Agenda item

The Select Committee gave consideration to a report of the Director of Finance which provided an update on the deployment of additional revenue and capital grants received in 2020/21 and advised of the financial challenge for the Council arising from the COVID-19 pandemic.  The Select Committee were also provided with an update on the Council’s 2020/21 forecast revenue budget position and the financial position of the capital programme as at 30 June 2020 (Quarter 1) together with the revised capital programme 2020/25.  The reports had been included on the Cabinet agenda on 24^th August 2020.

The report was presented with two appendices which enabled the review of the financial position of the Council. 

The Financial Update – Budget 2020/21 and 21/22 were attached at Appendix 1 of the report and provided detail of the additional grant funding which had been received since the Cabinet meeting of 23 April 2020 that included the range of significant grants to provide support related to the COVID-19 pandemic.  Details was also provided on the financial information that the Council provided to the Ministry of Housing, Communities and Local Government (MHCLG) on a monthly basis and the on-going impact of COVID-19 on the financial position of the Council in 2020/21 and future years. 

The Revenue Monitor and Capital Investment Programme 2020/21 Quarter 1 report attached at Appendix B of the report presented the current forecast outturn position for 2020/21.  Information on the Quarter 1 position of the Dedicated Schools Grant (DSG), Housing Revenue Account (HRA) and the Collection Fund was also outlined in the report.  The report also outlined the most up-to-date capital spending position for 2020/25 for approved schemes.

The reports enabled the Select Committee to review how the Council was dealing with the financial challenge of the COVID-19 pandemic, how the various additional grants had been applied and how that translated to the forecast revenue budget position for 2020/21 and future years.

Cabinet at its meeting on 23 April 2020 considered and approved a report which provided a financial update and an outline of a range of grants that had ben received from Central Government.  The report attached at Appendix A provided an update on the information and details of the most recent:

·         COVID related unringfenced revenue grants received

·         COVID related ringfenced revenue grants received

·         Other ringfenced revenue grants

·         Other unringfenced revenue grants

·         Capital grants including those received since April

The report advised on the impact of COVID-19 on the financial position of the Council.  The July return to MHCLG highlighted an in-year pressure of £17.112m in excess of funding currently available.  There was also the requirement to increase the budget reduction target for 2021/22 and the measure that were being taken in 2020/21 to control expenditure given the financial pressure in year presented by the response to the pandemic. 

The Cabinet Member for Finance and Green introduced the report and included information related to the grants which had been received, the allocation of the grants and the projected deficit of £30m for 2020/21 and an anticipated gap of £41m in the following year.

Members were informed that the position of the authority was not as anticipated when the budget was set in February from both an operational and financial perspective.  In the context of the financial challenge, the amount of expenditure was being reviewed as well as the impact of the lost income.  The financial pressures were highlighted with a focus on adult and children social care, costs associated with waste collection disruption, and the impact on capital and treasury because of interests in dividend income.  The Dedicated Schools Grant (DSG) remained in deficit, the grant had not been impacted by COVID but needed to be brought back into balance.  The Housing Revenue Account (HRA) had not been impacted particularly.  The collection fund had a deficit.  The Capital Programme reflected an increase in the grant but had seen little movement in the financial year and was being monitored.

Members raised a question related to the Minister’s letter which was appended to the report which stated at the outset that funding would be provided asked how accurate the statement was.  Members were informed that initially the government had said funding would be provided, then further information was later received about sharing the burden.  There would not be full compensation for commercial income.  This had led to the £30m reduction in the budget on top of losing £215m over the austerity period.  There was a difficult financial challenge.  Letters had been sent to the Government from the Leader of Council, Cabinet Member for Finance and Green, the Greater Manchester Mayor and MPs. 

Members asked a question related to business rates and the Autumn spending review, referred to the motion at the Council meeting in July and the petition which challenged the government and asked if there had been any response and the use of reserves being sustainable based on current projections.  Members were informed that with regard to financial sustainability there were sufficient reserves.  There were also management actions in place to reduce expenditure.  The S.151 Officer would determine the judgement.  Assumptions were being made related to government funding which would need to be revisited.  Reserves could only be used once.  Members were informed of a local authority who had approached the MHCLG for support in a financially challenged position which included an option to capitalise expenditure.  CIPFA had issued guidance on issuing notices.

Members asked it was fair to say that this was another u-turn and put local authorities in the firing line.  Members were informed that no response had yet been received from government.  Local government had borne the brunt of the cuts with many authorities at breaking point.  Local services were co-ordinated by Councils during the pandemic and had played a key role on a daily basis.

RESOLVED that the Select Committee note the financial position of the Council as outlined in the report and the information provided.