Issue - meetings

The Revenue and Capital Outturn Report for the financial year 2021-22 as presented to Cabinet at its meeting on Tuesday 7 June is attached for the Committee to consider.

Contributors:

Councillor John Chilver, Cabinet Member for Accessible Housing and Resources

Sarah-Murphy-Brookman, Corporate Director – Resources

Matthew Strevens, Head of Finance – Corporate

Mark Preston, Head of Projects & Pensions

Papers:

Budget Monitoring Outturn 2021-22

The Chairman invited the Cabinet Member for Finance, Resources, Property and Assets, Councillor J Chilver, to introduce the report. In the Cabinet Member’s presentation, the following points were highlighted:

·       The report set out the final financial outturn position for the financial year 2021-2022. It showed a more favourable position compared to the forecast position in the previous quarter on revenue overall. There was a £2.2m favourable variance, which was up from the £0.9 million forecast in quarter three.£7.7m of unrequired contingencies were built into the original budget due to the uncertainties and risks, particularly linked to COVID. It had been recommended that both these variances and the unused contingencies (total of £9.9m) be transferred to a specific reserve. This was to mitigate the growing financial risks in the current year and beyond linked to increased inflationary pressures, global turbulence, local government finance reform, and the new adult social care reforms. This affected both the Council’s direct costs and the costs of providers.

·       Construction inflation at 20% was particularly impacting on the Council’s future capital programme table.

·       Main overspends were seen in the education and children's services, transport, and health and wellbeing portfolios. The climate change and environment portfolio had seen an underspend, mainly delivered by increased revenue from the energy from waste plant.

·       There was forecast net slippage of £18.7m, which was an improvement on the quarter three position of £22.5m. This represented 9.5% of the overall capital budget, which is within the council's target of 10%. The slippage is mainly a result of COVID implications, including the availability of building materials and components. It had been recommended that slippage is carried into future years on already improved capital schemes.

·       Work had been undertaken to ensure the capital program was as realistic as possible. However, current inflationary pressures meant that a review needed to be undertaken. A task and finish group had been set up to review the capital budget to identify potential savings.

·       The Council achieved £12.8m of savings, which was below the target of £13.2m. Overall debt levels had been reduced over recent months. Unsecured debt over 90 days was at £8.5m, decreased from £10m in quarter three. Debt recovery had been affected by COVID, with suspensions of court activity. However, a recent focus on outstanding debt had significantly helped the overall position.

·       The overall performance for the last quarter on prompt payments to suppliers was 95%.

The following points were noted during the Committee’s discussion:

·       Comparing the council’s 10% slippage target to other local authorities was difficult due to some authorities adjusting their budget throughout the year. However, in comparison to published results from other authorities, Buckinghamshire Council’s slippage levels were good.

·       Prompt payment to suppliers was measured against two targets. For local, smaller, and medium-sized enterprises, the target timeframe for payment was 10 days. The general terms for payment were 30 days. As these timeframes were measured from the date on the invoice, delays in payment could occur as a result of processing time to  ...  view the full minutes text for item 7

The report set out the Revenue and Capital outturn position for Buckinghamshire Council for the financial year 2021/22. This would be subject to external audit and to continued pre-audit quality checks.

RESOLVED –

(1)               That the outturn for the financial year 2021/22 and the associated risks and opportunities, be NOTED.

(2)               That the transfer of £9.9m arising from the unused contingencies (£7.7m) and a favourable outturn variance (£2.2m) to earmarked reserve be APPROVED, to mitigate heightening risks around the financial implications associated with increased inflationary pressures, global turbulence, Local Government Finance reform and Adult Social Care reforms.

(3)               That the carry-forward of slippage on capital schemes where budget is required on approved capital projects in future financial years be APPROVED.

Cabinet received a report that set out the Revenue and Capital outturn position for Buckinghamshire Council for the financial year 2021/22.  This would be subject to external audit and to continued pre-audit quality checks.  Portfolio revenue and capital entries had been concluded, although work was ongoing to quality assure the final position.  It was anticipated that any movements would be offset by corresponding use of reserves.

The Revenue outturn position for 2021/22 was a favourable variance of £2.2m, 0.5% of Portfolio budgets.  This was an improved position from the Quarter 3 forecast, where a favourable variance of £0.9m (0.2%) had been forecast.  The main drivers for this increase in favourable variance were:

(i)                 an improved position in the Health and Wellbeing portfolio of £0.8m, due to £0.5m additional clawbacks of Direct Payments following successful migration of providers, and £0.3m from maximisation of Covid-19 grants, in particular the workforce and retention grant.

(ii)               An improved position in the Finance, Resources, Property & Asset portfolio with efficiencies realised in travelling expenses and webcasting costs, plus an increase in legal costs recovered.

On 29March 2022, Cabinet had approved the principle of transferring unused contingency budgets at year end to an earmarked reserve to help mitigate heightening risks around inflation from global, political and economic turbulence, the potential impact of future funding reform, reform of Adult Social Care and the ongoing effect of Covid-19.  The forecast at that time was that £6.2m of contingency budgets would not be required.  However, a further £1.5m had been held back in order to mitigate any further risks that might arise during the final quarter. These potential pressures had been managed within the Portfolios and so a further £1.5m was now available to transfer to the proposed new earmarked reserve.

The overall favourable variance of £2.2m was also proposed to be transferred to the reserve, giving a total of £9.9m.  This would considerably help to address the increased financial risks and pressures already being experienced within 2022/23, whilst also providing an opportunity to review the robustness of all budgets from 2023/24 onwards as part of the Medium Term Financial Planning process.

Inflation was a key risk for the Council at the current time and the Cabinet report contained detailed information on how this would impact on the Council, with upward pressure on wates, pressures within the supply chain for particularly housing/property costs and transport costs, risks that suppliers could withdraw from contracts in areas such as Client Transport and Home Care.  Construction inflation was especially concerning as it was currently running at 20% and would affect the Council’s capital programme with increased cost of delivery of capital schemes; which in turn would impact on the level of future financial borrowing required and on revenue budgets in terms of interest payable.  In addition, budgets such as repairs and maintenance expenditure would be impacted by an increase in raw material costs.

Although it was anticipated that the exceptionally high inflation rates would be temporary, HM Treasury estimates for financial year  ...  view the full minutes text for item 9