Agenda item

2021/22 Third Quarter Financial Monitoring Report (to December 2021)

Report of the Chief Operating Officer (Section 151 Officer)

Minutes:

The Cabinet considered a report of the Chief Operating Officer (Section 151 Officer), that would also be considered at the Audit and Procurement Committee on 21st March 2022, which advised of the forecast outturn position for revenue and capital expenditure and the Council’s treasury management activity as at the end of December 2021. Appendices to the report provided details of the Revenue Position: Detailed Directorate breakdown of forecast outturn position; the Capital Programme: Analysis of Budget/Technical Changes; the Capital Programme: Estimated Outturn 2021/22; the Capital Programme: Analysis of Rescheduling; and Prudential Indicators.

 

The headline revenue forecast for 2021/22 was for net expenditure to be £12.8m 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 £2.5m. At the same point in 2020/21 there was a projected underspend of £0.5m. This overall position incorporates two key areas of overspend.

 

There was an underlying overspend of £10.1m within Children’s Services, although £8.5m of this has been attributed to the pandemic and funded from one-off Covid funding leaving a net overspend of £1.6m. (3.4m at Quarter 2). Despite this use of Covid funding the underlying overspend represented a serious worsening of the position since the start of the year and a heightened risk to the Council’s overall financial position. Whilst this position was consistent with the basis of the 2022/23 Pre-Budget Report, it remained critical that work continued to be undertaken to understand the likelihood and extent of these pressures and any potential actions to reduce them in the future. It was clear 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.

 

After adjusting for the effects of Covid, the Streetscene and Regulatory Service was forecasting to be overspent by £4.3m by the year-end if the current industrial dispute by HGV drivers continued over this period. The HGV driver industrial dispute was resulting in a net pressure of c£1.8m, due primarily to the facilitation of the temporary waste collection sites, the revised arrangements for a fortnightly household waste collection and the loss of commercial waste income.

 

Elsewhere, lower-level budget pressures had continued or emerged within Business, Investment and Culture, Finance and Legal and Governance Services. Underspends were reported within Corporate budgets and Housing and Transformation such that the corporate position had stayed within acceptable tolerances and could be reasonably expected to improve towards the 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£43m 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 although the emergence of any further Covid- variants could still change the landscape of Government funding through 2022.

 

The Council’s capital spending was projected to be £223.6m and included major scheme expenditure which ranged from: investment in 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 had been moving gradually towards a business-as-usual position as the year progressed with activity and impacts arising from the Covid pandemic starting to subside. This position could be disrupted with the recent rise in case numbers whilst some pockets of service activity continued to be significantly affected. Significant financial risk remained in relation to the underlying funding position for local government, the future trajectory of Covid costs and challenging financial situations within a few service areas. It remained a financial imperative therefore to focus on the medium-term horizon and for the Council to anticipate and address 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 £223.6m incorporating: £27.4m programme rescheduling since quarter two and £2.3m net reduction in spending relating to approved/technical changes. 

Supporting documents: