Agenda item

Report of the Chief Operating Officer

The Cabinet considered a report of the Chief Operating Officer (Section 151 Officer) which outlined the forecast outturn position for revenue and capital expenditure and the Council’s treasury management activity as at the end of June 2022. The headline revenue forecast for 2022/23 is for net expenditure to be £9.5m over budget. At the same point in 2021/22 there was a projected overspend (after the application of COVID-19 emergency funding) of £4.0m.

The report indicated that the Council continues to face budget pressures due to increased volumes and higher costs of placements within Children’s Services and costs incurred due to the refuse drivers’ industrial dispute within Streetscene and Regulatory Services. A range of other smaller but still significant overspends are also being reported in several other services including Legal and Governance Services and Business, Investment and Culture.

In a worrying emerging development, significant additional costs are also being faced due to inflationary pressures affecting the Council, with an anticipated above budget pay award and costs affecting contracts for energy and social care amongst others. The in-year and ongoing impact of these inflationary pressures is a serious new cause for concern in terms of the Council’s ability to manage its budgetary position.

The Council’s capital spending is projected to be £165.6m and includes major schemes progressing across the city. The size of the programme and the nature of the projects within it continue to be fundamental to the Council’s role within the city. It is too early to have a clear view of the impact of the inflationary pressures referenced above on capital projects. The assumption is that stand-alone projects that are already in-progress will be delivered as planned but that future projects that have not yet started may need to be re-evaluated to determine their deliverability within previously defined financial budgets.

Following a report to Cabinet on 11 January 2022  in relation to a proposed Home for Disabled Children, (Minutes 63 and 68/21 refer), revised plans and a new external funding solution have been identified. The initial proposal was to refurbish a Council building (Logan Road) to create a residential home for looked after children with disabilities within the city for £1m. Unfortunately, the Council was unsuccessful in securing the match funding grant from the DfE and the detailed refurbishment costs for Logan Road came back significantly over £1.5m, higher than the original quote. It has since been identified that the business case for building a new home to meet this need, instead of the refurbishment, will deliver better outcomes for children, is more cost effective and allows the Council to meet priorities surrounding its Green Futures Agenda. It has also been determined that the cost of this new build (£1.4m) can be met from the wider Disabled Facilities Grant allocation which the Council receives annually from Government. This report sought approval for the revised scheme, additional cost and new funding source, details of which were contained in the report. The proposals are fundamentally consistent with the original report

The Council’s services have moved to a business as usual position with activity and impacts arising from the Covid pandemic having reduced significantly. Some pockets of service activity continue to be affected but this is not resulting in a large financial cost. The Council does not expect to receive any Government support linked to Covid within the 2022/23 financial year. 

The emerging inflationary risks facing the Council and the wider local government sector have renewed the imperative to maintain financial discipline and prioritise the Council’s medium-term financial position. This will become a familiar theme over the remainder of the year and will be a key focus of the Council’s activities.

Cabinet noted that the report will be considered by the Audit and Procurement Committee at their meeting on 26 September, 2022.

RESOLVED that the Cabinet:-

1)  Approves the Council’s revenue monitoring position.

2)  Approves the revised forecast capital outturn position for the year of £165.6m incorporating: £33.9m rescheduling from 2021/22 outturn, £6.7m net increase in spending relating to approved/technical changes and £20.1m of net rescheduling of expenditure into future years.

3)  Approves a revised proposal for a new-build residential home for children with disabilities instead of refurbishing Logan Road and to utilise Disabled Facilities Grant to fund the increased £1.4m capital costs as set out in paragraph 2.4 of the report.