Agenda item

This report will be subject to pre-scrutiny at a meeting of the Budget Scrutiny Working Group due to take place on 21^st November 2024.  Any recommendations arising from that meeting on this subject will be reported to the Executive Committee in a supplementary pack.

The Deputy Chief Executive and Section 151 Officer presented the Revenue and Performance Monitoring Report for the second quarter of the 2024/25 financial year.

Members were asked to note that the report updated the Committee on the following areas:

·             The Council’s forecast outturn revenue monitoring position for 2024/25 based on data to the end of the second quarter.

·             The position in respect of balance sheet monitoring as requested by the Audit, Governance and Standards Committee.

·             The updated procurement pipeline of Council projects due to be delivered over the following 12 months in order to properly plan for the delivery of these projects.

·             The organisation’s performance against the strategic priorities outlined in the Council Plan Addendum, including operational measures to demonstrate how the Council was delivering services to customers.

In terms of financial performance, the draft position was a £299,000 overspend, up from the £164,000 overspend reported in the quarter 1 report. As this related to expenditure at quarter 2, Members were asked to note that at this stage in the financial year, there were a number of instances where annual expenditure or accruals might distort the profiling.  The projected figures assumed support services and grants were adjusted to budgetary levels and accruals were netted out of the figures.

The overspends of £2.35 million detailed in the report, were offset by additional income of £2.05 million in corporate financing from additional grant income together with increased investment interest receivable and lower interest payable.  The Committee was asked to note that significant agency overspending in Financial Services related to the delivery of the Council’s accounts.  Overspends in Environmental Services were linked to greater costs arising with the Council’s vehicle fleet and reductions in income from Bereavement Services.

Additional funding had been added for the level of the pay award to staff, which had been agreed recently and which was above the 4 per cent allowed for in the 2024/25 budget.

In terms of cash management and borrowing, the Committee was informed that as of 30th September 2024, the Council had no short-term borrowings. The authority did have long-term borrowings of £103.9 million, although Members were asked to note that this linked to the Housing Revenue Account (HRA).

In respect of Council investments, Members were informed that on 30^th September 2024 there were £15 million of short-term investments held by the authority.

The capital programme had been approved in the Council’s budget for 2024/25 in February 2024.  The Council’s outturn spend in the capital programme was £3.682 million against a capital budget totalling £20.507 million. Members were asked to note that, as part of the budget setting process, it had previously been decided that £8.051 million would be rolled forward from 2023/24 into 2024/25 to take account of slippage from 2023/24.

Included in this capital programme, the Council also had the following grant funded schemes which were being delivered in 2024/25:

·             The three Town’s Fund schemes:

o      The library would not now be moving to the Town Hall to become part of the Town Hall Hub, following the decision taken by the Executive Committee on the 29^th July 2024.  A meeting with experts from the former Department for Levelling Up, Housing and Communities (DLUHC) on the 23^rd May 2024 had identified that, were the Council minded not to proceed with the current proposals, there were three options that could be followed linked to the three schemes agreed in the original bid submission. The way forward would require a Ministry of Housing, Communities and Local Government (MHCLG) Project Adjustment Request (PAR) form to be completed and approval by the Town’s Board.

o      The Digital Manufacturing and Innovation Centre (DMIC) – Estimated costs were £10.1 million, but this figure still remained to be finalised on the date of the Executive Committee meeting.  The DMIC funding needed to be spent by the 31st March 2026. However, it was expected that the scheme would be granted an extension by the Government and that library funding could be used to provide an enhanced scheme.  The site had been cleared and was ready for development.

o      Public Realm – a specification had been delivered to Worcestershire County Council by the end of March 2024 for inclusion in their Capital Programme and works had begun.

·       Community Hub - Reports had been received by the Executive Committee in July and September 2024 detailing a new design for the Town Hall Hub which no longer included the library.  The final costs of the new design had been received and were being assessed to deliver an implementation timetable. There would be a write-off of design works that had been expended in relation to the library, as this could not be capitalised.

·       UK Shared Prosperity Schemes for the year would total £1.694 million.  This funding had to be spent by 31^st March 2025.

An updated position on earmarked reserves had been provided in the report, taking account of the now submitted draft accounts for 2020/21 and 2021/22 as well as the reported outturn positions for 2022/23 and 2023/24.  As part of the MTFP, all reserves were thoroughly reviewed to assess their continuing their requirement and additional reserves set up for inflationary pressures such as utility increases.  At the 30^th June 2024, the Council held £11.477 million of earmarked reserves.

The HRA position to the 30^th September 2024 was detailed in the report.  In revenue terms, the Council was expecting revenue spending to be £1.2 million over budget, with plans to transfer funding from balances.

Capital spending in the HRA was expected to be £556,000 over budget, with the main variances set out in the report.

The balance sheet reporting was set out as the Quarter 2 Treasury Report at Appendix C to the report.  This report detailed the Council’s debt and borrowing position for the second quarter of the 2024/25 financial year.  Included in this was how the Council was using the authority’s working capital as well as measurement of the Council’s Prudential Indicators.  The Committee was asked to note that one indicator was not compliant.  This was a short-term loan between Redditch Borough Council and Bromsgrove District Council undertaken at year end which was repaid at the start of the second quarter of 2024/25. As reporting on the half yearly treasury position was a statutory requirement, this position would be reported on to Council.

The Council’s Procurement Pipeline included details of contracts expected to be reprocured and new procurement projects expected to be undertaken in the future.  The pipeline would be refreshed quarterly.

·             There were eight contracts between the old threshold of £50,000 and the new threshold of £200,000.

·             There were 11 contracts that were likely to be over the key decision threshold of £200,000.

·             There were three contracts procured by Bromsgrove District Council on behalf of Redditch Borough Council.

In terms of performance, the first section of this report showed the organisation’s performance against the strategic priorities outlined in the Council Plan Addendum. Additional comments and updates had been provided for the success measures to explain progress and activities. The final section of the report included some operational measures to demonstrate how the Council was delivering services to customers.  As the year moved forward, these indicators would link to business plans and the requirements of the new Executive Member for Performance.

The process of performance reporting would develop iteratively.  However, Members were asked to note that this document provided a snapshot in time and a temperature check of the organisation.  The layout comprised:

·             Strategic Priorities – success measures

·             Operational Measures – by service area

·             Financial Data (separate report on this occasion)

·             Corporate Projects (by exception)

Following the presentation of the report, Members discussed the pressures that could impact on the Council’s budget that were outside the authority’s control.  It was noted that this included the war in Ukraine and new policies that might be introduced by the next president of the United States of America. However, Members welcomed news that the Council had £11.5 million in reserves and the fact that three sets of accounts had now been closed for the authority, which brought the Council into line with other local authorities in the country.

RESOLVED that

1)          the current revenue overspend position of £299,000 and actions the Council was taking to mitigate this position be noted;

2)          the current capital spending of £3.68 million against a budget of £20.5 million be noted;

3)          the Housing Revenue Account position be noted;

4)          the updated procurements position be noted, with any new items over £200,000 to be included on the Executive Committee’s Work Programme;

5)          the Quarter 2 Performance data for the Period July to September 2024 be noted and that this will change over the year to link into the new administration’s priorities; and

RECOMMENDED that

6)          the Balance Sheet Monitoring Position for Quarter 2 - the Treasury Monitoring Report, required to be reported to Council - be noted.