Agenda item

The Cabinet 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.

In relation to the Revenue position, the Cabinet was 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 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 are the People and Place, Children’s Services and Community Health & Adult Social Care Portfolios. Action was being taken and will continue for the remainder of the financial year to address variances and take mitigating action as detailed in the report.

The Cabinet noted the overall corporate position was, 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 has been submitted to the MHCLG but not yet formally agreed for payment. The overall pressure was further offset by a refund from the GMCA for waste disposal contributions. In Appendix 1 to the report, both the full Government grant and the refund were presented as single sums 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, this summary report presents the position after applying the Government grant and the refund across Portfolio areas.

Section 4 of the report advised Cabinet of the grants that the Council had received. There have 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 therefore 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. As previously mentioned, there was an expectation of increased grant funding and external contributions which, based on current projections should bring the Council to a balanced position by the year end. However, it was important to note 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 depends on the future direction of the pandemic, Government action and the response required from the Council.

Information on the Month 8 position of the Dedicated Schools Grant (DSG), Housing Revenue Account (HRA) and Collection Fund was also outlined in the report. There were no significant issues of concern in relation to the HRA and Collection Fund, 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

With regard to the Capital position, 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). It was probable that the forecast position would continue to change before the year end with additional re-profiling into future years. The Month 8 Revenue Monitor and the Capital Investment Programme 2020/21 report was presented to the Overview and Scrutiny Performance and Value for Money Select Committee on 28 January 2021 to accompany the suite of 2021/22 budget reports. The Select Committee was content to note the report and commend it to Cabinet for approval.

Options/Alternatives considered

Option 1 – To approve the forecast revenue and capital positions presented in the report including proposed changes.

Option 2 – To approve some of the forecasts and changes detailed within the report.

Option 3 – Not to approve any of the forecasts and changes detailed within the report.

RESOLVED – That:

1.    The 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 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 at Month 8 as presented in Annex 2 of the report be approved.