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Agenda item

Financial Outturn Report

To consider the Council’s financial outturn.  

Subject To Call In::1. No - Item to note. 2. Yes - No action to be taken prior to the expiry of the call-in period.


1.      That the General Fund Outturn for 2021/22, the financing of the capital programme and the annual treasury management report and performance be NOTED.

2.      That the transfers to and from earmarked reserves be APPROVED.  


21.1           The report of the Head of Finance and Asset Management, circulated at Pages No. 100-123, highlighted the Council’s financial performance for the previous year, setting out the General Fund and capital outturn positions. Members were asked to consider the General Fund outturn for 2021/22, the financing of the capital programme and the annual treasury management report and performance; and approve the transfers to and from earmarked reserves.

21.2           In introducing the report, the Head of Finance and Asset Management advised that the report outlined an underspend of £4.2million and detailed the reasons for that position – the majority of the underspend was due to one off ringfenced income that had not been spent. The report summarised the service performance that had generated the surplus as well as highlighting the non-service related activity and other aspects of the overall budget to provide a whole view of the Council’s general fund. Particular reference was made to employees - £700,000 underspent largely as a result of staff turnover and vacancies in a number of service groupings; payments to third parties – including £138,000 on planning appeals as well as various provisions amounting to £330,000, in addition, £140,000 on appeals had been funded from reserves totalling £608,000 on planning appeals this year; £215,000 saving in the MRF gate fee due to changing provider; and £300,000 of gross costs, across various activities, were supported by external grant funding which was shown as part of the surplus on income. COVID-19, including Contain Outbreak Management Funding (COMF), expenditure amounted to £807,000 and included £148,000 leisure centre costs; £281,000 on contain outbreak management; additional staff costs across various departments – some full-time staff were redeployed fully to the COVID response, e.g. administering grant schemes therefore agency staff were contracted to backfill the day jobs; and £47,000 of additional Ubico costs due to extra staff, vehicles, PPE and cleaning products in order to be COVID secure. The heading ‘projects funded externally’ contained the costs and income of the Joint Core Strategy, Garden Towns and Heritage Action Zone – the balances on those individual funds were moved to reserves at year-end.

21.3           In terms of corporate codes, the treasury outturn for 2021/22 was a £100,000 gain against budget. In respect of commercial activity, the Council had an investment property portfolio totalling £61.5million which produced a gross rental income of £3.06million – the gross rental income was slightly down against budget expectations of approximately £116,000 as a result of the reletting of the units at Clevedon at lower market rents, a temporary vacancy as a result of a tenant exercising a break clause and an ongoing vacancy at an office unit in Hertford. The commercial property reserve had been utilised to cover the shortfall in income to the general fund. All vacant units had now been let. Business rates were volatile with the Valuation Office Agency agreeing a refund to Virgin Media of £2million. The report also highlighted COVID funding of £1million received in-year to support the Council’s position as a result of the COVID pandemic. It had received a fifth tranche of general COVID support funding in the first quarter as well as significant new burdens funding for its work on administering business grants, compensation for losses on sales, fees and charges as a result of COVID for the first quarter of the year and a direct allocation of Contain Outbreak Management Funding (COMF). Delivery of the budget 2021/22 had used less reserves than envisaged at the time of setting the budget – a number of activities such as in-cab technology had not moved forward in the financial year and had therefore not required the funding from reserves as originally planned – the allocation for those projects would remain within the Council’s earmarked reserves for draw down once the projects commenced. The outturn for 2021/22 highlighted a significant financial surplus for the Council. Savings had been generated in the delivery of core services which had been supplemented by increased service and corporate income. In addition, substantial external funding had been attracted for both COVID related activity and for service/project specific activity. Overall, a £4.2million net underspend was recorded and went forward to support the Council’s reserves, a breakdown of which was attached to the report at Appendix B.

21.4           Total revenue reserves of the Council stood at £29.55million as at the end of March 2022 and included earmarked reserves, planning obligations and the general fund working balance. Whilst £4.2milion was transferred into reserves from the general fund surplus, there was an overall decrease in revenue reserves of £2.06million as a result of expenditure against existing earmarked reserves in year, particularly relating to COVID, the use of the business rates reserve to meet the collection fund deficit in 2021/22 as a result of COVID and a net reduction in planning obligation reserves. The general fund surplus allowed the Council to support a number of existing reserves as well as to create new specific reserves to meet some of the inflationary risks that were now arising – increases to existing reserves included: planning contributions to the commercial property reserve, investment reserve and vehicle replacement reserve; increasing the Medium Term Financial Strategy reserve to support financial challenges that the Council faced; increasing the working balance of the Council in line with recommendations associated with the CIPFA resilience index; and adding in-cab project delivery to the waste management reserve. New reserves had been set aside for inflation; and pay awards. Where external funding had been received for specific projects, this had been set aside in ringfenced reserves including transport modelling for the Joint Strategic Plan (JSP), homeless reduction, digitisation of the planning service, health-related projects and investigation of a development corporation for the Garden Town.

21.5           The Council’s planned capital programme for 2021/22 was £3.9million with the breakdown of the planned expenditure being £2.4million on land and buildings delivery; £0.9million on replacement vehicles and equipment; £0.1million on housing and business grants; and £0.5million on disabled facilities grants. The actual delivery of the capital programme totalled £1.3million which was £2.6million less than the budgeted amount. An underspend of £2.1million was reported against Council land and buildings due to delays with Ashchurch Bridge. Actual expenditure of £276,000 included £59,000 on the decarbonisation project, which was funded from a grant, £178,000 on Ashchurch Bridge and £39,000 on car parking payment machines. A total of £383,000 was spent during the year on vehicles and equipment – this included purchase of three new mowers, a tractor, a wood chipper and a mounted flail for grounds maintenance, waste and recycling bins and the purchase of IT hardware. The community grants programme showed an outturn position of £90,000 expenditure – these were grants distributed to Winchcombe Skate Park and Bishops Cleeve Football Club as well as other small community projects. The disabled facilities grant programme showed an overspend of £31,000 – all expenditure was covered by capital grant funding from the government which was administered by the County Council. Tewkesbury Borough Council’s allocation for the year was £500,000 with the total expenditure incurred being £531,209 - the shortfall would be fully recovered. As well as the income for disabled facilities grants, capital receipts were also received for right to buy sales on housing stock previously owned by Tewkesbury Borough Council and for the sale of land in Northway and Bishops Cleeve. The summarised capital programme was shown at Appendix C to the report, together with the sources of finance used. Following the allocation of capital receipts, the balance on capital reserves, both receipts and grants, had increased to £1.539million as at 31 March 2022.

21.6           Referring to treasury management, the detailed report was attached at Appendix D and set out the economic environment, local performance and a number of prudential indicators. The prudential indicators had been monitored regularly and there were no deviations from those indicators which arose during the year. The in-year performance of treasury investments resulted in an average return of 1.29% and total income of £429,218, which was £84,218 above budget. In addition, the Council had an in-year gain from the capital growth of its pooled funds totalling £600,000. Given the lack of available investment opportunities, the Council had temporarily invested in short-dated, liquid instruments such as call accounts and money market funds. Total short-term investments at 31 March 2021 was £10million increasing to £22million at the end of this financial year. The average income return, across all investments, had decreased from 1.5% to 1.29%.

21.7           A Member referred to the investment units in Clevedon and questioned whether they had been re-let to the existing tenants and why the rents were lower. In response, the Head of Finance and Asset Management explained that one had been re-let and the second had a new tenant. It was already known that the rents may need to decrease when the properties were re-let as they had been on the high side and rents had decreased in the area – fortunately the other two vacant units in the Council’s commercial property portfolio had been let with increased rents.

21.8           Accordingly, it was

Action By:HF&AM

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