To note and comment on the quarter 1 Budget Monitoring Report for 2022/23.
The Strategic Director Corporate and Section 151 Officer, A Small, outlined the report which set out the forecast outturn position for the 2022/23 General Fund and Housing Revenue Account, revenue and capital, based on the available information at 30th June 2022. The report contained the Council’s funding position which gave members visibility of the balance sheet impact of the financial projections.
A Small highlighted the current global, national and local economic malaise and the uncertainty this created for the Council. The financial pressures detailed in the report had driven a forecast General Fund revenue expenditure budget overspend of £1.196 million. The current position was dominated by a range of substantial spending pressures, these included:
· The impact of spiralling inflation was driving higher pay demands of at least 5% with a potential overspend of £800,000, this was being offset in the short term by salary savings due to vacant posts,
· The continued delay in finalising the Local Plan had created a negative variance of £711,780 on the forecast income from planning applications, and
· The combined impact of the pace of drawdown from Qualis loans and interest rates for PWLB loans had impacted on the income from the margins generated by the Council with a forecast budget shortfall of £700,526.
There had been a positive variance of £541,000 on recycling income due to an increase in market rate and sale of recyclable materials.
The Committee were advised that the yearend balance would fall to £3.045m, if the forecast spending and funding position was accurate and this was significantly below the Council’s formally adopted contingency balance of £4.0 million.
Members were advised that the Housing Revenue Account (HRA) revenue position had a forecast an underspend of £1.513m and faced similar pressures to the General Fund. The HRA Business Plan included the assumed maintenance of a minimum balance of £2.0 million in reserves and this had reduced the ability to make capital contributions by £1.740m, the reconciliation was shown in the report
Capital spend for the General Fund and HRA had been subdued in Quarter 1, delayed draw down of Qualis loans was the biggest factor in a forecast underspend of £73.072m on the General Fund Capital Programme and delays to the house-building programme being the key factor in the £21.082m underspend for the HRA Capital Programme
The Committee commended the officers for their excellent work.
The Committee sought confirmation on the financial impact in the delay in Local Plan, Cllr Philip reminded the Committee that timescale for approval of the Local Plan was by the end of this year and suggested that the current economic issues and pressure associated with increased construction costs could impact on development and the number of planning applications received.
The Committee asked if work was being carried out to maximise the revenue generating opportunities? A Small advised that options to maximise income were being considered, this included income generation and efficiencies. Cllr Philip advised that there was a balance to be achieved in raising charges and maintain collection rates. He reminded the Committee that the Council was in a better position this year, the expectation was that the reserves for this year would be approx. £2.5m, but significant improvements were made and the reserves for 2022/23 were £4m.
The Select Committee commented and noted the:
· General Fund revenue position at the end of Quarter 1 (30th June 2022) for 2022/23, including proposed actions proposed to improve the position, where significant variances had been identified,
· General Fund capital position at the end of Quarter 1 (30th June 2022) for 2022/23,
· The Housing Revenue Account revenue position at the end of Quarter 1 (30th June 2022) for 2022/23, including actions proposed to ameliorate the position, where significant variances had been identified, and
· The Housing Revenue Account capital position at the end of Quarter 1 (30th June 2022) for 2022/23.