Subject:
|
Targeted Budget
Management (TBM) 2021/22:
Month 9
(December)
|
Date of Meeting:
|
10 February 2022
|
Report of:
|
Acting Chief Finance
Officer
|
Contact Officer:
|
Name:
|
Jeff Coates
|
Tel:
|
292364
|
|
Email:
|
Jeff.Coates@brighton-hove.gov.uk
|
Ward(s)
affected:
|
All
|
FOR GENERAL RELEASE
1
PURPOSE OF REPORT AND POLICY CONTEXT:
1.1
The Targeted Budget Monitoring (TBM) report is a key component of
the council’s overall performance monitoring and control
framework. This report sets out an indication of forecast risks as
at Month 9 on the council’s revenue and capital budgets for
the financial year 2021/22. As last year, the report includes
memorandum information to indicate the element of the forecast
attributable to the pandemic.
1.2
The forecast for 2021/22 at Month 9 (December) is a £1.093m
underspend on the General Fund revenue budget, assuming the
reallocation of Contain Outbreak Management Funding as set out in
the report. This indicates a favourable turnaround form the
previously reported overspend of £3.396m at Month 7. This
improved position is important in the context of the substantial
call on one-off resources both this year and next and will help to
reduce the level of borrowing from reserves to support Collection
Fund deficits, one-off Covid costs and the 2022/23 budget.
1.3
Forecasting expenditure and income over the year has remained
challenging due to uncertainty over the impact of ongoing Covid
restrictions and the potential impact of changes to other support
such as changes in eviction legislation, the ending of furlough,
the withdrawal of Universal Credit top-up’s and the extent to
which these may be alleviated by the Household Support Fund,
isolation payments, and general economic recovery. These factors
can variously impact the council’s budget through impacts on
income (e.g. due to reduced visitor activity), increased
homelessness and/or increased Council Tax Reduction claimants.
1.4
On other matters, the report indicates that £3.314m (31%) of
the substantial savings package in 2021/22 of £10.687m is at
risk. Of this, £0.890m is due to pressures arising from
COVID-19.
1.5
With regard to the Capital Investment Programme, this continues to
be affected by the pandemic and re-profiling of costs into future
years remains higher than normal.
2
RECOMMENDATIONS:
2.1
That the Committee note the forecast risk position for the General
Fund, which indicates a potential forecast underspend of
£1.093m. This is net of an underspend of £1.877m on the
council’s share of the NHS managed Section 75 services.
2.3
That the Committee note the forecast for the Housing Revenue
Account (HRA), which is currently an overspend of
£1.705m.
2.4
That the Committee note the forecast risk position for the
Dedicated Schools Grant which is an overspend of
£0.346m.
2.5
That the Committee note the forecast outturn position on the
capital programme which is a forecast underspend of £5.671m
and approve the variations and slippage in Appendix 6 and new
schemes and future years’ variations as set out in Appendix
7.
3
CONTEXT/ BACKGROUND INFORMATION
Targeted Budget
Management (TBM) Reporting Framework
3.1
The TBM framework focuses on identifying and managing financial
risks on a regular basis throughout the year. This is applied at
all levels of the organisation from Budget Managers through to
Policy & Resources Committee. Services monitor their TBM
position on a monthly or quarterly basis depending on the size,
complexity or risks apparent within a budget area. TBM therefore
operates on a risk-based approach, paying particular attention to
mitigation of growing cost pressures, demands or overspending
through effective financial recovery planning together with more
regular monitoring of high risk demand-led areas as detailed
below.
3.2
The TBM report is normally split into the following sections:
i)
General Fund Revenue Budget Performance
ii)
Housing Revenue Account (HRA) Performance
iii)
Dedicated Schools Grant (DSG) Performance
iv) NHS
Controlled S75 Partnership Performance
v)
Capital Investment Programme Performance
vi)
Capital Programme Changes
vii)
Implications for the Medium Term Financial Strategy (MTFS)
viii) Comments of the Chief
Finance Officer (statutory S151 officer)
4
General Fund Revenue Budget Performance (Appendix 3)
4.1
The table below shows the provisional outturn for Council
controlled revenue budgets within the General Fund. These are
budgets under the direct control and management of the Executive
Leadership Team. More detailed explanation of the variances can be
found in Appendix 4. Please note that the ‘COVID Variance
Month 9’ column is a memorandum-only column identifying the
extent of the ‘Forecast Variance Month 9’ attributable
to the pandemic.
Forecast
|
|
2021/22
|
Forecast
|
Forecast
|
COVID
|
Forecast
|
Variance
|
|
Budget
|
Outturn
|
Variance
|
Variance
|
Variance
|
Month 7
|
|
Month 9
|
Month 9
|
Month 9
|
Month 9
|
Month 9
|
£'000
|
Directorate
|
£'000
|
£'000
|
£'000
|
£'000
|
%
|
288
|
Families, Children & Learning
|
98,795
|
98,804
|
9
|
446
|
0.0%
|
(1,967)
|
Health & Adult Social Care
|
71,541
|
67,679
|
(3,862)
|
152
|
-5.4%
|
2,716
|
Economy, Environment & Culture
|
43,015
|
44,369
|
1,354
|
3,088
|
3.1%
|
1,603
|
Housing, Neighbourhoods & Communities
|
25,668
|
26,538
|
870
|
794
|
3.4%
|
1,164
|
Finance & Resources
|
23,031
|
24,199
|
1,168
|
3
|
5.1%
|
(37)
|
Strategy, Governance & Law
|
6,198
|
6,036
|
(162)
|
0
|
-2.6%
|
3,767
|
Sub Total
|
268,248
|
267,625
|
(623)
|
4,483
|
-0.2%
|
(371)
|
Corporately-held Budgets
|
(29,226)
|
(29,696)
|
(470)
|
0
|
-1.6%
|
3,396
|
Total General Fund
|
239,022
|
237,929
|
(1,093)
|
4,483
|
-0.5%
|
* The
COVID-19 Grant for 2021/22 is £8.023m but has been treated as
recurrent funding to balance the 2021/22 budget and does not
therefore show as a one-off grant above.
4.2
The General Fund includes general council services, corporate
budgets and central support services. Corporate Budgets include
centrally held provisions and budgets (e.g. insurance) as well as
some cross-cutting value for money savings targets. Note that
General Fund services are accounted for separately to the Housing
Revenue Account (Council Housing). Note also that although part of
the General Fund, financial information for the Dedicated Schools
Grant is shown separately as this is ring-fenced to education
provision (i.e. Schools). The chart below shows the monthly
forecast variances for 2021/22 and the previous three years for
comparative purposes. The impact of the pandemic clearly makes
comparisons difficult at this time.
Demand-led Budgets
4.3
There are a number of budgets that carry potentially higher
financial risks and therefore could have a material impact on the
council’s overall financial position. These are budgets of
corporate significance where demand or activity is difficult to
predict and where relatively small changes in demand can have
significant implications for the council’s budget strategy.
These can include income related budgets. These therefore undergo
more frequent and detailed analysis.
Forecast
|
|
2021/22
|
Forecast
|
Forecast
|
COVID
|
Forecast
|
Variance
|
|
Budget
|
Outturn
|
Variance
|
Variance
|
Variance
|
Month 7
|
|
Month 9
|
Month 9
|
Month 9
|
Month 9
|
Month 9
|
£'000
|
Demand-led
Budget
|
£'000
|
£'000
|
£'000
|
£'000
|
%
|
896
|
Child Agency & In House Placements
|
22,828
|
23,876
|
1,048
|
201
|
4.6%
|
(1,860)
|
Community Care
|
82,958
|
79,371
|
(3,587)
|
0
|
-4.3%
|
5,100
|
Temporary Accommodation
|
10,190
|
15,104
|
4,914
|
4,914
|
48.2%
|
4,136
|
Total Demand-led Budget
|
115,976
|
118,351
|
2,375
|
5,115
|
2.0%
|
The chart below
shows the monthly forecast variances on the demand-led budgets for
2021/22.
TBM Focus Areas
The main pressures
identified at Month 9 are across parts of Families, Children &
Learning, Homelessness, Transport, City Environmental Management
and Culture, Tourism & Sport. Information about these pressures
and measures to mitigate them are summarised below:
4.4
Families, Children & Learning: The current projected
position identifies potentially significant cost pressures:
£0.671m on Services for Children with Disabilities; in- house
Adult Learning Disability Provision £0.158m and Council
Nurseries £0.115m. However, there is a forecast underspend on
Children’s Social Care Services of (£0.110m), Adult
Learning Disabilities Community Care (£0.692m) and Home to
School transport of (£0.069m) together with other variances
of (£0.064m), this results in a forecast of £0.009m
overspend as at Month 9.
£0.446m of the forecast overspend
relates to COVID-19 – this is a combination of loss of
income, impact on savings targets and additional expenditure given
the need to mitigate health risks posed by COVID-19. Work
will continue in implementing financial recovery plans but it is
anticipated that demand for statutory social care services could
increase as Covid restrictions ease.
The projected
position for the Dedicated Schools Grant is an overspend of
£0.346m. This is largely due to some significant overspends
in the high needs block, most notably education agency placements
£0.538m and other external high needs provision
£0.141m. These pressures are offset by the remaining balance
of the central DSG carried forward from 2020/21.
4.5
Adults Services: Although the overall position is
favourable, it is to be noted that this is after applying service
pressure funding of £12.700m in 2021/22 which has been used
to fund budget pressures resulting from the increased complexity
and costs of care. Funding of £0.361m was also needed to
backfill the reduction in CCG funding contributions. Over the last
three years there has been an overall £3.750m reduction in
core CCG funding due to pressures on local NHS budgets. In the
short term, NHS funding has helped to alleviate pressures by
providing Covid funding for managing hospital discharges.
At
this stage, £1.409m of the £4.515m 2021/22 savings plan
are being forecast as unachievable in this financial year. To
maintain this position, actions are focused on attempting to manage
demand on and costs of community care placements across Assessment
Services and making the most efficient use of available
funds.
The
HASC directorate has a Modernisation Programme which aims to
implement a consistent strengths-based approach across key work
streams, ensuring robust pathways are in place, developing a
community reablement offer and re-designing the front door service.
Currently the Health & Social Care system is under considerable
pressure and this is generating additional costs for the council
due to:
·
Pressures
on NHS budgets resulting in reduced funding contributions from the
CCG;
·
Significant
pressures on the acute hospital resulting in increased costs to
support timely discharge into residential and nursing home
care;
·
Ongoing
transformation of GP practices and enhancement of their clinical
screening and general medical services which contribute to
preventative support;
·
Pressures
on NHS outreach and other preventative services including community
nursing (known as Integrated Primary Care Teams);
·
Workforce
capacity challenges across adult social care services;
·
There
is also focus nationally on improving rates of hospital discharge
in order to accommodate winter pressures.
The funding of all care packages is scrutinised for Value for
Money, ensuring that eligible needs are met in the most
cost-effective manner which will not always meet people’s
aspirations. Established safeguards are in place to provide
assurance within this process.
4.6
Housing Services and Temporary Accommodation: The budget for
Temporary Accommodation (TA) is currently forecast to overspend by
£0.922m. This relates partly to the budget assumption for
Rough Sleeper funding which included £1m increased funding
relating to the government announcement of £254m funding
nationally of which £151m was new funding and was expected to
provide at least £1m additional core funding to the council.
This funding was not confirmed in the Local Government Financial
Settlement (LGFS) and this has caused some presentational and
analytical issues.
In the event, in May 2021, government
announced funding of £203m nationally, however, this not only
subsumed the previous announcement but also covered a number of
other funding streams including Rough Sleeper Initiative (RSI4),
Next Steps Accommodation Programme (NSAP) continuation, and other
COVID-19 support. Some elements of the funding therefore came with
specific conditions to provide additional services. Therefore,
although core funding has increased overall, it has not increased
by £1m compared to 2020/21 core funding thereby creating a
budget pressure.
This pressure is partially offset by a
net underspend of £0.078m over the TA service. The forecast
average number of Emergency Accommodation EA homes (excluding rough
sleeper hotels, discussed separately below) for the year has been
reducing over the last few months to 589 at month 7 as numbers of
households in spot purchased accommodation has steadily reduced.
However, the numbers of households in spot purchased accommodation
is now forecast to increase by the year-end. Therefore, the average
number in EA is forecast to be 610 for the year. This is due, in
part, to the normal slow-down of move-on over the Christmas break
but the wave of the new Omicron variant may also be a factor. The
forecast includes more HB income received as backlogs are resolved,
however, it also includes an increased forecast for costs of block
booked emergency accommodation properties as contracts come up for
renewal. A full re-procurement of the block-booked EA is also in
progress.
The service is also seeing higher
repairs costs as the costs of materials and sub-contractors are
increasing due to the national labour shortages and supply chain
issues. There are some risks to this forecast around homelessness
increasing as a result of the ending of the moratorium on private
landlord evictions together with potential implications with the
ending of the government's furlough scheme, although numbers are
currently very difficult to predict. The council has been informed
that it will receive £1.308m as a winter top up to the Winter
Homelessness Prevention Grant to assist tenants in the private
rented sector under threat of eviction which should help mitigate
this risk.
There is a forecast overspend of
£0.344m on the cost of the additional emergency hotel
accommodation originally acquired early in the pandemic, a small
reduction of £0.017m since Month 7. The forecast includes an
increase in expected HB income as backlogs in HB claims are being
dealt with by the Revenues and Benefits service and the DWP.
The housing service has taken steps to reduce the number of
placements in TA and as a result has seen a net reduction in the
numbers of households in emergency accommodation including the
emergency hotels. However, this has slowed over the Christmas
period and the forecast does now assume that an estimated 75 rooms
will be required to 31st March 2022 to house those we owe a
homeless duty to, compared to a forecast of 47 at Month 7. This
service is forecast to cost £5.142m for 2021/22 and this has
been funded through £0.650m one-off council reserves;
£0.500m from the Next Steps Accommodation Programme (NSAP)
funding, £1.615m from the 2021/22 Containment Outbreak
Management Fund (COMF) grant and the use of £2.043m of
2020/21 COMF Grant. A further £0.600m from the COMF grant
will be applied to homelessness pressures subject to the
Committee’s approval as requested in this report.
The council commissions services to
assist rough sleepers and those in supported housing. This service
is now forecast to break-even during 2021/22, an improvement of
£0.168m when compared to the forecast at Month 7. This is due
to a forecast underspend on staffing costs £0.116m which is
offset by an overspend on support costs for the 'care and protect'
hotels from July to September of £0.086m. The forecast
overspend for SWEP has reduced to £0.020m as most of this
will be covered by the Winter Provision Fund from the Department of
Levelling Up, Housing and Communities (DLUHC). Other small net
overspends on the service £0.010m. The council has also been
informed that it will receive £0.451m for the ‘Protect
& Vaccinate’ Programme which will be operated by this
service.
The Housing Service will continue to
work to improve this TA and Rough Sleeper overspend position as the
new financial year approaches. There is no longer a financial
recovery plan in place for 2021/22 as the reductions in spend on
the extra emergency hotels and other emergency accommodation has
already been factored into the forecast. This will be kept under
review and, if possible, additional cost reductions will be sought
to reduce the overspend further. The service has employed the
services of a Homelessness Transformation Manager to head up an
‘end to end’ improvement programme to help the service
improve its processes to reduce the use and length of stay in
Temporary Accommodation by improving homeless prevention, homeless
processes and enabling move on to more sustainable accommodation.
This forecast incorporates some of the early cost reductions
resulting from the review. Further efficiencies will be sought by
(for example) continuing to improve move-on processes, void
turnaround times in emergency accommodation, and improving income
collection and continuing to reduce costs in 2022/23.
4.7
Environment, Economy & Culture: The Directorate
has substantial income budgets for parking, planning and venues and
for the council’s commercial property portfolio, all of which
are dependent on visitor numbers and commercial activity.
There is also a challenging additional income target for Parking
Services of £1.750m for 2021/22. These activities and
services had been heavily impacted by the COVID-19 restrictions and
the forecast reflects income shortfalls compared to budget for
2021/22 in most of these areas.
However, the Sales, Fees & Charges
Compensation Grant has reduced the impact of some of this lost
income. There is also some recovery following improvements to
tourism and visitor numbers as restrictions ease. However, there
are also unavoidable cost pressures (mainly agency staffing)
related to maintaining core services, such as refuse collection
& recycling and street cleansing. The overall effect of these
factors is a forecast risk of £1.354m for Month 9 which is an
improvement of £1.362m compared to £2.716m at Month
7.
Monitoring Savings
4.8
The savings package approved by full Council to support the revenue
budget position in 2021/22 was £10.687m following directly on
from a £10.291m savings package in 2020/21. This is very
significant and follows 10 years of substantial packages totalling
over £170m that have been necessary to enable cost and demand
increases to be funded alongside managing reductions in central
government grant funding of over £100m.
4.9
Appendix 4 provides a summary of savings in each directorate and
indicates in total what is anticipated/achieved or is at risk.
Appendix 5 summarises the position across all directorates and
presents the entire savings programme. The graph below provides a
summary of the position as at Month 9 and shows that £3.314m
(31%) is currently at risk. Of this £0.890m is in respect of
pressures relating to COVID-19. Mitigation of these risks will be
included in the development of services’ financial recovery
actions as far as possible.
5
Housing Revenue Account Performance (Appendix 4)
5.2
The forecast outturn at Month 9 is an overspend of £1.705m
and more details are provided in Appendix 4. This year is more
challenging for the HRA and the overspend is mainly the result of
the catching up on the backlog of repairs from 2020/21 together
with a reduction in rent income and extra council tax caused by
empty properties awaiting works. However, if the HRA cannot manage
this overspend through the year, this can be met from HRA
reserves.
6
Dedicated Schools Grant Performance (Appendix 4)
6.1
The Dedicated Schools Grant (DSG) is a ring-fenced grant within the
General Fund which can only be used to fund expenditure on the
schools budget. The schools budget includes elements for a range of
services provided on an authority-wide basis including Early Years
education provided by the Private, Voluntary and Independent (PVI)
sector, and the Individual Schools Budget (ISB) which is divided
into a budget share for each maintained school. The forecast
outturn is an overspend of £0.346m and more details are
provided in Appendix 4. Under the Schools Finance Regulations any
underspend or overspend must be carried forward to support the
schools budget in future years.
7
NHS Managed S75 Partnership Performance (Appendix 4)
7.1
The NHS Trust-managed Section 75 Services represent those services
for which local NHS Trusts act as the Host Provider under Section
75 Agreements. Services are managed by Sussex Partnership
Foundation Trust (SPFT) and include health and social care services
for Adult Mental Health and Memory and Cognitive Support
Services.
7.2
This partnership is subject to separate annual risk-sharing
arrangements and the monitoring of financial performance is the
responsibility of the respective host NHS Trust provider.
Risk-sharing arrangements result in financial implications for the
council where a partnership is underspent or overspent at year-end
and hence the performance of the partnership is included within the
forecast outturn for the Health & Adult Social Care
directorate. An underspend of £1.877m is currently forecast
and more details are provided in Appendix 4.
8
Capital Programme Performance and Changes
Forecast Variance Month 7
|
Directorate
|
Reported Budget Month 9
|
Forecast Outturn Month 9
|
Forecast Variance Month 9
|
Forecast Variance Month 9
|
£'000
|
|
£'000
|
£'000
|
£'000
|
%
|
0
|
Families, Children
& Learning
|
15,355
|
15,355
|
0
|
0.0%
|
0
|
Health & Adult
Social Care
|
755
|
818
|
63
|
8.3%
|
0
|
Economy, Environment
& Culture
|
62,627
|
62,627
|
0
|
0.0%
|
0
|
Housing,
Neighbourhoods & Communities
|
3,390
|
3,390
|
0
|
0.0%
|
(4,966)
|
Housing Revenue
Account
|
77,192
|
71,456
|
(5,736)
|
-7.4%
|
0
|
Finance &
Resources
|
3,203
|
3,203
|
0
|
0.0%
|
0
|
Strategy, Governance
& Law
|
600
|
602
|
2
|
0.4%
|
(4,966)
|
Total
Capital
|
163,121
|
157,450
|
(5,671)
|
-3.5%
|
(Note: Summary may include minor
rounding differences to Appendix 6)
8.2
Appendix 6 shows the changes to the capital budget and Appendix 7
provides details of new schemes for 2021/22 to be added to the
capital programme which are included in the budget figures above.
Policy & Resources Committee’s approval for these changes
is required under the council’s Financial Regulations. The
following table shows the movement in the capital budget since
approval at Budget Council.
Summary of Capital Budget
Movement
|
Reported Budget Month 9
|
|
£'000
|
Budget approved as
at TBM Month 7
|
207,249
|
Changes reported at
other committees and already approved
|
2,200
|
New schemes to be
approved in this report (see Appendix 7)
|
5
|
Variations to budget
(to be approved)
|
(5,480)
|
Reprofiling of
budget (to be approved)
|
(40,663)
|
Slippage (to be
approved)
|
(190)
|
Total
Capital
|
163,121
|
8.3
Appendix 6 also details any slippage into next year. In total,
project managers have forecast that £0.190m of the capital
budget may slip into the next financial year and this equates to
approximately 0.12% of the capital budget.
9
Implications for the Medium Term Financial Strategy (MTFS)
9.1
The council’s MTFS sets out resource assumptions and
projections over a longer term. It is periodically updated
including a major annual update which is included in the annual
revenue budget report to Policy & Resources Committee and Full
Council. This section highlights any potential implications for the
current MTFS arising from in-year TBM monitoring above and details
any changes to financial risks together with any impact on
associated risk provisions, reserves and contingencies. Details of
Capital Receipts and Collection Fund performance are also given
below because of their potential impact on future resources.
Capital Receipts Performance
9.2
Capital receipts are used to support the capital programme. Any
changes to the level of receipts during the year will impact on
future years’ capital programmes and may impact on the level
of future investment for corporate funds and projects such as the
Strategic Investment Fund, Modernisation Fund, Asset Management
Fund and the Information, Technology & Digital Investment Fund.
The planned profile of capital receipts for 2021/22, as at Month 9,
is £11.400m which includes receipts expected from the land
transferring to the HRA for the Moulsecoomb housing redevelopment,
land disposals at the Cliff and Braypool Lane, disposal of
properties at the Old Steine and a number of lease extensions. To
date there have been receipts of £5.834m in relation to the
lease re-gear for commercial premises in Western Road in Brighton
and the disposal of land at Braypool Lane. The transfer of Palace
Place and transfer of land and buildings associated with the
Moulsecoomb Housing and Hub project to the HRA have been completed.
There have also been some lease extensions and some minor loan
repayments. The capital receipts performance will be monitored over
the coming months against capital commitments
9.3
The forecast for the ‘right to buy sales’ in 2021/22
(after allowable costs, repayment of housing debt and forecast
receipt to central government) is that an estimated 30 to 40 homes
will be sold and net retained receipts of up to £2.000m
available to re-invest in replacement homes. In addition to this
net retained receipt the HRA will also retain circa £0.520m
to fund investment in the HRA capital programme. To date 36 homes
have been sold in 2021/22.
Collection Fund Performance
9.4
The collection fund is a separate account for transactions in
relation to council tax and business rates. Any deficit or surplus
forecast on the collection fund relating to council tax is
distributed between the council, Sussex Police and Crime
Commissioner and East Sussex Fire Authority, whereas any forecast
deficit or surplus relating to business rates is shared between the
council, East Sussex Fire Authority and the government.
9.5
The council tax collection fund had an increased deficit of
£0.743m brought forward from 2020/21 of which, the
council’s share is £0.627m. The impact of Covid-19 was
built into the current year’s estimate for council tax
liability and receipts. Although the ultimate impacts of Covid-19
remain difficult to forecast the in-year position is forecast to
breakeven overall. In addition to the brought forward deficit, the
council has to cover the year 2 repayment of the 3-year spread of
the 2020/21 forecast deficit of £1.520m and therefore the
overall council tax deficit that will need to be funded in
2022/23 is estimated to be £2.150m.
9.6
The business rates collection fund, after allowing for section 31
compensation grants on retail and nursery relief, government
support for the brought forward deficit and the 3-year spread of
the 2020/21 deficit is forecasting the council share to be a net
surplus of £0.889m for budget setting in 2022/23. There are a
range of risks that could change this forecast significantly with
the main uncertain factors being business failures and any step
increase in empty properties.
Reserves, Budget Transfers and
Commitments
9.7
The creation of reserves, the approval of budget transfers
(virements) of over £0.250m, and agreement to new financial
commitments of corporate financial significance that are not
provided for in the approved budget and policy framework require
Policy & Resources Committee approval in accordance with the
council’s Financial Regulations and Standard Financial
Procedures. There are no new reserves or budget transfers requiring
approval at this time.
10
ANALYSIS & CONSIDERATION OF ANY ALTERNATIVE OPTIONS
10.1
The provisional outturn position on the General Fund is an
underspend of £1.093m. This includes a forecast underspend of
£1.877m on the council’s share of the NHS managed
Section 75 services. However, it should be noted that the accuracy
of forecasts, including Collection Funds, remains challenging,
particularly given the very wide range of variables and factors
driven by the ongoing pandemic. The recovery of Parking Incomes
will clearly be an area to monitor closely alongside ongoing
pressures on Homelessness services.
10.2
The committee are advised that there are no specific financial risk
provisions available to support the General Fund revenue budget,
however, the council retains a £9m Working Balance which is
its key risk reserve.
10.3
Regarding Recommendation 2.2 of the report, the Committee could
elect not to reallocate £0.600m underspent COMF grant to meet
qualifying Homelessness cost pressures, however, this would
effectively reduce the overall forecast underspend by £0.600m
and increase the level of borrowing from reserves to support the
General Fund budget as per the budget report elsewhere on this
committee agenda. While the revenue budget position may continue to
improve between now and the year-end this cannot be guaranteed and
there remains significant uncertainty over the speed of economic
and visitor recovery. By allocating COMF in this way to a
qualifying area of spend, this enables an improved forecast to be
provided which will reduce the very substantial call on one-off
resources (reserves) to support Collection Fund deficits, estimated
one-off cost pressures in 2022/23 and the 2022/23 budget. If, in
the event, the revenue budget improves further by year-end, this
position can be reviewed at outturn and alternative options
considered at that time. See paragraph 12.2 for more details.
11
COMMUNITY ENGAGEMENT & CONSULTATION
11.1
The Director of Public Health has been consulted regarding the
reallocation of Contain Outbreak Management Funds.
12.1
The forecast underspend of (£1.093m) at Month 9 represents
0.45% of the net General Fund, indicating a favourable turnaround
from the previously reported overspend at Month 7 of £3.396m.
This is due to a range of factors including:
·
A lower than expected impact from Omicron and Plan B restrictions
including an earlier end to the restrictions than anticipated. This
has enabled improved forecasts for income generating budget areas
in particular;
·
Continued impacts across Adult Social Care due to care home
restrictions and outbreaks, and staffing shortages across the
sector, as well as continued financial support from the NHS. This
has slowed the expected increase in activity for the second half of
the year, however, the underlying position is expected to revert to
expected levels once the care home situation is alleviated;
·
Similarly, there are reduced costs of day care services across the
sector, particularly Adult Learning Disability, due to Covid
restrictions.
·
As COMF grant has fewer limitations on the areas it can be used to
support and government have recently confirmed that it can be
carried forward, every effort has been made to fully utilise other
funds that are less flexible and which must be spent by 31 March
2022. In this respect, earlier Track & Trace funds provided to
support the Local Outbreak Plan have now been fully utilised to
maximise their use and this has reduced the need for COMF funding
for areas such as Contact Tracing and project support.
·
Another reason concerns the recruitment of staffing which, as for
many other service areas, has been problematic during the pandemic.
Many of the COMF schemes experienced delays to recruitment or were
not able to recruit the full complement of staff resulting in
underspends on a number of schemes.
·
The easing of restrictions and their impact and the frequent
changes in policy and guidance meant that some schemes were not
deployed to their fullest. An example being the Covid Marshals
where the easing of restrictions made the continued deployment of
Marshals unnecessary.
The current estimate is that there will
be an underspend of COMF of at least £0.600m.
12.3
It is also probable, as in previous years, that the revenue budget
position will continue to improve from here on in until year-end
but this cannot be guaranteed. As the council has a substantial
requirement for one-off funds to support Collection Fund deficits,
expected one-off costs in 2022/23 and the 2022/23 budget, the
greater the underspend on the revenue budget, the more one-off
funding this provides to support these requirements (i.e. reducing
the level of borrowing from reserves). As some COMF schemes will
not require their full allocation in 2021/22, it is proposed to set
this funding aside to meet qualifying Homelessness cost pressures
and consequently improve the revenue budget (TBM) position in
2021/22. If the revenue budget improves further by year-end, this
position can be reviewed at outturn, although consideration should
be given to using any increased underspend to further reduce the
level of borrowing from reserves in the first instance.
13
FINANCIAL AND OTHER IMPLICATIONS
Financial Implications:
13.1
The financial implications are covered in the main body of the
report. Financial performance is kept under review on a monthly
basis by the Executive Leadership Team and the management and
treatment of forecast risks is considered by the Audit &
Standards Committee as part of its review of strategic risks.
13.2
The Month 9 TBM forecast is an important forecast in the context of
setting next year’s General Fund Revenue Budget as it is a
key determinant of the availability of one-off resources to support
the budget. A forecast overspend at month 9 must be funded from
one-off resources while an underspend provides additional one-off
resources. The one-off resources required to support the 2022/23
General Fund budget are set out in the budget report which is also
on this committee agenda. The report indicates a substantial call
on one-off resources and reserves and therefore the additional
resources provided by the month 9 forecast underspend will help to
meet these requirements.
Finance Officer Consulted: Jeff
Coates
Date: 25th January 2022
Legal Implications:
13.3
Decisions taken in relation to the capital and revenue budget must
enable the council to observe its legal duty to achieve best value
by securing continuous improvement in the way in which its
functions are exercised, having regard to a combination of economy,
efficiency and effectiveness. The council must also comply with its
general fiduciary duties to its Council Tax payers by acting with
financial prudence, and bear in mind the reserve powers of the
Secretary of State under the Local Government Act 1999 to limit
Council Tax & precepts.
Lawyer Consulted: Elizabeth
Culbert
Date:26th January 2022
Equalities Implications:
13.4
There are no direct equalities implications arising from this
report.
Sustainability Implications:
13.5
Although there are no direct sustainability implications arising
from this report, the council’s financial position is an
important aspect of its ability to meet council priorities. In
addition, the council’s response to managing the impact of
the pandemic, in lieu of further government funding announcements,
will be important to demonstrate that in a worst case scenario, it
has plans to manage the financial impact and avoid financial
collapse.
Risk and Opportunity Management Implications:
13.6
The council’s revenue budget and Medium Term Financial
Strategy contain risk provisions to accommodate emergency spending,
even out cash flow movements and/or meet exceptional items. The
council maintains a recommended minimum working balance of
£9.000m to mitigate these risks. The council also maintains
other general and earmarked reserves and contingencies to cover
specific project or contractual risks and commitments. However,
current reserves and balances were not set at a level to manage
financial shocks of the scale of the pandemic and any depletion of
reserves and balances to manage this position will normally require
a plan for replenishment in future years.
SUPPORTING DOCUMENTATION
Appendices:
1.
Financial Dashboard Summary
2.
Revenue Budget Movement Since Month 7
3.
Revenue Budget RAG Rating
4.
Revenue Budget Performance
5.
Summary of 2021/22 Savings Progress
6.
Capital Programme Performance
7.
New Capital Schemes and Future Years’ Variations
Documents in Members’ Rooms:
None.
Background
Documents
None.