Agenda item

Report attached.

Members considered a report of Councillor Peter Britcliffe, Deputy Leader of the Council and Portfolio Holder for Resources, regarding the financial spending of the Council up to the end of December 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 outlined the purpose of the report.

Councillor Noordad Aziz enquired about the amount of underspends now committed to other projects.  He also asked for a more detailed breakdown of the forecast variance for Non-Service Items, as this represented a large financial sum.  Mr Dyson responded that the main changes since the last quarterly report included a £490k subsidy to Hyndburn Leisure and a £175k contribution to reserves to provide a contingency fund for the leisure development at Wilson’s Playing Field.  The consultants fees in connection with the Huncoat Garden Village project were being funded by existing reserves, not revenue underspending.  In respect of Non-Service Items, these included investment income, investment income from cash balances and capital financing.

The Chair reported that even after making resources available to fund the Leader’s Budget, Community Chest and the Persistent Organic Pollutants (POPs) waste collection service, the Council was forecasting a positive year end variance of approximately £460k.  Councillor Munsif Dad BEM JP enquired about how this money would be reallocated.

Approval of the report was not considered to be a key decision.

Reasons for Decision

The financial detail was provided in a table set out as Appendix A to the report.

The current forecast spend to the end of the financial year in March 2024 was £13.925m compared to a Budget of £14.383m.  This forecast produced a positive variance of £0.458m by the end of the financial year.  Further analysis of these changes was provided 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 Regeneration & Housing Services.  The breakdown of variances showed £1.507m for non-staffing costs and £1.462m for income, which related to forecast increases for the Huncoat Garden Village scheme and the grant received for Asylum Seekers.

The revenue forecast underspend in year was a decrease since the figure of £0.998m reported at the end of Quarter 2 (Period 6).  Further analysis of these changes was shown in Section 5 and with a table of movements in the last quarter at Section 5.2 of the report.

The forecast outturn position as at Quarter 3 included budget pressures for the nationally awarded pay award for staff that was 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.

The forecast underspend by service was summarised below, with the variances including the budget pressures and additional investment income mentioned at Paragraph 3.4 of the report.

The report included a more detailed commentary on the variances and reasons for those variances on a service by service basis.

The decrease in underspend from Quarter 2 was as summarised below:

A more detailed breakdown of the changes since the last quarter was set out in a further financial table in the report, along with a written commentary about the individual items shown.

Although the forecast underspend at Quarter 3 stood at £0.458m, there were some real pressures and risks that needed to be considered that were not currently built into any financial forecasts.

The main (in year) pressures / risks to be considered were as highlighted below.  A more comprehensive description of these items was provided in the report:

• Waste Disposal Site / Transfer Station;
• Oswaldtwistle Civic Theatre;
• Crematorium / Cremators; and
• Leisure Trust Support.

These pressures / risk might need to be considered for Quarter 4 as costs against the Quarter 3 forecast underspend in year.

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

The Medium Term would be affected by the forecast underspend in year and highlighted pressures.  The latest strategy was in the process of being updated to reflect the latest projections and impact of inflation.

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 any surplus or shortfall projected.

The assumptions already contained in the current Medium Term Financial Strategy for future years 2024/2025 and 2025/2026 were:

• 5% Pay Award for all years;
• 5% General inflation on all supplies and services;
• Forecast increase of 2% on Council Tax along with a 2% growth in the Council Tax property base;
• 3% increase in Government grant funding; and
• 3% increase in Business Rates funding.

The Council’s Medium Term Financial Strategy was currently being revised to reflect the provisional local government finance settlement for 2024/25.

There were no alternative options for consideration or reasons

Resolved                                 (1)   That Cabinet notes the report and asks Corporate Management Team to continue to monitor the financial position of the Council over the remaining months of the year.

(2)   That Cabinet notes the potential pressures and risks highlighted in Section 6 of the report, and that regular updates will be provided on any potential impact on the current forecast underspend in year and the future Medium Term Financial Strategy.