Agenda item

Division/Wards Affected:  All

Purpose:  To provide Members with an updated forecast of the revenue and capital outturn position for the current financial year.

This report will also be considered by Select Committees as part of their responsibility to,

•     assess whether effective budget monitoring is taking place,

•     monitor the extent to which budgets are spent in accordance with agreed budget and policy framework,

•     challenge the reasonableness of projected over or underspends, and

•     monitor the achievement of predicted efficiency gains or progress in relation to savings proposals.

To provide an update on the financial impact of Covid-19 on the Council.

Authors:

Peter Davies, Chief Officer for Resources (Section 151 officer)

E-mail:peterdavies@monmouthshire.gov.uk

Jonathan Davies, Acting Assistant Head of Finance (Deputy S151 officer)

E-mail:jonathandavies2@monmouthshire.gov.uk

·         That Cabinet recognises a forecast surplus of £2.182m at year-end on the Council’s core service delivery, a significant improvement in the forecast outturn position since month 6 of £4.122m.

·         That Cabinet note that the improvement in the forecast outturn has arisen both through continuing budget recovery action and more significantly through the notification of substantial further and late specific grant funding to be received from Welsh Government before the year-end.

·         That Cabinet recognises the importance of a positive outturn position being achieved for 2021/22, in that it safeguards and now forecasts to contribute to limited one-off reserve headroom retained to assist with meeting the unpredictable financial challenges over the medium term, and where uncertainty still remains to the extent of future pressures and the funding available to meet these challenges.

·         That Cabinet recognises that currently the overall net revenue forecast surplus at month 9 is £310k, as this takes account of a further forecast deficit of £1.872m that is directly associated with the extraordinary financial pressures attached to Covid-19. If, as expected the £1.872m is fully recovered from the WG Covid-19 hardship fund the overall surplus would be that on core service delivery of £2.182m.

·         That Cabinet can be reasonably assured based on commitments from Welsh Government, that all Covid-19 associated cost pressures and income losses that are eligible to be met by the Welsh Government Covid-19 Hardship fund will be funded to the end of March 2022.

·         That Cabinet note that there remains significant Covid-19 related cost pressures and income losses forecast after the end of March 2022 and that these have been assessed and incorporated where required into the final budget proposals for 2022/23.

·         That Cabinet recognise that the current budget forecast allows for an estimated non-teaching pay award for 2021/22 of 1.75%. The outcome of pay negotiations is awaited and in the event that the agreed pay award is above this estimate, that this will present a further budgetary pressure. Welsh Government have been clear that no compensating funding is anticipated and given that the Minister confirmed via the final settlement that this already took into account any subsequent pay awards.

·         That Members note that the overall revenue outturn position continues to be subsidised by £2.2m of capital receipts which are being used to fund identified eligible expenditure under the flexible use of capital receipts directive.

·         That Members note the forecast 93% delivery of the budgeted mandated savings as detailed in appendix 3 and as agreed by full Council previously and the implicit remedial action/savings included in the financial outturn to compensate for circa 7% savings (£309k) reported as delayed or unachievable by service managers.

·         Cabinet notes the extent of forecast improvements in school balances contained in table 4 and appendix 1 which is informed and driven by the extent to which significant and unprecedented late grant support provided by Welsh Government to schools at the end of 2020/21 exceeded the impact of school investment plans, and notably further receipt of unbudgeted grant support notified since month 6 totalling £2.06m.

·         Cabinet considers the forecast capital outturn spend of £31.5m as outlined in appendix 1 that would result in forecast slippage of £54.3m, noting the continuing delays in progressing some of the key capital projects due to the ongoing challenging operating conditions and impact both internally and externally in relation to Covid-19.

·         That Cabinet approve the Capital budget revisions as listed in appendix 4 to this report resulting from the notification of external capital grant awards to the value of £4.01m and draw on Section 106 balances of £971k.