Agenda item

Consideration was given to a report of the Director of Finance which sought to provide the Cabinet with an update on the Council’s 2020/21 forecast revenue budget position at Annex 1 and the financial position of the capital programme as at 31 October 2020 (Month 7) together with the revised capital programme 2020/25, as outlined in section two of the report at Annex 2 of the report.

The current forecast outturn position for 2020/21 was a projected deficit variance of £8.504m after allowing for approved and pending transfers to and from reserves.

Revenue Position

It was reported the position also included additional costs and pressures that have been identified by the Authority in this financial year as a direct result of the Governments ongoing arrangements to mitigate the spread of COVID-19 which commenced on 23 March 2020. The additional pressures included forecasts of both income shortfalls and additional expenditure that have impacted on the Authority’s budgets as a result of the pandemic

The pandemic has affected nearly all aspects of Council service delivery; however, the most significant areas of concern were the People and Place, Children’s Services and Community Health & Adult Social Care Portfolios. Action was being taken and would continue for the remainder of the financial year to address variances and take mitigating action as detailed in the report.

The overall corporate position was partly being offset by the application of the £23.978m un-ringfenced Government COVID related grant funding from the Ministry for Housing, Communities and Local Government (MHCLG).  Of this sum, £7.641m was received in 2019/20 and held in a specific Earmarked Reserve to underpin the 2020/21 budget and receipts in 2020/21 of £15.055m COVID Emergency Funding, of which £8.928mm is new funding introduced at month 7, including £1.282m for loss of income in relation to sales, fees and charges under the income compensation scheme. In Appendix 1 to the report, the full Government grant was presented as a single sum so that it highlighted the level of variation across all Council budgets, given that there was still insufficient resource to offset the adverse variance. However, this summary report presented the position after applying the Government grant across Portfolio areas. 

Further General Fund grant was expected, certainly in respect of lost income for sales, fees and charges (with two further returns scheduled for the current financial year), both the overall financial position and the application of Government grant would therefore change during the course of the financial year.

As this financial monitoring report reflected the financial position at Month 7, it could be regarded as an indicator of the potential year end position, however, management action had been initiated across all service areas to review and challenge planned expenditure and to maximise income.  Although, the effect of this action had still to take full effect, and the Council was clearly operating in an uncertain and volatile environment, it is anticipated that by the year end, the outturn deficit should be reduced.

However, it was important to note the worsening position in relation to the course of the pandemic and the continued stringent, Tier 3 restrictions re-imposed in Oldham following the end of the new national lockdown.  Financial pressures on the Council could increase even further and therefore the variance could rise. 

Information on the latest position of the Dedicated Schools Grant (DSG), Housing Revenue Account (HRA) and Collection Fund is also outlined in the report.

Capital Position

The report outlined the most up to date capital spending position for 2020/21 to 2024/25 for approved schemes. The revised capital programme budget for 2020/21 was £90.121m at the close of Month 7, a net decrease of £57.511m from the original budget of £147.632m.  Actual expenditure to 31 October 2020 was £47.508m (52.72% of the forecast outturn).

It was probable that the forecast position would continue to change before the year end with additional re-profiling into future years.

Options/alternatives:

Option 1 - To approve the forecast revenue and capital positions presented in the report.

Option 2 - To approve some of the forecasts and changes included in the report

Option 3 - Not to approve any of the forecasts and changes included in the report

RESOLVED – That

1.    The forecast revenue outturn for 2020/21 at Month 7 being a £8.504m adverse variance having regard to the action being taken to manage expenditure be approved.

2.    The forecast positions for the Dedicated Schools Grant, Housing Revenue Account and Collection Fund be approved.

3.    The use of reserves as detailed in Appendix 1 to Annex 1 of the report be approved.

4.    The revised capital programme for 2020/21 to 2024/25 as at Month 7 as presented in Annex 2 of the report be approved.