Agenda item

Report atached.

Members considered a report of Councillor Peter Britcliffe, Deputy Leader of the Council and Portfolio Holder for Resources, informing Cabinet of the financial spending of the Council up to the end of June 2023 for the financial year 2023/2024 and the forecast impact on the Council’s Medium Term Financial Strategy for 2023/2024 to 2025/2026.

Councillor Britcliffe highlighted that this was a report containing good news and demonstrated that the Council was able to manage finances within its budget for the year and was on course to return a surplus of £151k at year end.  This was being delivered notwithstanding a freeze in Council Tax for 2023/24.  The annual pay award and other inflationary pressures would be contained within the budget and these would be offset by returns from higher interest rates on investments.  Over the Medium Term an increase in costs of £103k was forecast.  However, overall the information showed the Council in a good financial position.

Councillor Noordad Aziz commented that the revised reporting format was an improvement.  He asked if the projected positive variance could potentially fund the return of free pest control visits.  Notwithstanding the eligibility of some residents to claim from the Household Support Fund, he expressed a view that the cost of a visit put off residents from calling the Council.  Councillor Britcliffe responded that the question was not within the scope of the report provided.  However, Councillor Smithson, Deputy Leader of the Council and Portfolio Holder for Environmental Services, indicated that the changes introduced to the service had achieved the objective of reducing waiting times.  The successful reduction in waiting times was also noted by Councillor Loraine Cox.  Councillor Britcliffe reiterated that residents who could not afford to pay could claim from the Household Support Fund.

Councillor Mohammed Younis thanked the Portfolio Holder and Council officers for their prudent financial management.

Approval of the report was not deemed a key decision.

Reasons for Decision

Key financial details were set out as a table at the end of the report.

The current forecast spend to the end of the financial year in March 2024 was £14.231m compared to a Budget of £14.383m.  This forecast produced a positive variance of £0.151m by the end of the financial year.  Further analysis of these changes were shown in section 4 and Appendix A of the report.

Appendix A included a breakdown of the Forecast Outturn Variances between staffing costs, non-staffing costs and income.  Some service areas showed large variances in the breakdown figures where grant funding was received and subsequently used to fund expenditure but budgets were not in place because the amounts were not known in advance.  In these instances, although the breakdown figures might be large, they offset each other and the overall variance was much lower, or even nil.  The largest instance of this was in the Customer Contact section under Resources.  The breakdown of variances showed £1.276m for non-staffing costs and £1.428m for income, which related to forecast increases in Housing Benefit payments and Subsidy to be received.  Another instance where the breakdown figures were skewed was in Regeneration and Housing on Housing Advice where extra grant income had been forecast and would be offset by increased expenditure.

The forecast outturn position as at quarter 1 included budget pressures for the nationally awarded pay award for staff that was forecast to be on average 1.5% above the original budgeted inflation figure of 5%.  This increase was offset by increased investment income due to the recent rises in interest rates.

Forecast Variance by Service

The forecast underspend by service was as summarised below, with the variances including the budget pressures and additional investment income as mentioned above.

Medium Term Financial Strategy Forecast 2023/2024 to 2025/2026

As could be seen from the forecast information above, there were some significant variances included that were having an effect across all service areas and these were shown in the table below along with the impact they would have on the Council’s Medium Term Financial Strategy over the next three years until 2025/2026.

These pressures for 2023/2024 were offset by in year savings that would enable the Council to meet additional costs through the use of earmarked reserves and a small increase in the savings target that now forecast an outturn underspend of £151,000 for the year.

The cumulative impact of the budget pressures on the Medium Term Financial Strategy was forecasting that there would be a further increase in costs of £103,000 taking the overall forecast shortfall to £0.917m by the end of 2025/2026.

The forecasts included in the Medium Term Financial Strategy approved in February 2023 included the assumptions below and, therefore, any changes in future budget and funding decisions would have both positive and negative impacts on the shortfall figure.

The assumptions already contained in the current Medium Term Financial Strategy for future years 2023/2024 and 2024/2025 were:

·       a 5% Pay Award for all years – indications were that this would be above that figure in 2023/2024 and the impact of this had been reflected for the future years in the table above.

·       a 5% General inflation on all supplies and services – currently inflation was running at 8.7% and it was likely that this might affect future forecasts if these costs could not be maintained within the current budget resources.

·       a forecast increase of 2% on Council Tax along with a 2% growth in the Council Tax property base.  Currently the Council had the option to raise the Council’s element of Council Tax by a maximum of 2.99% or £5.00, whichever was highest.  Raising Council Tax to the maximum would be an option that would need to be considered in the next Budget setting process to help reduce the gap on the Medium Term Financial Strategy.  Council Tax currently provided approximately 40% of the Councils required Funding.

·       a 3% increase in Government funding through the Revenue Support grant – The Council currently received £2.038m in this funding, which was approximately 14% of the Council’s required funding.  The potential for reduction or removal of this funding could create a significant financial pressure, although it was expected that there was unlikely to be announcements for changes in the Revenue Support Funding prior to a General Election.

·       a 3% increase in Business rates funding.  Business rates currently provided approximately 46% of the Council’s required funding.

The future impact on the Council’s Medium Term Financial Strategy would continue to be monitored and a revised strategy would be published later in the year.

There were no alternative options for consideration or reasons

Resolved                                    -    That Cabinet notes the report and asks Corporate Management Team to continue to reduce expenditure and increase income so as to further improve the overall financial position of the Council over the remaining months of the year.