Agenda item

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 2023 were still very broad, ranging from 1% to 6.4%.  For each 1% change in inflation, the estimated cost was £4.6m annually in revenue and £5.2m across the 4 year capital programme.  Although the revenue budgets for 2022/23 contained some contingencies that would provide an element of mitigation, a prudent provision for risk at outturn was recommended.

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

£13.2m of savings were incorporated into the approved 2021-22 Revenue budgets. The table below shows performance against those targets.  Overall there had been a shortfall of £0.5m (£0.5m Q3) which had been fully considered and taken into account when approving the 2022/23 budget.

The final outturn position on capital slippage was £18.7m that was 9.5% of budgets. This was an improved position from the Q3 forecast of £22.5m (11.7%) and brought the outturn to within the Council’s target of 10% of budgets.  Focus would remain on challenging the robustness of capital budgets, and as part of the MTFP process, the profile of capital expenditure would be reviewed to ensure that realistic budgets based on achievable timescales were set.  Further details for each portfolio were at Appendix 1.

The Leader referred to the unused contingencies which the Council no longer required and also commented that the underspend could be used to offset new pressures for this financial year. He also welcomed the £12.8 million savings which had been achieved through efficiencies.

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.