The Interim Director of Finance and Resources presented the Financial Outturn 2022/23 report, detailing the provisional revenue and capital outturn for that financial year, for Members’ consideration. Whilst the Council had been on a finance recovery programme since April 2022, Members were informed that it was important to note that the authority had not yet closed the 2020/21 and 2021/22 accounts and these could impact upon the final 2022/23 position.
From a revenue perspective, the Council had a £10.520 million full year revenue budget which was approved by Council in February 2022. The 2022/23 budget had included a £595,000 cross-cutting efficiency target, which was allocated to services based upon forecast underspends at Quarter 1 predominantly linked to vacancies.
The Finance Team had undertaken a detailed review of the 2022/23 accounts since the end of March 2023, and there were a number of assumptions and manual adjustments that had been made to arrive at the provisional outturn position detailed in the report. They included:
· Anticipated accruals and prepayments,
· Recharges to/from the HRA,
· Grants were applied to known expenditure and remaining balances were carried forward,
· Reserves were applied to expenditure,
· Shared service recharges between Redditch Borough Council and Bromsgrove District Council were manually reflected, and
· Transfers between the Collection Fund and the General Fund.
There was still work to be done to clear the backlog of entries in suspense and any miscoding. Therefore, the provisional position detailed in the report was subject to change and a further update would be provided in due course.
Overall, it was anticipated that the provisional revenue overspend position would be a £685,000 overspend against the £10.520 million budget. This was a £65,000 reduction over the forecast at Quarter 3 which was a £750,000 overspend position.
The 2022/23 pay award - £1,925 pay award across all pay scales – had created a variance against the budget for a number of service areas. In addition to this, income pending reallocation had resulted in unfavourable variances for Community Transport, Shopmobility and Bereavement Services. Overspends were also anticipated within Environmental Services due to a reallocation of stores stock pending in the Depot, increased fuel and fleet maintenance costs in Waste Management and the Place Teams as well as insurance claims in Tree Management.
From a Treasury Management perspective, the Council had no short-term borrowing at the 31st March 2023 and long-term borrowing had not changed from the £103.9 million taken out some time ago. The Council also held £10.6 million in short-term investments.
An updated capital programme totalling £5.431 million was approved in the budget for 2022/23 in March 2023. Of this, £2 million was funded from Council resources whilst £3.4 million was externally funded. The provisional capital outturn expenditure was expected to be £2.137 million against the overall £5.431 million budget. The £3.292 million budget underspend would be rolled forward from 2022/23 to the 2023/24 financial year.
Information had been provided regarding anticipated reserves over the medium term to the 31st March 2026. At the 31st March 2023, it was projected that the Council held £7.5 million of earmarked reserves and the General Fund balance would stand at £2.686 million.
In respect of the HRA, it was anticipated that the Council would outturn with a surplus of £34,000 against the £25.4 million revenue budget. There were a number of variances that had contributed to this surplus including:
· Anticipated efficiencies due to improved work planning,
· Vacant posts and reduced consultancy/professional fees,
· Reduced depreciation per dwelling,
· Greater interest receivable due to increased interest rates,
· Offset by an increase in the bad debt provision due to an increase in arrears.
The HRA capital programme would outturn with a spend of £7.8 million against the £14.2 million budget for 2022/23. The £6.4 million underspend was as a result of delays in project start dates and changes in assumptions regarding housing one-for- one purchases. The £6.4 million budget would be rolled forward to 2023/24.
Following the presentation of the report, Members noted that a number of projects in the capital programme had been delayed and the funding had been rolled over into the 2023/24 municipal year. Questions were raised about the impact that these delays would have on the capital programme and whether the Council was on track to catch up on this work. Officers confirmed that there had been some delays in the procurement process but these had mostly been addressed and the Council was progressing with the necessary works.
Consideration was also given to the financial costs relating to works on the relocation of the library to the Town Hall as well as the new innovation centre in the town. Members commented that, given the increase in projected costs for the Town Hall Hub, there might similarly be increases to costs for these projects and Officers were asked to clarify whether this had been reviewed in recent months. The Committee was advised that the costs for the library had taken into account potential increases already. In terms of the Innovation Centre, the Redditch Town’s Deal Board had been reviewing costs. The Council was eligible to receive £1.5 million from funds previously managed by the Greater Birmingham and Solihull Local Enterprise Partnership (GBSLEP), which no longer existed and there was a further £8 million fund that had been held by the GBSLEP, and all partners previously in that LEP could bid for funds from that budget. It was confirmed that Birmingham City Council was managing the budget but that local authority could not use those funds for their Council alone and would need to ensure that funding was distributed amongst the previously eight members of the former LEP. Members were advised that the need for this funding to be shared between former partners who had been members of that LEP would also be raised at a meeting of the West Midlands Combined Authority (WMCA) Board.
Reference was also made to the sixth recommendation in the report and Members questioned the purpose of this recommendation. Officers clarified that, due to the importance of income from Council Tax to the Council’s finances, it was important to provide Members with assurance that the authority was collecting Council Tax at an appropriate level. The recommendation aimed to help provide Members with this assurance.
Members also discussed the position of the HRA and noted that Officers were working hard to invest in developing new Council properties as well as to purchase existing properties that could be incorporated into the Council’s housing stock. These actions would enable the Council to increase the number of properties in the Council’s housing stock and help to meet continuing demand in the local community for social housing.
During consideration of this item, Members noted that the report had been pre-scrutinised at a meeting of the Budget Scrutiny Working Group held on 6th September 2023 and a recommendation had been made on this subject. Members commented that the proposed action detailed in the recommendation would be helpful and therefore it was agreed that the recommendation should be approved. The Portfolio Holder for Finance and Enabling thanked the Budget Scrutiny Working Group for permitting him to attend the meeting and for undertaking thorough scrutiny of the report.
RESOLVED to note
1) that the 2022/23 provisional outturn position in relation to revenue budgets would be a projected revenue overspend in the region of £685,000;
2) that the 2022/23 provisional outturn position in relation to Capital expenditure would be £2.137 million against a total approved programme of £5.431 million;
3) the provisional outturn position in respect of the General Fund Reserves;
4) the provisional outturn position in respect of Earmarked Reserves;
5) the HRA net revenue expenditure would be £34,000 better than expected although Capital Expenditure would be £6.4 million less than budget;
6) financial performance in respect of Council Tax and Non Domestic Rates Collection;
7) that at the time of writing the Council was yet to formally close its accounts for the 2020/21 and 2021/22 financial years. This could therefore result in adjustments to actual expenditure and income in those years and could have a consequential impact on the 2022/23 accounts;
8) that work continued to refine the position including addressing the backlog of entries that were in suspense and any miscoding, therefore the provisional position detailed in this report would be subject to change, and a further update would be presented to Members in due course; and
9) that Officers be asked to prepare a public statement on the Council's position regarding the submission of the Statements of Accounts to external auditors in order to provide assurance to the public about the Council's financial situation.