Minutes:
The Interim Deputy S151 officer presented the Provisional Financial Outturn Report 2022/23.
Members’ attention was drawn to the Financial Implications as detailed on page 34 of the report, as follows: -
The report sets out the Council’s provisional revenue and capital outturn positions for 2022/23 against budget.
The £12.068m full year revenue budget was the budget that was approved by Council in March 2022.
At Quarter 1 of 2022/23, it was noted that the budget included £478k of organisational cross-cutting efficiency targets which had not been allocated to services. This target was offset in the main by forecast underspends across other service areas predominantly due to vacancies. The 2022/23 budget had therefore, been revised to reflect the allocation of £424k operational efficiency target to those areas.
Whilst the Council had been on a finance recovery programme since April 2022, following the implementation of a new financial system in February 2021 which led to a deterioration of the Council’s financial position, it was important to note 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 the actual expenditure and income in those years and could have a consequential impact on the 2022/23 accounts.
The Finance team had undertaken a detailed review of the 2022/23 accounts since year end. There were a number of assumptions and manual adjustments that had been made to arrive at the provisional revenue outturn position, mainly as a result of transactions still being cleared from suspense. Those assumptions and manual adjustments included:
· Anticipated accruals and prepayments,
· Grants are applied to known expenditure and remaining balances are carried forward,
· Reserves are applied to known expenditure,
· Shared service recharges between Bromsgrove District and Redditch Borough councils where a shared service arrangement exists, and
· Transfers between the Collection Fund and the General Fund.
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 was subject to change, and a further update would be presented to Members in due course. Taking this into account, the provisional revenue outturn position was anticipated to be a £956k overspend; a £54k increase over the forecast Q3 £902k overspend position. These figures were after the “absorption” of the £424k of non-allocated savings and efficiency targets.
The variances for each service area against the 2022/23 revenue budget were as set out on pages 36 to 37 of the main agenda report.
Members’ attention was further drawn to the Earmarked Reserves and
General Fund Position.
Appendix B – to the report detailed the Reserves Position.
Members were informed that the Council had no long term borrowing.
Questions followed from Members on the following: -
· Efficiency savings being predominantly linked to vacancies, as shown on page 37 of the main agenda pack, was this an efficiency saving? It was explained that this was lined to efficiency targets by taking out staff vacancies where we did not need staff in order to set out a balanced budget by taking out staffing numbers. At Quarter 1 of 2022/23, officers looked at cross-cutting efficiency targets that had not been allocated to services and were re-allocated to where budgets should have been in previous years; and areas that were holding a significant amount in finances, which would be looked at again. A fuel reserve for 3 years was also created.
· The Council being understaffed due to sick leave or maternity leave – The Council were understaffed with agency staff currently covering vacancies. It was explained that this was a national problem with difficulties in trying to recruit and fill vacancies across the industry. Where budgets had been taken away those areas would not be able to employ staff.
· Pay Awards – It was highlighted that the pay award for 2 years running had had an impact, it had been fully counted for 2022/23, but the expected pay award of 6.8% for 2023/24 had not, as it was expected to be around 2%. With an increase in pension and national insurance contributions, the pay award would total 8/9%.
Further discussions followed around service areas overspend and underspend, whereby the Interim Deputy S151 officer responded and provided brief explanations.
The Interim Deputy S151 officer responded to questions from some Members with regards to Council Tax and NDR Collection Rates, who had commented that linear lines had been profiled on page 40 of the main agenda pack; which made predicting outcomes difficult. It was explained that the figures for Quarter 1 had not been received in order to reflect actual collection; and that there was usually a dip in collection during December, however there was a catch up during January to March.
The Leader asked if the Provisional Financial Outturn Report 2022/23 had been presented to a meeting of the Finance and Budget Working Group.
The Interim Deputy S151 officer explained that due to the tight report and meeting deadlines there had not been time, so the report had not been presented.
With this in mind and following a brief discussion, Members agreed to defer this item to the next Cabinet meeting. Officers were tasked to arrange for the Provisional Financial Outturn Report 2022/23 to be presented to a meeting of the Finance and Budget Working Group, prior to the next meeting of the Cabinet.
RESOLVEDthat
1) prior to the next Cabinet meeting to be held on 18th October 2023, that Officers arrange for the Provisional Financial Outturn Report 2022/23 report to be presented to a meeting of the Finance and Budget Working Group; and
2) following on from this, that the findings of the Finance and Budget Working Group; and the Provisional Financial Outturn Report 2022/23, be presented at the Cabinet meeting on 18th October 2023.