Agenda item

[Report of the Interim Director for  Finance. To be introduced by the Cabinet Member for Finance.]

Monitoring report on forecast spend against budget and consideration of any proposed budget virements as at the end of quarter 1.

The Cabinet Member for Finance introduced this budget monitoring report which covered the position at Quarter one (period 3) of the 2018/19 financial year, including Revenue, Capital, Housing Revenue Account (HRA) and Dedicated Schools Grant (DSG) budgets.

The Cabinet Member outlined that the Council, like other local authorities, continued to face budget challenges and the report was forecasting a £6m overspend. This was after an application of £7m from the budget resilience reserve which was set up in the previous financial year in anticipation of savings, at the end of period 3, being harder to deliver. The Council were acting early and applying reserve funding to support the demand led services in Children’s and Adults that were currently overspending and looking for other ways to make the budget balance if needed.

In response to questions, the following was noted:

• Assessment of a 33% delivery of savings, reflected a realistic approach to savings delivery. This was taking account of some savings that had been rolled over from previous years and which were similar savings most Councils were finding hard to deliver. Rather than anticipate a higher delivery, it was appropriate to be realistic about savings delivery and look at other budget areas, at an early stage, to deliver the shortfall if required.
• The whole Council net budget of £235m would form the basis of budget discussions.
• Within the budget discussions, delivering a fair Council Tax reduction scheme to support low income families with Children was a budget priority.
• In terms of the impact of the capital underspend for the Council’s revenue account, the cost of borrowing, that the Council would incur during the year, would be less. There could be impact on business cases and delivery on the proposed capital scheme but this type of situation would usually be highlighted in the compilation of the report and there was nothing significant in regards to this.
• There was a need to make use of the reserves at this stage until the savings can be delivered and new savings available.
• A cut was different to a saving, and across the Council there have been cuts to services over the last 7 years. It could be assessed that the overspends were a symptom of the overall cuts to funding in the borough, including partner’s funding such as the Police. Agreed with the conclusion that the use of the word ‘savings’  should not imply that was money being put aside by the Council.

RESOLVED

1. To note the forecast revenue outturn for the General Fund (GF), including corporate items, of £5.9m overspend post mitigations of £7.5m and consider what remedial actions need to be implemented to bring closer to the approved budget (Section 6, Table 1, and Appendix 1).

2. To note that the final 2017/18 general fund outturn, post completion of the external audit, was an increased overspend of £0.404m compared to the £0.019m reported in the outturn which has been offset against the GF reserve. The 2018/19 brought forward GF reserve balance is now £15.5m still in line with the level proposed in the budget paper approved by Full Council in February 2018.

3. To note the net HRA forecast of £0.2m overspend. (Section 6, Table 2, and Appendix 2).

4. To note the net DSG forecast of £2.59m overspend, the actions being taken to seek to address thisand the potential implications for the GF. (Section 7 and Table 3).

5. To note the latest MTFS savings position in 2018/19 which indicates that only 33% (£5.2m) will be achieved. To consider what remedial action is required to improve this position. (Section 8, Table 4).

6. To note the latest capital forecast expenditure of £192.8m in 2018/19 which equates to 84% of the approved budget. To also consider & approve the proposed changes to the approved budget (Section 9, and Table 5).

7. To endorse the measures in place to reduce overspend in service areas; and

8. To approve the budget virements as set out in Appendix 3.

Reason for Decision

A strong financial management framework, including oversight by Members and senior management, is an essential part of delivering the Council’s priorities and statutory duties.

Alternative Options Considered

The report of the management of the Council’s financial resources is a duty of the Interim Director of Finance (Section 151 Officer), helping members to exercise their role and no other options have therefore been considered.