Agenda item

Report of the Director for Finance. To be introduced  by the Cabinet Member for Finance and Corporate Services.

This report will provide an update on the Quarter 1 budget monitoring and Council's financial position. It will seek approval for any changes to the Council's revenue or capital budgets required to respond to the changing financial scenario and the delivery of the MTFS.

The Cabinet Member for Finance and Corporate Services introduced the report which set out the position at Quarter 1 (Period 3) of the 2024/25 financial year including General Fund (GF) Revenue, Capital, Housing Revenue Account (HRA) and Dedicated Schools Grant (DSG) budgets. The report focused on significant budget variances, including those arising from the forecast non-achievement of approved Medium Term Financial Strategy (MTFS) savings.

The Cabinet Member outlined that figures in the report showed a projected £20m overspend by year end, if no mitigation actions were taken and significant work was being undertaken to reduce in-year spend.

The Cabinet Member continued to outline the achievements of the Council as well as the substantial financial challenges with ongoing increases in the cost of Adult and Children’s social care (predominantly placements) and temporary accommodation for homeless families.

It was noted that the Housing Revenue Account (HRA) continued to show pressure, caused primarily by the continued high number of void properties and the costs of legal disrepair. There was significant work being done to accelerate void repairs and disrepair cases to improve this position and the HRA budget overspend was still well within the £8m set aside annually for capital investment.

The capital programme was under constant review and would be reconsidered in the light of these financial projections to reduce the revenue implications of any additional borrowing.

The organisation was currently working on refreshing the agreed Budget and Medium-Term Financial Strategy (MTFS) and there was full awareness of the impact that the Qtr1 forecast had on both delivering the agreed Corporate Delivery Plan and the financial planning process for the MTFS.

In response to questions from Cllr Emery and Cllr Mason, the following information was provided:

-       In relation to increasing the Council's bad debt provisions, this was not an indication of a specific issue but to aid budget forecasting as usually an estimate or a calculated figure was added at the year end. However, in the new reporting process being put in place this year, this would allow a view to be taken at the end of quarter two, rather than leaving it to the end of the year.

-       With regards to the likely litigation success and the costs concerning housing disrepair cases brought against the Council by tenants and leaseholders, it was explained that regardless of whether the case was likely to be successful or not, the case needed to be managed. It was expensive for the Council to use outside legal support and there were mitigations being put in place to right size the in-house legal team to manage those cases. It was further noted that the Council were moving away from a legacy position and starting to manage pre-orders in place so those cases would be managed in house for the Council to deal with internally. This was expected to be a cost-effective way to control the costs internally.

-       The Council had not anticipated two pre-election periods, and the second election period had delayed the libraries consultation and in turn savings timescale.

-       Noted that Cllr Mason would seek to put her question on the financial impact of no-fault evictions in writing to the Cabinet Member for Housing, and Planning (Deputy Leader).

RESOLVED:

1. To note the forecast total revenue outturn variance for the General Fund of £20m comprising £18m base budget pressures and £1.978m savings delivery challenges. (Section 6, Table 1, Table 2 and Appendices 1 & 3).

2. To approve the revenue budget virements and receipt of grants as set out in   Appendix 6.

3. To note the net DSG forecast of £2.5m overspend. (Section 6 and Appendix 1).

4. To note the net Housing Revenue Account (HRA) forecast surplus is £3.093m lower than anticipated when the budget was set. (Section 6 and Appendix 2).

5. To note the forecast General Fund and HRA Capital expenditure of £310.285m in 2024/25 (including enabling budgets) which equates to 58% of the total current programme for 2024/25. (Section 8 and Appendix 4).

6. To approve the proposed budget adjustments and virements to the capital programme as set out in Table 3 and Appendices 5 and 6.

7. To note the debt write-offs approved in Quarter 1 2024/25 which have been approved by the Director of Finance under delegated authority (Appendix 7).

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 as set out in the Corporate Delivery Plan and to meet its statutory duties. This is made more critically important than ever because of the uncertainties surrounding the Council’s uncertain and challenging financial position, which is impacted by Government funding, high demand for services, particularly for

the most vulnerable and the wider economic outlook.

Alternative Options Considered

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