely to provide an update on the 4 items agreed as part of the budget back in February as follows:

 

1.    £100k was agreed to recruit a housing early intervention officer for 3 years – we have now had an Officer in post for a few months now to support this important part of the housing service.

 

2.    £44k was agreed to recruit two fixed term posts to support improvements to the overall appearance of the district – these posts were filled earlier in the year and work is now going on across the district.

 

3.    £249k was agreed to support enforcement activities within the district – a number of strands of work are now under way led by the Community Engagement Team and include a focus on anti-social behaviour supported by additional office capacity, directly on the ground, to provide on-going case management and to proactively pursue prosecutions. 

 

4.    £500k was agreed to establish a Tendring Community Fund - £48k was used to support the members small scheme with work underway to bring relevant members together to explore options to maximise the benefit from using remaining funding.  

 

I will end by extending my thanks to the financial team who have waded through some almost impossible deadlines imposed by government relating to the grants paid out early in the year, and in the past two weeks for translating into plain English the further four business grant schemes to support our local economy.”

 

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

 

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

 

RESOLVED –

 

(1)    That in respect of the financial performance against the budget at the end of September 2020 -

 

(a)    the position be noted;

 

(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 Corporate Director (Place and Economy), in consultation with the Portfolio Holder for Leisure and Tourism, be agreed to amend leisure membership fees in response to the national lock down period and the resumption of a phased approach to reopening up leisure facilities later in the year;

 

(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 for each day the offices are closed over the Christmas break; and

 

(e)    the Council continues to be a member of the Essex Business Rates Pool in 2021/22 if it remains financially advantageous to do so.

 

(2)    That in respect of the Updated Long Term Forecast -

 

(a)    the updated forecast be agreed and that the Resources and Services Overview and Scrutiny Committee be consulted on the latest position.