The Head of Financial and Customer Services presented the Financial Monitoring Report for the second quarter of the 2020/21 financial year.
The recommendations included a proposal to increase the management fee paid by the Council to Rubicon Leisure Limited. The cost of this would be covered using grant funding that had been provided by the Government to the Council to help manage the financial impact of the Covid-19 pandemic. The Council had received £1.6 million funding from the Government during the year for this purpose and £1.1 million remained available to spend.
There was an overspend on the strategic purpose ‘Aspiration, Work and Financial Independence’ of over £200,000. This was primarily as a result of an overspend on temporary accommodation for rough sleepers and homeless people during the Covid-19 pandemic. The strategic purpose ‘Run and Grow a Successful Business’ was also overspent by over £750,000. This was largely as a result of the impact that the Covid-19 pandemic had had on Rubicon Leisure Limited.
By contrast, there was an underspend for the strategic purpose ‘Communities which are Safe, Well Maintained and Green’ of £34,000. This was primarily due to a significant saving in the anti-social behaviour budget of £135,000. However, Bereavement Services had received less income than had been anticipated at the start of the year.
Enabling services were overspent by £281,000. This was primarily due to additional audit costs as well as extra costs associated with the introduction of the new finance ERP system. There had been difficulties with the introduction of this system due to the impact of the Covid-19 pandemic and additional agency staff had had to be employed to help embed the system.
Officers were projecting a £2.4 million variance in the capital programme by the end of the year. The majority of capital projects that had not been delivered as anticipated had been postponed due to the impact of the Covid-19 pandemic. For example, contractors could not necessarily come on site to work when planned.
The Corporate Management Team were working hard to review the Council’s budget position. It was hoped that there would be improvements to the accuracy of budget forecasting moving forward.
The Housing Revenue Account (HRA) had a surplus of over £200,000 by the date of the meeting. This was primarily due to savings in respect of Repairs and Maintenance (R&M) and Management and Supervision costs. During the Covid-19 pandemic it had not been possible for Officers to undertake the full range of R&M work that was required. However, it was anticipated that once the Covid-19 vaccine had been rolled out, the work of the team would increase and therefore this saving was not likely to be sustainable moving forward. The savings in supervision and management costs were mainly due to vacant posts, though the service reviews that were being undertaken were likely to impact on this budget.
The Committee subsequently discussed the financial position of the Council by September 2020 and in so doing highlighted the following points:
· The recommendations detailed in the report proposed investment in leisure facilities, including the Council’s parks and open spaces. Members noted that this was occurring at a time of high visitor numbers in the parks.
· The significant impact of the Covid-19 pandemic on Rubicon Leisure Limited like many businesses in the hospitality industry.
· The figures that had been reported in respect of the overspend on the strategic purpose ‘Run and Grow a Successful Business’ and the fact that two figures had been supplied for this in the report. Officers confirmed that there had been a typographical error and the correct figure would be provided for the Council meeting.
· The savings that had been anticipated for the Dial-A-Ride service at the start of the year and the potential for lost income for the service to be recovered. Officers explained that it was unlikely that the lost revenue would be recovered by the end of the financial year but it was hoped that income targets could be met in the 2021/22 financial year.
· The potential use of the grant funding that had been provided by the Government to help the Council manage the financial impact of the Covid-19 pandemic.
· The Council’s financial position moving forward and the likelihood that difficult decisions would need to be taken in order to achieve a balanced budget in the Medium Term Financial Plan 2021/22 to 2024/25.
1) the current financial position in relation to revenue and capital budgets for the financial period April 2020 – September 2020 be noted.
2) an increase in the 2020/21 Capital Programme of £15k for Digital screens including installation at Arrow Valley Country Park be approved;
3) an increase in the 2020/21 Capital Programme of £6k for an additional passing bay along the main access to the Arrow Valley Country Park be approved;
4) an increase in the 2020/21 Capital Programme of £19.5k for resurfacing of pathway at Arrow Valley Country Park be approved;
5) an increase in the 2020/21 Capital Programme of £10k, for the already approved capital Scheme Café and infrastructure Morton Stanley Park, be approved. This will help towards ensuring all relevant carbon reduction measures are incorporated; and
6) an increase the management fee payment to Rubicon Leisure by £373k be approved for the second quarter of 2020 only, from the COVID-19 funding received from the central government along with confirming the first quarter increase (£170k) also being funded form this same funding stream. This is to offset the shortfalls in income that the company is facing in 2020/21.