Agenda item

To consider the quarterly budget position.

That the financial performance information for the second quarter of 2020/21 be NOTED.  

53.1          The report of the Head of Finance and Asset Management, circulated at Pages No. 169-194, highlighted a projected year-end deficit on the revenue budget and detailed the expenditure to date against both the capital programme and the approved reserves. Members were asked to consider the financial performance information for the second quarter of 2020/21.

53.2          Members were advised that this was the first report in the new format which forecasted to the year-end and it was hoped it would provide a more meaningful quarter end report. In addition, the Committee was advised that the report before it had been prepared prior to the latest lockdown so the information contained therein was likely to change as costs rose and income fell. The current year-end deficit was £329,000 which combined the impacts of COVID-19 with normal activities and additional grant funding from the government.

53.3          The Head of Finance and Asset Management drew particular attention to the surplus on employee costs of £642,401 which had been generated through staff vacancies across all services. COVID-19 meant there had been a delay to recruitment from the end of March, which may have left a greater number of posts open than normal, however recruitment processes were operating again with all remaining vacant posts in Development and Corporate out for recruitment. The Council had separately identified where costs had been incurred as a direct response to the COVID-19 pandemic with the aim being to demonstrate to central government the impact on the Council’s revenue position and that, without additional financial support, those costs would have a significant impact on the reserves held by the Council. Those areas that had been identified included the Council’s contractual requirement with Places Leisure, the purchase of 115 laptops to ensure staff could work from home effectively, the additional costs incurred by Ubico as it responded to the COVID-19 pandemic and a significant increase in demand on services particularly supporting vulnerable people in the Borough whether that was residents who were shielding, those finding themselves homeless or those who were facing unemployment and required financial support. The deficit on income had been attributed to the COVID-19 pandemic and had resulted in planning income expected to be under budget by £276,000 including planning fees, land charges and street naming and numbering; £248,000 of lost income from car parks as all charges were suspended during the lockdown period; £69,000 of lost income from rental income since some businesses were closed during the lockdown period; £42,000 lost income on trade waste during the first half of the year as a significant number of customers businesses were closed and their accounts were suspended during the lockdown period; £33,000 budget deficit on licensing, particularly around lost renewals on vehicle and taxi licences as well as premises licences; £47,000 budget deficit on the recovery of housing benefit overpayments and, as the Courts had been closed, there had been no revenue from Council Tax summons which amounted to a £100,000 loss; and a potential £214,000 budget deficit on One Legal fees as third party clients had been focussed on response to the pandemic rather than day to day business requiring legal support – One Legal had originally anticipated significant growth during the financial year but the pandemic had not made that possible. Appendix A to the report attached a summary position for each Head of Service which showed the current variance against their budget. The government had allocated £1,247,602 of un-ringfenced additional funding in 2020/21 to support the Council’s spending pressures and this had not been directly allocated to individual service areas but would be kept as additional general funding to support the Council’s overall budget. The government was also providing revenue contributions to cover lost income which would help improve the revenue position. In terms of COVID-19 business grants, the local authority had been asked to administer the distribution of those grants the details of which were set out at Paragraph 2.5 of the report. Further schemes were likely to be announced if Tewkesbury Borough was moved into a higher COVID tier level so the Council would continue to inform and update Members on the COVID response, including the financial implications, on a quarterly basis. Based on the quarter two forecast, the Council was in a good position with only a relatively modest deficit forecast and it would benefit from a significant business rates collection fund surplus in the current year which could be used to meet that deficit. The balances remaining from the collection fund surplus would be allocated to reserves to meet the significant financial costs of balancing future year budgets. The capital budget position was shown at Appendix B and this currently set out an underspend against the profiled budget of £69,094. The reserves position was provided at Appendix C and showed a summary of the current usage of available reserves, and Appendix D attached the mid-year treasury management report.

53.4          Accordingly, it was