Agenda item - Financial Outturn Report 2022/23

Agenda item

Financial Outturn Report 2022/23

Minutes:

The Head of Finance and Customer Services presented the Financial Outturn Report 2022/23 and stated that the report outlined the Council’s provisional revenue and capital outturn positions for 2022-2023.

 

Cabinet was informed that from a revenue perspective, the Council had a £12.068m full year revenue budget which was approved by Council in March 2022.

 

Members were reminded that the 2022/23 budget included a £478k cross-cutting efficiency target, of which £424k was allocated to services based upon forecast underspends at Quarter 1 predominantly linked to vacancies.

 

Whilst the Council had been on a Finance Recovery Programme since April 2022, it was important to note that the 2020/21 and 2021/22 accounts had still not been closed and that this could have an impact upon the 2022/23 position.

 

It was reported that 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 made to arrive at the provisional outturn position detailed in the report. These assumptions included:

 

·       Anticipated accruals and prepayments,

·       Grants are applied to known expenditure and remaining balances are carried forward,

·       Reserves are applied to expenditure,

·       Shared service recharges between Bromsgrove District and Redditch Borough Councils were manually reflected, and

·       Transfers between the Collection Fund and the General Fund.

 

The Head of Finance and Customer Services noted that there was still work to be done in order 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 £956k overspend against the £12.068m budget. This was a £54k increase over the forecast at Quarter 3 which was a £902k overspend position.

 

Members attention was drawn to the financial position per service area along with supporting service narrative.

 

It was reported that the 2022/23 pay award - £1,925 pay award across all pay scales – had created a variance against budget for a number of service areas.

 

Cabinet was informed that overspends were anticipated within the following service areas:

 

·       Environmental Services - largely due to the implications of the pay award.

·       Financial & Customer Services - due to implications of the pay award, temporary staffing requirements and reduced court costs/housing benefit overpayments recovered, however this could change pending income reallocation.

·       Legal, Democratic and Property Services - predominantly due to a budget pressure linked to the contract with SLM to deliver Leisure Management Services. It was noted that the leisure sector continues to recover from the effects of the Covid-19 pandemic and therefore a cost pressure had been seen in this area.

 

From a Treasury Management perspective, the Council had £3.7m short-term borrowing at 31st March 2023 and no long-term borrowing. It was noted that the Council also held £1.2m in short-term investments.

 

Information regarding Capital monitoring was provided within the report, and Cabinet was informed that an updated Capital Programme totalling £13.099m was approved in the budget for 2022/23. This Capital Programme would be funded from both Council and external resources. The provisional Capital Outturn Expenditure was £10.256m against the overall £13.099m budget and the £2.843m budget underspend would be rolled forward from 2022/23 to 2023/24.

 

The report provided further details of anticipated reserves over the medium term to 31st March 2026. At 31st March 2023 it was projected that the Council held £7.9m of earmarked reserves.

 

Cabinet was informed that the General Fund Balance on 31st March 2022 was £4.485m. The anticipated in-year draft overspend of £956k in addition to the budgeted drawdown from reserves totalling £411k could result in the application of £1.367m from the General Fund Balance in 2022/23. Re-baselining of earmarked reserves during the 2023/24 budget setting process added £2.682m to the General Fund, therefore as at the 31st March 2023 it was projected that the General Fund Balance would be £5.8m. With 2020/21 and 2021/22 still to be closed and approved by Audit, Members were reminded that these figures could be subject to change.

 

Officers stated that it was important to note that, any overspend funded from the General Fund Balance was the use of one-off funding and therefore it was imperative to identify medium-term budget efficiencies to accommodate increasing costs and replenish reserves.

 

Following the presentation of the report some Members felt it was important to note that although utilising reserves to cover the anticipated in-year draft overspend of £956k in addition to the budgeted drawdown from reserves totalling £411k (total £1.367m) the budget of the Council was not truly balanced as it had to be supported by the use of reserves. It was suggested that it was important for other Members to understand that there would need to be some decisions made in the future to reflect the financial position and that it would be imperative that decisions be made on what were considered vitally important areas. It was also reiterated that all significant amounts of expenditure must always be requested in conjunction with a robust business case.  Members did comment however, that it was important to recognise that Bromsgrove District Council were in a better position than some local authorities were currently.

 

RESOLVEDthe following be noted:

 

1.     The 2022/23 provisional outturn position in relation to revenue budgets is a projected revenue overspend in the region of £956k.

2.     The 2022/23 provisional outturn position in relation to Capital expenditure is £10.856m against a total approved programme of £13.1m.

3.     The provisional outturn position in respect of the General Fund Reserves, noting that any overspend funded from General Fund Reserves is the use of one-off funding. It is therefore imperative to identify medium-term budget efficiencies to accommodate increasing costs and replenish reserves.

4.     The provisional outturn position in respect of Earmarked Reserves.

5.     Financial performance in respect of Council Tax and Non Domestic Rates Collection.

6.     At the time of writing the Council is 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.

7.     Work continues to refine the position including addressing the backlog of entries that are in suspense and any miscoding, therefore the provisional position detailed in this report is subject to change, and a further update will be presented to Members in due course.

 

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