Agenda item

Division/Wards Affected: All

Purpose: The purpose of this report is to provide Members with information on the Authority’s financial forecasts for the 2022/23 financial year in respect of the revenue budget, capital programme, and associated reserves position.

Author: Jonathan Davies, Head of Finance (Deputy S151 officer)

Contact Details: jonathandavies2@monmouthshire.gov.uk

That Cabinet recognises the concerning net deterioration of £355k since the previous revenue budget forecast that results in a forecast over spend at Month 6 of £9.15m, driven by an increase of £880k within Children’s services to a £4.4m over spend; an increase of £194k in meeting the needs of the Homeless to a £1.5m over spend; offset by a number of favourable movements, significantly the level of ongoing staff vacancies being carried or held in the workforce.

That Cabinet notes that the Strategic Leadership Team have taken immediate action to arrest the forecast over spend and developed a robust recovery plan as outlined in table 3 that will result in a balanced outturn position being achieved. These are notably through the one-off use of revenue and capital reserves; reprioritisation of grant funding; and through cost moderation or reduction in service delivery.

That Cabinet note the further financial risk represented by the current volatile environment that both Adult’s and Children’s services are operating within that is associated with the level and complexity of demand, inflationary pressures, and labour shortages, and the risk this represents to the ongoing financial sustainability of this Council.

That Cabinet require the respective Chief Officers and the Responsible Financial Officer to continue to closely monitor and manage operational and financial performance, specifically in relation to Children’s services, Adult’s services, and Housing, but also the other service areas highlighting forecast over spends, and to ensure the release of at least £2.185m of highlighted service budget mitigations across all directorates as a consequence of the budget recovery plan.

That Cabinet recognise the ongoing financial risks to the revenue budget of the current wider economic climate, including the inflationary and interest rate environment; supply chain disruption; the volatile energy market; and notably the potential impact of the cost of living crisis on communities, and the associated financial impact this may have on the Council.

That Cabinet recognises the importance of a balanced outturn position being achieved for 2022/23, in that it minimises the need to draw further upon any planned use of reserves and capital receipts and which will be required to assist in meeting the unprecedented projected budget deficit highlighted for 2023/24.

That Cabinet note that the overall revenue budget continues to be subsidised by £2.65m of capital receipts which are being used to fund identified eligible expenditure under the flexible use of capital receipts directive.

That Cabinet note the forecast 100% delivery of the budgeted mandated savings as detailed in appendix 2 and as approved as part of the budget set by full Council.

Cabinet notes the extent of forecast movements in Schools reserve usage contained in table 6, and appendices 1 & 3 which highlight the possibility of a further seven schools entering into a deficit reserve position by the end of the financial year.

Cabinet considers the forecast capital outturn spend of £59.9m as outlined in appendix 1 that currently indicates a forecast over spend of £310k, noting the continuing difficulty in delivering capital projects to their allocated budget in the current challenging economic environment.