Agenda item

The Select Committee gave consideration to a report of the Director of Finance which provided them with an update on the Council’s 2020/21 forecast revenue budget position and the financial position of the capital programme as at 30 November 2020 (Month 8), together with the revised capital programme 2020/25.

The Cabinet Member for Finance and Corporate Green and the Director of Finance presented the report and addressed the enquiries of the Select Committee.

In relation to the Revenue position, Members were informed that the current forecast outturn position for 2020/21 was a projected deficit variance of £8.330m after allowing for approved and pending transfers to and from reserves.

The position also included additional costs and pressures that had 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 had impacted on the Authority’s budgets as a result of the pandemic

The pandemic had 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.

Members were informed that the overall corporate position was partly being offset by the application of the £24.902m unringfenced Government COVID related grant funding from the Ministry for Housing, Communities and Local Government (MHCLG), of which £7.641m was received in 2019/20 and held in a specific Earmarked Reserve to underpin the 2020/21 budget. There had been actual, in-year, receipts of £16.337m of COVID Emergency Funding, including £1.282m for the first claim for loss of income in relation to sales, fees and charges under the income compensation scheme (SFC). In addition, provision was made for the second SFC claim, calculated as £0.924m for the period August to November, which had been submitted to the MHCLG but not yet formally agreed for payment. 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 fully offset the adverse variance. However, the summary report presented the position after applying the Government grant across Portfolio areas.

An update detailing the major issues driving the projections was contained within Annex 1, Section 3.

Section 4 of the report advised the Select Committee of the grants that the Council had received. There had been a number of developments particularly in relation to support for businesses and to provide additional support for the Council. Further grant funding and external contributions were expected, as a result, both the overall financial position and the application of Government grant would change during the remainder of the financial year.

As this financial monitoring report reflected the financial position at Month 8, 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. There was an expectation of increased grant funding and external contributions which, based on current projections should address the £8.330m adverse variance and bring the Council to a balanced position by the year end.

Members noted the worsening position in relation to the course of the

pandemic, potentially made more challenging firstly by the Authority, along with rest of Greater Manchester being placed under Tier 4 Stay at Home restrictions from 31 December 2020 and then the full national lockdown effective from 5 January 2021. Financial pressures on the Council could increase even further and therefore, much therefore depended on the

future direction of the pandemic, Government action and the response required from the Council.

Information on the latest position of the Dedicated Schools Grant (DSG), Housing Revenue Account (HRA) and Collection Fund was also outlined in the report. There were currently no significant issues of concern in relation to the HRA, however the Collection Fund was forecasting an in-year, deficit of £7.110m directly as a result of COVID-19. This would have a budgetary impact in 2021/22. The DSG continued to be an area which was facing a financial challenge with a revised, projected deficit of £4.559m at the end of the current financial year. Action was being taken with the aim of reducing the cumulative deficit and bringing the DSG towards a balanced position. The projection was that the DSG would be balanced by 2023/24.

In relation to the 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 £81.013m at the close of Month 8, a net decrease of £66.619m from the original budget of £147.632m. Actual expenditure to 30 November 2020 was £50.566m (62.42% of the forecast outturn).

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

Members sought and received clarification on the table in paragraph 2.3, which indicated a significant funding gap. They were informed that the Council had received £24M grant support that was not ring-fenced and £17M of ring-fenced grant. Further funding was expected in relation to fees and charges. The figures set out were best estimates and the forecast was subject to change.

The Select Committee RESOLVED that the following be noted:

1.    Forecast revenue outturn for 2020/21 at month 8 being a £8.330m adverse variance having regard to the action being taken to manage expenditure

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

3.    Use of reserves as detailed in Appendix 1 to Annex 1

4.    The revised capital programme for 2020/21 to 2024/25 at Month 8 as presented in Annex 2.