To consider the quarterly budget position. 

That the financial performance information for the first quarter of 2021/22 be NOTED.  

33.1          The report of the Head of Finance and Asset Management, circulated at Pages No. 18-28, provided the first quarterly monitoring report of the Council’s financial performance for the year. Members were asked to consider the information provided.

33.2          The Head of Finance and Asset Management explained that the report highlighted a projected outturn surplus based on the quarter one position of £22,382 on the revenue budget and detailed the expenditure to date against both the capital programme and the approved reserves. In terms of service expenditure, the quarter one full year projection highlighted a full year cost of service provision totalling £13.266 million which would result in a deficit against the approved budget of £849,177. In respect of employees, the full year projection highlighted a potential gross surplus of £377,508; however, it should be noted that within the Council’s corporate expenditure there was a target to save £155,000 from employment costs across the Council, therefore, the net position was a surplus against target of £222,508. Payments to third parties highlighted a small projected overspend of £75,005 which included additional costs relating to an increased amount of burials at cemeteries, the costs of a Domestic Homicide Review and a forecast overspend on the Ubico contract sum in relation to extra payments being made in order to attract and retain drivers for the Council’s services - a national shortage of drivers, estimated to be around 70,000, had resulted in an impact on many forms of business with local authority waste collection services not immune to that impact. There had been a growing number of examples of authorities having to suspend collections as a result of driver shortages. To help mitigate the problem on the Tewkesbury contract, an increased market supplement had been agreed whilst the driver training for loaders continued – the rest of the contract sum was on target.

33.3          COVID-19 costs were continuing with the full year cost estimated at £415,094 which included the continued work of the business cell, additional costs for the provision of waste and recycling services and the continued support to Tewkesbury Leisure Centre. Those costs would be met from the additional COVID-19 grant funding provided by the government and new burdens funding for the business cell work. Income levels were down but many areas of Council activity had recovered well from the impact of COVID-19 with several income streams either back on budget or delivering a small surplus. Some areas continued to be affected by the pandemic with reductions in income levels from car parks during the first quarter, an expectation that the Tewkesbury Leisure Centre contract fee would not be provided during the year, and current vacancies for the units within the Council Offices. In addition, One Legal income remained below target; although this was offset to an extent by the savings on employee costs.

33.4          The expenditure associated with corporate activities, as well as the financing of the Council, highlighted an estimated surplus of £871,559 for the financial year. Treasury activities were largely expected to be in line with budget predictions, although a small saving on borrowing costs could be achieved. The commercial portfolio was currently predicting a small deficit on the year as a result of the expected temporary void at one office unit and the inducements offered to secure leases at the Clevedon units. It was anticipated that the deficit could be offset by the rental income for Unit 5 at the Tipton site where interested parties were currently agreeing Heads of Terms for a long lease. However, should the commercial property account remain in deficit for the full year, the Council would utilise the commercial property reserve to cover the void and lease costs resulting in no impact on the base budget position. The Council was expecting additional new burdens funding for its continuing administration of business grants as well as being able to claim compensation for losses on its sales, fees and charges as a result of COVID-19 for the first quarter of the year. The level of new burdens funding was not yet known, and the calculation of the compensation claim had yet to take place so a prudent estimate of £100,000 for new burdens and £70,000 for the compensation claim had been included within the projection – it was hoped that, by the second quarter report, exact figures would be known for both elements. Referring to business rates, the Head of Finance and Asset Management explained that the anticipated retention of income showed a gain of approximately £250,000 from the original budget compiled in December 2020. At the time of compilation, the outlook for the economy and business was very uncertain as a result of the impact of COVID-19 and the Council adopted a prudent view following national guidelines for likely levels of business rates in 2021/22. The first quarter information had highlighted businesses in Tewkesbury Borough to be doing significantly better than those estimates with, for example, the level of empty properties being considerably lower than forecast.

33.5          Appendix B to the report showed the capital budget position as at quarter one which was currently an underspend of £78,233 against the profiled budget of £286,658. The capital programme estimated total expenditure for the year to be approximately £3.9million which was much reduced on previous years as a result of the end of the acquisition phase of the commercial investment property strategy – the main elements of the forecast included: Ashchurch bridge; vehicle replacement; replacement of the heating system at the Council Offices; and Disabled Facilities Grants (DFGs). Very little had been spent in the first quarter but the DFG scheme was ahead of the profiled budget and had incurred an overspend – all expenditure on DFGs was covered by grant funding provided by the County Council so none of the scheme cost was borne by the Borough Council. Appendix C showed the reserves position. Reserves had been set aside from previous years to fund known costs and the strategic planning of the authority’s operation. This year’s reserves had been boosted by both grant funding related to COVID-19 and also the release of provisions from the retained business rates scheme. The information in the appendix did not take account of reserves which had been committed but not yet paid.

33.6          During the discussion which ensued, a Member questioned whether the costs of Domestic Homicide Reviews were paid for by the Council and whether the Council received income from Tewkesbury Leisure Centre in a normal year. In response, the Head of Finance and Asset Management explained that the Council received funding to offset the costs of Domestic Homicide Reviews from a pot which all districts across the County paid into and was matched by the Police and Crime Commissioner. In terms of Tewkesbury Leisure Centre, the contract fee payable each year was £160,000 and, until COVID-19, that had been paid. At the moment the Leisure Centre seemed to be doing well again and it was hoped it would be cost neutral around September time, potentially moving into a surplus position, so the Council may receive some of the contract sum this year. In respect of the void office space within the Council Offices building, the Head of Finance and Asset Management advised that both vacant units had been advertised but little interest had been seen to date. In terms of the wider commercial property portfolio, there were two vacant units; one was due to be occupied shortly and the other should be let soon.

33.7          In respect of the national shortage of drivers, how that impacted Ubico and whether that would affect the income from the Garden Waste Service, the Head of Finance and Asset Management advised that, if it became necessary to ‘stand down’ the Garden Waste Service, there would not necessarily be a need to offer refunds as the Council did not specify the number of collections which would be made in the year. The driver shortage was certainly a precarious position, but no services had yet been stopped. The Garden Waste subscription renewals were sent out in the New Year ready for April and the issue could be considered then if necessary. It was hoped the Council would be in a stronger position regarding drivers by that time as the national shortage was currently being compounded by staff taking summer holidays and illness through COVID-19. Ubico had been working hard to get other crews to cover services where needed and staff were being flexible which was good news as it had allowed the Council to continue to maintain its services.

33.8          Referring to the current situation in Afghanistan and the plan to accommodate refugees across the country, a Member questioned whether there was a pot of government funding for this purpose. In response, the Chief Executive advised that, in Gloucestershire, it had been agreed that accommodation would be provided in the county and offered to the resettlement scheme. To date, seven homes had been found and further homes were being identified. At the moment the government was providing significant amounts of funding for each refugee and, on that basis, Gloucester City Council had taken out a contract on behalf of the county with Gloucestershire Action for Refugees and Asylum Seekers (GARAS) to support with furniture, guidance etc. County Council services were ready to receive them in terms of schools etc, and would be providing administrative support, and Tewkesbury Borough Council had seconded a person to help run the team which would be looking at local authority stock, registered housing providers, private sector and letting agents to find available properties – this was not an easy task as there was already a housing need in the county which had to be addressed; however, he believed Gloucestershire was the first to offer housing within the South West as Leadership Gloucestershire had considered the matter some time ago and asked Officers to be ready to address it. In terms of the likely numbers involved, the Chief Executive advised that this was currently unknown, although the initial estimate - before the evacuation had been ramped up – was 3,500 people into the country (Gloucestershire had planned for 1% of that number) so on that basis, if the new number was 17,000, Gloucestershire would expect to receive around 170 people. Officers had pointed out to the government that, in Gloucestershire, there was an amount of Ministry of Defence (MoD) housing which was empty, and it was possible that those not in high security places could be used; the government representative had said he would escalate that idea back up the chain. Officers were also aware that it would be helpful to locate people around where there were existing Afghan communities who could offer additional support; particularly now it was becoming clear that the people being housed were likely to be ordinary people rather than just interpreters who, by their nature, would speak English well. In response to a query regarding incentives for private landlords, the Chief Executive confirmed they were being contacted to understand what might be possible and Officers were checking whether incentives could be offered from the government funding.

33.9          A Member raised queries regarding the extra funding required by Ubico, whether any deficit in the investment portfolio could be covered and whether there was any update on the new contract for Cleeve Hill Golf Club. In response, the Head of Finance and Asset Management explained that the additional funding required by Ubico was entirely to add to the current market supplement for drivers; a large proportion of the investment portfolio deficit was expected for things such as inducements for new tenants and that was the reason there was a reserve in place to cover voids etc.; the memberships at Cleeve Hill Golf Club were increasing and the new tenants appeared to be doing well with their plans – they were scheduled to provide an informal update to Members shortly.

33.10        Accordingly, it was