Agenda item

The report set out the overview of the financial Revenue and Capital outturn position for Buckinghamshire Council for the financial year 2021/22 as at quarter 3. The Appendix provided further detail for each Portfolio and information about performance relating to overdue debts and late payments of commercial debt.

RESOLVED –

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

(2)          That the principle to transfer unused contingencies at year end, currently forecast at £6.2m, to an earmarked reserve be approved.  The reserve will be used to mitigate the potential impact of Local Government fund reform, and heightening risks around the financial implications associated with inflation, Adult Social Care reforms and the ongoing impact of Covid-19.

The report set out the overview of the financial Revenue and Capital outturn position for Buckinghamshire Council for the financial year 2021/22 as at quarter 3.  The Executive Summary highlighted a number of issues including:

·                That the local government settlement in February 2022 had for the 4^th consecutive year been only for one year.  This was due to the Government’s intention to reform local government funding and their ‘Levelling Up’ agenda.  There was, therefore, high risk around future funding levels with changes expected from FY 2023/24.

·                That in-year pressures in Portfolio budgets had been managed and successfully mitigated, meaning that an element of the corporate contingency budget was no longer required.  A contribution to an earmarked reserve was proposed which could be released, if necessary, in future years. This aligned to the Select Committee’s view (budget scrutiny task & finish group) on risk and whether the level of contingencies for pressures such as inflation were sufficient.

·                That the proposed transfer to reserves would help to mitigate against heightened risks around political uncertainty, global turbulence, inflationary pressures (currently exceeding 5%), social care reform and market sustainability, and the ongoing impact of Covid-19.

·                That inflation would impact across revenue and capital in both the direct supply of goods and services. For each 1% change in inflation, the estimated cost was £4.6m annually in revenue and £5.2m across the 4 year capital programme. The revenue budgets for 2022/23 contained contingencies that would provide an element of mitigation, however, consideration would need to be given as to how to further mitigate the impact, and this might have implications for borrowing, cashflow or the scale and scope of projects.

The Appendix provided further detail for each Portfolio and information about performance relating to overdue debts and late payments of commercial debt.

At the end of Q3, an overall favourable variance of £0.9m was forecast after allowing for £6.8mof corporate mitigations. This was a favourable movement of £0.9m since Q2 where a balanced budget position had been reported.  The favourable variance comprised:

-                 £5.9m adverse variance on Portfolio budgets (£4.8m adverse at Q2).  This represented 1.4% of the Total Portfolio budgets.

-                 £4.2m favourable variance on Corporate Contingencies, after a proposed transfer to earmarked reserves of £6.2m (£2.8m Q2).

-                 £1.9m favourable variation relating to Covid Sales Fees and Charges compensation scheme (£0.9m at Q2). £1.2m of this related to the claim for the current year, as eligible pressures were higher than budgeted for, leading to the additional compensation. A further £0.7m related to the previous year, as further scrutiny had enabled the identification of more compensation than had been identified at financial year end.

-                 £0.7m favourable variation on Corporate Budgets, principally capital financing costs (£1.1m at Q2).

Section 3 of the report detailed information on savings targets.  £13.2m of savings had been incorporated into the approved 2021-22 revenue budgets and it was forward there would be shortfall of £0.5m (£0.6m at Q2), which had been taken into account within Portfolio forecasts.

Section 4 of the report detailed information on:

·                Covid grant funding – total new grant allocations for FY21/22 not including corporate grants totalled c. £62.7m.  Excluding Business Support Grants the total amount carried forward to FY21/22 from the previous financial year totalled c.£15.3m.  16 COVID grants were currently open (excluding corporate grants).

·                The Contain Outbreak Management Fund (COMF) which provided funding to local authorities to help reduce the spread of coronavirus and supported local public health. Buckinghamshire was expected to benefit from £15.9m of this spread over three financial years.

Members were informed that capital slippage had increased between Q2 and Q3 from 7.9% (£14.8m) to 11.7% (£22.5m). This was now exceeding the Council’s target of 10% of budgets and could further increase in the final quarter of the year.  As part of the MTFP process, the profile of capital expenditure had been reviewed and challenged to ensure that realistic budgets based on achievable timescales were set.  An explanation was provided of specific circumstances impacting on capital projects.

Cabinet Members discussed the Q3 budget monitoring report and commented:

·                Whilst some services were overspent others had a surplus but there were a range of pressures impacting on all services which were not forecastable and also the Ukrainian crisis.

·                There needed to be adequate contingencies to cover the high end cost of care, particularly residential and nursing care.

·                Children services had to pay high costs for placements with external providers; this could relate to seven or eight complex cases. Agency costs have also risen.

RESOLVED –

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

(2)          That the principle to transfer unused contingencies at year end, currently forecast at £6.2m, to an earmarked reserve be approved.  The reserve will be used to mitigate the potential impact of Local Government fund reform, and heightening risks around the financial implications associated with inflation, Adult Social Care reforms and the ongoing impact of Covid-19.