Agenda item

Report of the Chief Executive to follow.

Cllr Pauline Church, Cabinet Member for Finance and Procurement, Commissioning, IT, Digital and Commercialisation introduced the report which (i) advised Members of the provisional outturn position for financial year 2020/21 (31 March 2021) for revenue with the necessary approvals as appropriate; and (ii) provided an update on the financial impact on the Council of responding to the COVID-19 pandemic and details on Government support.

The Cabinet received questions from Susan McGill in relation to this report. Cllr Clewer explained that the questions had received responses, which were available to read in the agenda supplement 2 on the Council’s website here.

Cllr Church reported that the £13.571m set aside in two new earmarked reserves, one for Latent Demand and a Collection Fund Volatility reserve as well as £4.165m in the Budget Equalisation Reserve approved as part of the quarter two (Q2) budget monitoring report, would mitigate risk and known pressures that will arise in future years and balance the budget for 2021/22 financial year. It was noted that the approvals have effectively reset the budgets for services by transferring all the variances, the overspends and underspends, and putting the net position into the Latent Demand reserve.

The report set out the variances in the financial performance from Q3 to the Q4 position. The overall financial variances for the financial year were detailed in Appendix A.

Cabinet noted that after receiving £32m of emergency funding from the Government to support the Council in managing the response to COVID-19, an estimated £6.4m from Government to offset income losses as a result of lockdown interventions, additional furlough grant claimed and the revision of the timing of latent demand, the Q4 outturn position has again improved. The provisional Q4 position shows an additional underspend of £16.246m following the requests approved as part of the Q2 and Q3 budget monitoring reports, which will see the Council underspend by £33.982m for the financial year 2020/21.

Cllr Church explained that a significant proportion of the one-off funding will be required to meet a range of costs and pressures, some of which maybe recurring, in the following financial year. Therefore, the report set out proposals to set aside these funds to ensure the financial sustainability and resilience of the Council to continue to deliver services over the medium term. Concern was expressed specifically about the Dedicated Schools Grant and in particular overspends on the High Needs Block, which was driven from parents and schools for support for vulnerable children and SEN & disability. 

Cllr Pip Ridout, Chair of the Financial Planning Task Group, reported that the next Task Group meeting was set for 25 June 2021 and she would be able to report further on the Task Group comments on this at a future meeting of the Cabinet. Cllr Ridout reminded the Cabinet that the provisional outturn represented a moment in time, and that the Council were still in the midst of a pandemic and its impacts on the Council budgets.       

Cllr Ian Thorn, Leader of the Liberal Democrat Group asked for information about the Councils financial position if the pandemic had not taken place and there were no exceptional circumstances to be dealt with. The Council’s Corporate Director of Resources & Deputy Chief Executive explained that it was difficult to understand the true picture without Government help and officers were undertaking a base budget review to understand the metrics going forward, and latent demand for future years.

Following questions from Cllr Helen Belcher about alternative sources of income and financial support for the Council, Cllr Church explained that the Council received support from the Government through various grants, for instance, the Dedicated Schools Grant, many services provided by the Council were funded by the Government, and there were some commercialisation opportunities.  The Council would also consider other forms of income like Business Rates and Council Tax.

In response to a question from Cllr Simon Jacobs about the £32m funding received from the Government to tackle the pandemic, Cllr Church assured the Cabinet that in relation to this funding, the Council had a statutory responsibility to spend the funding on tackling COVID and not for any other purpose.  The Government would also undertake an audit of how the Council spent the funding.     

Resolved:

1. Cabinet noted:

a)    the Section 151 officer’s summary of the impact of COVID-19 on the Council’s 2020/21 budget;

b)    the provisional revenue budget outturn position for the financial year 2020/21;

c)    the contributions to and from earmarked reserves as planned;

2. Cabinet approved:

d)    the transfer of an additional £2.937m to the Latent Demand reserve;

e)    the transfer in total of £3.912m to new earmarked reserves as detailed in the report and Appendices B & C, as follows:

i. National Assessment & Accreditation System (NAAS) £0.163m;

ii. School Improvement, Monitoring & Brokerage Grant £0.220m;

iii. Early Years Professional development programme £0.062m;

iv. Neighbourhood Planning £0.164m;

v. Local Plan £0.323m;

vi. Highways & Environment £3.007m;

vii. Car Parking Machines £0.034m;

f)     the transfer of £2.675m to the Capital Financing reserve;

g)    the transfer of the balance of the £6.661m provisional underspend as follows:

i.               £1.4m to be transferred to the General Fund reserve;

ii.             £2m to be set aside for the estimated pay award for 2021/22;

iii.            £3.261m to the Budget Equalisation reserve;

h)    £0.470m of Capital Approval for Salisbury Car Park & Maltings is brought forward from 2022/23 into 2021/22 and allocated to the River Park Bridge works.

Reason for decision:

To inform effective decision making and ensure sound financial management as part of the Councils overall control environment.

To inform Cabinet on the provisional revenue outturn position for the Council for the financial year 2020/21, including delivery of approved savings.

To improve the Councils financial resilience by increasing the balance on the General Fund reserve now and setting aside funds in earmarked reserves to prudently assist in managing the Councils future pressures and budget gap.