Agenda item

(To receive a report from Michelle Grady (Assistant Director – Strategic Finance), which invites the Board to consider a report on the Review of Financial Performance 2019/20 which is being presented to the Executive on 7 July 2020. The views of the Board will be reported to the Executive as part of its consideration of this item)

Consideration was given to a report by the Assistant Director – Strategic Finance, which invited the Board to consider a report on the Review of Financial Performance 2019/20 which was due to be presented to the Executive on 7 July 2020.

The Board was informed that the Covid-19 pandemic hadn't had much of an effect on the 2019 financial performance, however any financial impact in the 2019/20 financial year caused by Covid-19 had been set out within the report for each department. 

Members were advised that excluding schools, the Council had a total underspend of £15.140m. In addition, there had been an underspend of £11.958m relating to schools, which would be carried forward for schools to use in 2020/21.

The Board was referred to Table B which set out the Revenue Budget Final Outturn for 2019/20. The Assistant Director –Strategic Finance also provided a breakdown of any key areas of revenue spending for each service area.

The capital programme had underspent by £18m, details of which could be found at Appendix A to the Executive report.

In line with the proposed use of the 2019/20 carry forward set out within the report, it was proposed that £7.394m was transferred to the Development Fund Earmarked Reserve to support the Council's transformation and recovery plans.

Members discussed the report, and during the discussion the following points were noted:

·         The underspend on the Carers Commissioning Strategy of £0.121m related to 2019/20 and was due to a couple of contracts which needed to be realigned for 2020/21. The contracts had been extended to March 2021 pre Covid-19 but were under review for 2020/21 due to the Covid-19 environment.

·         The Chairman of the Adults and Community Wellbeing Scrutiny Committee confirmed that the budget outturn for Adult Care and Community Wellbeing for 2019/20 had been considered at its meeting on 1 July 2020 which raised awareness of the demand and pressures on this service area due to the impact of Covid-19.

·        The 'allocation for compensation payment relating to A1073' of £25,000 in the New Development Capital Contingency Fund was due to outstanding recent claims for compensation arising from the impact of the road scheme. It was highlighted that this was the tail end of the claims but they were still included in this contingency fund in the absence of an end date for claims.

·         The overspend on the home to school/college transport budget of £2.373m in 2019/20 was due to the impact of rising costs in the market, increased demand of eligible SEND children and legislative changes. It was confirmed that Covid-19 funding has been earmarked to finance the anticipated additional costs for transporting pupils to school. The impact of Covid-19 on the return of schools in September was unknown, and a number of transport scenarios and its financial impact were being worked on. The impact of social distancing and how that was managed would be a challenge, in particular for the transport market in terms of sufficient supply to cater for any social distancing requirements on school transport from the Government.

·         The contingency budget had been £3m for a number of years now, and for some years there had been very little call on the budget. For 2020/21, a 2% pay award had been budgeted for, but if the pay award was higher, the contingency budget would be called on to cover the additional cost. It was noted that the whole contingency budget could potentially be used this year. In previous years some services had contingencies within their own budgets but these were all offered up as savings for 2020/21 so there would be more demand on the contingency budget to cover any additional costs. The contingency budget would cover any significant variances and cost pressures in service area budgets that could not be met within existing budgets, such as by offsetting overspends in one area with underspends from another area, or where the cost pressure was across the Council such as the pay award.

·         There had been an underspend on capital financing charges for a number of years. The capital financing budget was always based on the capital programme at the start of the year and the forecast spend required for it. Slippage on the capital programme could then occur due to a number of reasons such as bad weather which results in an underspend. The capital underspend results in a lower financing requirement which then causes an underspend on the revenue capital financing budget. It was highlighted that more internal borrowing in future was being considered so that there would be lower cash balances. The proposed capital financing reserve would ensure any future overspends on the capital financing budget could be met through this reserve. 

RESOLVED:

1.    That the Board support the recommendations to the Executive,     as set out in the report;

2.    That a summary of the above comments be passed on to the         Executive as part of its consideration of this item.