Agenda item

(To receive a report from Michelle Grady, Assistant Director – Strategic Finance, which invites the Board to consider a report on Revenue Budget Monitoring, which is being presented to the Executive on 2 September 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 theAssistant Director – Strategic Finance, on Revenue Budget Monitoring, which was due to be presented to the Executive on 2 September 2020.  The views of the Board would be reported to the Executive as part of its consideration of this item.

The report compared the Council's projected expenditure with the approved budget for 2020/21 and provided explanations for any significant over or under spending. The overall revenue position forecasted this year was for an overspend of £3.555m (excluding schools). There was a forecast underspend on capital financing charges of £6.948m but this was not included within this forecast position at this stage. General reserves at the end of the year would remain within the target range of 2.5% to 3.5%, however, if it was not possible to manage to turn around the current revenue forecast then the Financial Volatility Reserve would need to be used to support the budgetary position.

The impact of this revenue budget forecast on the Council's resilience had been assessed and the conclusion was that financial resilience had weakened due to the financial impacts of the Covid-19 pandemic both in the current year and looking forward to next year. It was noted that there were healthy reserve balances and the aim was to strengthen financial resilience by: continued monitoring of the financial position and undertaking work to address issues as they arose; continued reporting of the Covid-19 impacts to Government alongside working with the Society of County Treasurers to ensure that the Government understood the particular issues faced by County Councils; refreshing and updating the Medium Term Financial Plan and Strategy; focusing on transformation work to reduce cost pressures and create budget savings; and requesting all budget holders to preserve any budgetary savings incurred this year to help support the overall position.

Members of the Board asked a number of questions, and the following points were confirmed:

·         Potential savings arising from Covid-19, such as from reductions in travel costs, utility bills for buildings, training costs, and room hire costs, should be available to report in Quarter 2. It was reported by officers that service areas were being asked to forecast these potential savings and keep the savings available to cover any budget pressures.

·         A number of bodies, such as the County Councils Network and Local Government Association, had been putting forward the budgetary pressures facing councils as a result of the Covid-19 pandemic across the country to the Government. In response the Government had delivered three tranches of additional funding to councils. The first tranche was calculated predominantly based on the adult social care needs assessment which focussed on adult social care figures as this was seen as an area requiring additional funding. The second tranche was calculated based on population which was more supportive of district council funding. The third tranche was around population and deprivation.

·         Councils had to complete monthly returns to the Ministry of Housing, Communities and Local Government (MHCLG) which had helped the Government respond to funding pressures facing councils. The Council would also inform the Government what it had lost in terms of sales, fees and charges, such as from the registrars and heritage services, and the Government would reimburse the Council for only some of those losses through the reimbursement scheme.

·         Budgetary pressures in relation to home to school transport were already coming through before Covid-19 due to higher cost per day transport delivery costs. Due to Covid-19, the Government had announced additional funding of £720,000 for home to school transport for Lincolnshire. The funding would be used to help pupils get to school safely from the start of September to the October half term. Any underspend would have to be returned to the Government. High capacity routes were being looked at where there were a high number of pupils trying to access school transport. Designated school transport would be provided for these pupils to enable them to travel to school safely. The costs were being worked through but it was considered that the funding would be sufficient. Children with medical needs might incur additional costs. An update on the school transport budget would be provided in Quarter 2.

·         The overspend of £0.787m on social care legal costs for Children's Services was due to a number of factors such as court decisions being delayed in response to Covid-19, an increase in disbursement fees, and an increase in the number and length of proceedings. Children's Services were working with Legal Services to look at how to reduce and manage the social care legal costs.

·         Whilst a service budget overspend was currently forecasted, it was hoped that this could be managed so there would be no requirement to use the Volatility Reserve to support the budgetary position. It was hoped that the emergency Covid-19 grant of £40.299m from the Government should cover the additional costs arising from Covid-19. Savings were also being identified to balance service delivery costs and any deficits should be managed within this year's budget.

·         The overspend of £1.690m on waste services was due to a significant increase in volume of Mixed Dry Recycling (MDR) and a change in provider for the MDR contract. The MDR related to business premises would usually go through a commercial route, but changes in people's working arrangements due to Covid-19 had displaced this waste to coming through the household route and being processed by Lincolnshire County Council. The costs were also higher due to an increase in cost per tonne.

RESOLVED:

1.  That the Board unanimously supported the recommendation 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.