Agenda item

Report of the Director of Finance and Resources

The Audit and Procurement Committee considered a report of the Director of Finance and Resources (Section 151 Officer), which set out the forecast outturn position for revenue and capital expenditure and the Council’s treasury management activity as at the end of June 2024.

The report had previously been considered by the Cabinet at its meeting on 27^th August 2024 (their minute 18 refers).

The net revenue forecast position after management action is for spend in 2024/25 of £7.1m over budget. Whilst not a wholly comparable position, at the same point in 2023/24, there was also a projected overspend of £12.1m.

The report indicated that the Council continues to face budget pressures within both Adults and Children’s social care, Housing, and City Services. Other overspends are also being reported in Property Services and Business Investment and Culture. These financial pressures are being caused by a combination of legacy inflation impacts, continued service demand, complexity, market conditions, and income shortfalls due to the economic climate. 

The Council’s position above includes a significant number of one-off actions that have been applied to reduce the overspend. Recognising that the underlying position is significantly higher, further urgent action is being assessed to address the pressure to prevent the 2025/26 position increasing to unmanageable levels.

The Council’s capital spending is projected to be £193.3m 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. Although prevailing inflation rates look to be stabilizing, legacy inflationary pressures continue to affect 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 will need to be re-evaluated to determine their deliverability within previously defined financial budgets.

The materiality of the emerging financial pressures, both revenue and capital, has renewed the imperative to maintain strict financial discipline and re-evaluate the Council’s medium-term financial position. This will be a priority across all services as the Council develops its future budget plans in the coming months.

The revenue budgets and forecast positions analysed by service area were detailed in the report, together with details of movement in the capital budget. The report also outlined the Treasury Management position and the Commercial Investment Strategy.

With regard to the implementation of the charges for garden waste, the Committee sought clarification on what market research had been done to establish the income figure set out in the budget.  It was indicated that the figure had been based upon what other local authorities had experienced when implementing charging.  The report identified that the take up for garden waste collection had gone well and predictions were looking positive. 

In respect of the Cultural Gateway, clarification was sought as to whether Coventry’s financial commitment was a part of the overall costs as this was a partnership.  It was confirmed that, including Coventry, there are 5 partners.  However, Coventry is the owner of the building, which was one of the risks identified at the outset.  It was further confirmed that the occupiers will be paying rent to the Council.

It was noted that there were a number of marked variances to the set budget and the Committee highlighted that there was now showing a deficit of £100k against St Mary’s Guildhall, and sought to establish whether this related to the capital works that have taken place or ongoing costs.  The Committee were advised that the deficit related to the running costs. 

Additionally, the Committee requested details of how the Godiva Festival is funded and were advised that in terms of the Council’s budgets, a sum of money was set aside to subsidise the Festival, but that the income for the event would also contribute to the funding.

RESOLVED that the Audit and Procurement Committee note the content of the report and confirm that it has no recommendations for the Cabinet.