Decision:
RESOLVED:
To note the update on the overall financial position.
Minutes:
4.1 The Group Director of Finance and Corporate Resources presented to the Committee, highlighting the following:
· General Fund Forecast 2022/23 - forecast overspend of £8.409m;
· Financial pressures driven by high inflation, pay award, demand in services such as social care;
· Housing Revenue Account (HRA) position 2022/23 - forecast overspend in net operating expenditure of £10.728m. This could be brought into balance by a reduction in revenue contributions to capital;
· The cost of borrowing had increased;
· The current energy price guarantee to be removed from April 2023;
· Provisional local government settlement in 2023-24 was set out;
· The Revenue Support Grant will rise in line with the CPI;
· The Services Grant had been cut;
· The New Homes Grant had been reduced;
· Summary of consultation responses - key points set out;
· 2023/24 budget journey;
· Gap for 2023/24 had increased to £28.8m as a result of the staff pay award. A review of budget assumptions had reduced the amount to £13m;
· What the Local Government Funding Settlement means for the Council’s 2023/24 budget - provides the ability to consider raising Council Tax by 5 percent/ additional social care monies/ provides the capacity to deal in part with rising costs in this area; also able to set aside a bit more for inflationary pressures such as energy
· 2023/24 Council Tax and Budget will be proposed at Cabinet on 27 February and Full Council on 1 March 2023
· The HRA continues to be under considerable pressure with the need for savings of £15m over the next 3 years;
· Forecast spend on the capital programme was £165m;
· Cost of living crisis response was set out in the context of the Poverty Reduction Framework;
· Accounts Update - Opinion on the 2020/21 accounts remained outstanding as a result of the moratorium that Mazars had placed on audit;
· opinions. The 2021/22 draft statement of accounts had been published
· in July
· The terms of reference of the Reserves Deep Dive had been agreed.
4.2 The Chair commended officers on the production of the Help at Hand
booklet. She welcomed that there would be no new Council borrowing.
4.3 Councillor Chapman told the Committee that the level of the Government
settlement was below what was required with concerns that a 1 year settlement left little scope for planning. There continued to be a forecast £40m deficit for 2 years hence and considerable financial pressures would continue for some years.
4.4 Councillor Gordon asked for clarification with regard to the Special
Educational Needs deficit and other pressures on education and children
services.
4.5 Councillor Garbatt asked for clarification on the Council’s level of financial risk.
4.6 Councillor Smyth asked how much reliance the Council would place on
borrowing to ensure the maintenance of the Capital Programme.
4.7 The Group Director of Finance and Corporate Resources highlighted:
· That there had been a statutory override around how Local Authorities accounted for schools deficit around Special Education Needs (SEN) and that this would be extended for a further 3 years. Work was ongoing to address the SEN funding difficulties. An update on this matter would be made to the Audit Committee in April 2023;
Action: The Group Director of Finance and Corporate Resources
· Schools were facing considerable cost pressures and work was ongoing to support schools;
· There was concern that the financial settlement was only for one year as this did not allow for time to plan in the medium term.;
· Each capital scheme was funded differently. Consideration was given to viability and affordability of schemes with the need to recognise the likelihood that some schemes would not produce the income for the cost of building. There was a need to be clear about specifications, economies of scale and the approach to procurement. The Council would need to be agile in its approach to procurement.
RESOLVED:
· To note the update on the overall financial position.