Agenda item

The Executive Director of Finance and Corporate Resources explained that following the Audit, Governance and Standards Committee’s agreement of the Section 24 Action Plan the external auditors had been notified of the Council’s plans.  Grant Thornton had included three recommendations in the Section 24 Notice and an update was provided in the report in respect of progress in relation to each of these recommendations.

The first recommendation focused on the need for the Council to achieve a balanced budget in 2019/20.  Specifically the Council needed to be sure about the deliverability of savings proposed for the financial year.  Officers were in the process of preparing the financial monitoring reports for the second quarter of the financial year, however, information gathered to date appeared to indicate that the Council was on track to deliver the forecast savings of £1.1 million in the MTFP for the year.  In addition, it was anticipated that further savings would be made on top of this figure; any such savings would be returned to balances.

The second recommendation focused on the further savings that needed to be made to address the £1.4 million gap in the budget the following year as well as to balance the HRA.  The Executive Committee had recently received an update on the Council’s financial position as of October 2019.  To date £1 million of savings had been secured for 2020/21.  The Council had also secured £450,000 in New Homes Bonus (NHB) funding that year together with £400,000 in savings identified through a review of the Council’s capital programme.  Unfortunately, the Government had announced that the Council could only increase Council Tax by a maximum of 2 per cent before triggering a referendum, rather than the 2.99 per cent that Officers had budgeted for and this would have a negative impact on the Council’s finances moving forward.

The Committee discussed the savings that had been secured to date by the Council and the review of the capital programme.  Officers explained that the £400,000 savings in the capital programme related to borrowing costs.  The Council had also reviewed the £20 million borrowing costs that had been incorporated into the Council’s plans in relation to the Investment and Acquisition Strategy.  As the Council had not agreed the number of investments that had originally been anticipated the borrowing costs for investments had been re-profiled to a more sensible level. 

Members noted that there would be a need in seeking to balance the budget to take decisions that would ensure the Council’s financial sustainability. The Section 151 Officer would be looking for a clear steer from Members in respect of balancing the Council’s budget and approvals, at least in principle, on spending plans by December 2019. 

Concerns were raised that some of the language included in the report was quite vague, such as the suggestion that the Council was anticipating that the unidentified savings included in the budget for 2019/20 would be met.  Officers explained that certainty could not yet be provided as the figures from the monitoring report for the second quarter of the financial year had not yet been finalised.  However, from the information that had been gathered to date Officers were anticipating that the Council was on track to achieve the savings required.

During consideration of this item Members asked about the inclusion of unidentified savings in the MTFP for 2019/20 and the value of including unidentified savings in a Council budget as these had tended to be delivered by Officers over a number of years.  Officers acknowledged that unidentified savings had been delivered in the past.  However, the amount of unidentified savings included in the budget in 2018/19, at £770,000 had been relatively high and Officers had not been able to deliver unidentified savings at this level.  The Engagement Lead for Grant Thornton explained that whilst external auditors were sceptical about the inclusion of unidentified savings in a budget it was recognised that it was a judgement call and Councils could not always clarify every aspect of the budget in advance.

RESOLVED that

the report be noted.