Agenda item

Report of the Director of Finance

The Cabinet considered a report of the Director of Finance that would also be considered by Audit and Procurement Committee at their meeting on 31^st January 2022, advised of the forecast outturn position for revenue and capital expenditure and the Council’s treasury management activity as at the end of September 2021. Appendices to the report provided details of: Revenue Position -  Detailed Directorate breakdown of forecast outturn position; Capital Programme - Analysis of Budget/Technical Changes; Capital Programme - Estimated Outturn 2021/22; Capital Programme - Analysis of Rescheduling; and Prudential Indicators.

The headline revenue forecast for 2021/22 was for net expenditure to be £14.4m over budget before the application of COVID-19 emergency funding for local government. After the use of this grant, the net forecast over-spend was £3.1m. At the same point in 2020/21 there was a projected overspend of £3.5m.

The position included an underlying overspend of £6.8m within Children’s Services although £3.3m of this had been attributed to the pandemic and funded from one-off Covid funding accordingly leaving a net overspend of £3.4m (2.7m at Quarter 2). Work had been undertaken to understand the likelihood and extent of these pressures continuing into next year and this would be reflected in the 2022/23 Pre-Budget Report. Management focus would continue to identify the causes and manage as far as possible the budget pressures within Children’s Services as a fundamental element of balancing the 2022/23 Budget position. It was clear though that a combination of societal and demographic trends and market pressures were creating a very difficult environment for the service, part of the effect of which was the challenging financial position reflected here.

Elsewhere, lower-level budget pressures had continued or emerged within Streetscene and Regulatory Services, Finance, Legal and Governance Services and Transportation and Highways. In overall terms the corporate position was within acceptable tolerances at this stage of the financial cycle and could be reasonably expected to continue improving towards year-end.

The Council and the city continued to receive Government support linked to Covid within the 2021/22 financial year. This amounted to c£24m announced to date to support Council services directly and a further c£41m channelled through the Council to support Coventry businesses and external suppliers. Although further allocations could be ruled out, the pace of funding announcements had slowed markedly reflecting the wider easing of lockdown measures. The scale of any residual Covid related grants was therefore likely to be modest.

The Council’s capital spending was projected to be £253.4m and includes major scheme expenditure which ranged from investment in to the A46 Link Road, Coventry Station Masterplan, construction of a second office building and a hotel within the Friargate development, Air Quality highways works and Secondary Schools expansion. The size of the programme and the nature of the projects within it continued to be fundamental to the Council’s role within the city.

The Council’s services and its financial position were moving gradually towards a business as usual position as the year progressed with activity and impacts arising from the Covid pandemic starting to subside. Some pockets of service activity continued to be significantly affected although often this was not resulting in a net financial cost. It was clear though that significant financial risk remained in relation to the underlying funding position for local government as well as the future trajectory of Covid costs and funding within a few service areas. It remained a financial imperative therefore to focus on the medium-term horizon and for the Council to tackle the anticipated legacy effects of Covid.

RESOLVED that the Cabinet:

1)  Approves the Council’s revenue monitoring position incorporating the application of Covid emergency funding.

2)  Approves the revised forecast capital outturn position for the year of £253.4m incorporating: £4.8m programme acceleration since quarter one and £1.5m net increase in spending relating to approved/technical changes.