Agenda item

The Committee received a report which set out the Budget Monitoring position for Quarter 1, which was considered by Cabinet in September. The Committee also received a verbal update on the Council’s latest financial position. The report was introduced by Jon Warlow, Director of Finance as set out in the agenda pack at pages 27-62 of the agenda pack. The following key points were noted from the Director of Finance’s verbal update:

·         The total Covid financial pressure to the Council was set out in the report as £44.44m.

·         The budget pressure from non-delivery of savings was identified as £8m.

·         The report set out that, as of Q1, the government had provided £18.3m in unringfenced emergency grant funding which was effectively a subsidy to cover the additional costs to the authority from Covid. Following the recent receipt of tranche 4 funding, the Council had received £26.74m to date in unringfenced emergency grant funding.

·         The Director of Finance advised that he anticipated that the Council would receive an additional £8m from the government to cover the costs incurred from a loss of income, such as car parking and highways income.

·         As at Q1, the report highlighted that the unfunded costs of Covid were £18m, but an additional £8.3 million had been received since then.

·         There was also an additional pressure on the Council’s budget of £4.96m arising from non-Covid related spend. This figure had remained largely consistent. 

·         The biggest impact on additional costs from Covid was within Adult Social Services due to the costs of providing care packages. There was also a significant hit to income streams across the Council of around £10m.

·         The cost to the HRA arising from loss of rental income had improved from around £9.6m in Q1 to a forecast position of around £4m.

·         Another area of concern highlighted was around the Dedicated Schools Grant, the deficit for which had increased from last year despite additional income from government. It was anticipated that the overspend position at year-end could be £15m. This figure was ringfenced and so could not be subsumed by the General Fund. The Director of Finance advised that other local authorities were in a similar position and that there was some hope that the government would provide additional financial assistance to help cover the cost of the overspend in this area.

·         The Government had allowed local authorities to spread the impact of non-collection of Council Tax and Non-Domestic Rates over three years.

·         There was a significant slippage within the Capital Programme due to Covid. Much of the capital allocated for housing delivery would be rolled over to futures years.

·         The Director of Finance assured the Committee that the authority did have the means to overcome the impact on its budget, regardless of the level of additional government support, but there would be a detrimental impact to the Council’s resource position for next year onwards in doing so.

The following arose during the discussion of this item:

a.    The Chair sought clarification around the High Needs Block and the nature of the lobbying for resources that was taking place. The Chair also requested further information around what the recovery plan with key partners was for the High Needs Block. In response, officers set out that it was the overspend in the High Needs Block that was driving the forecast overspend within the DSG. The Committee was advised that this was an issue across local government and that lobbying was taking place at a national level for additional financial support from central government.

b.    The Committee requested further details from the Director of Children’s Services on the recovery plan and involvement of key partners around the High Needs Block. (Action: Ann Graham).

c.    The Committee sought clarification around the overall pressure on the budget from the Bernie Grant Art Centre. In response, officers advised that the Council was providing grant relief to the centre by forgoing some income that was due to be paid to Council. This amounted to around £35k. The Council would use the money due to them to pay down a grant that was due to be cleared by the organisation. In effect, the organisation would be receiving an ongoing additional grant as the Council would be paying down the debt from the grant on their behalf. The grant was around £340k over a 9-10 year period.

d.    In relation to a query around the nature of non-Covid pressures, the Committee was advised that the two main areas of  pressure identified in the report were Children’s Services and in Place. Overall, the level of non-Covid pressures identified was not felt to be an extreme position and the Director Finance was hopeful of reducing this figure before year-end. 

e.    In relation to support for local SME business, it was noted that the Council had been active in providing business rate relief as well as business grants to the sector.

f.     In relation to a query around contingency funds and whether that effectively enabled the government to hold back funding for local government, the Committee was advised that there was some capacity to absorb financial shocks through contingency reserves. However, the Director of Finance advised that he had seen no evidence that grants from government were impacted by the level of reserve held by a particular authority. It was not thought that the level of  grant received by Haringey had been impacted by its balance sheet or its financial strategy.

g.    In relation to contingencies within the capital strategy, the Director of Finance set out that a capital contingency was established within the MTFS to allow the authority to respond quickly to circumstances. However, this contingency was not used  and a new financial plan would be presented to Cabinet as part of the updated MTFS in December.

h.    In response to a question, the Director of Finance advised that there was a Covid slippage of £8.3m from the £16.538m savings target for 2020/21, however, this position had improved during Q2. The Director of Finance advised that the key was how the non-delivery of these savings was picked up in future years. This would be addressed in the latest MTFS.

i.      In response to a request for clarification, the Committee was advised that the Directorate level forecast at Appendix 1 of the report showed both Covid and non-Covid related budget pressures, totalling £49m.

j.      In response to a question around contingencies in the event that the government did not provide all of the grant funding promised, the Director of Finance restated that an additional £8.3m had been received in grant funding since the Q1 position and the authority was continuing to pressure the government to fill the gap in the cost of responding to Covid-19.  There was a contingency built-in to the budget around non-delivery of savings and the uncertainty around the impact of Brexit, this would be used to offset any shortfall in the first instance.

RESOLVED

That OSC:

     I.        Noted the forecast revenue outturn for the General Fund (GF), including the impact of Covid, and known and estimated levels of announcedCovid funding, is a net overspend of £23.1m. This is before any further emergency grant support (Section 6, Tables 1a and 1b, and Appendix 1 of the report). This excludes the DSG forecast.

    II.        Noted that Directors have been asked to focus on actions to bring the forecast overspend down before the end of the year.

  III.        Noted the net Housing Revenue Account (HRA) forecast of £9.6m overspend (Section 6, Table 2, and Appendix 2 of the report).

  IV.        Noted the net DSG forecast of £4.6m overspend, the actions being taken to seek to address this and the potential implications for the GF (Section 7 and Table 3 of the report).

   V.        Noted the forecast budget savings position in 2020/21 which indicates that 50% (£8.3m) may not be achieved. (Section 8, Table 4 and Appendix 3 of the report).  This is incorporated in the GF budget pressures addressed in recommendation I above.

  VI.        Noted the proposed budget adjustments and virements to the capital programme as set out in Table 5 and Appendix 4 of the report and note the forecast expenditure of £251.5m in 2020/21 which equates to 43% of the revised capital budget (Section 9, Table 5 and Appendix 4 of the report).

VII.        Noted the budget virements as set out in Appendix 5 of the report.

VIII.        Noted the debt write-offs approved in Quarter 4 2019/20 (Appendix 6 of the report).

  IX.        Noted the Council’s income recovery practices, operative from 1 October 2020, following the temporary changes made since April of this year (Section 10 of the report).

   X.        Noted the approach to providing assistance to the Bernie Grant Arts Centre, as set out in section 6.17.6 of the report.