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Agenda item

Financial Outturn Report 2021/22

To consider the financial outturn report for 2021/22.


26.1          Attention was drawn to the report of the Head of Finance and Asset Management, circulated at Pages No. 67-78, which provided financial information for 2021/22 which would usually be included in the performance report that had been considered by the Overview and Scrutiny Committee at its last meeting. Members were asked to consider the general fund outturn for 2021/22, the reserves position and the financing of the capital programme.

26.2          The Head of Finance and Asset Management advised that the quarter three outturn position was reported with an estimated year end surplus of £3.6m; this had increased by £600,000 with the final general revenue fund outturn position for the full year showing a £4.2m surplus.  The table at Page No. 68, Paragraph 2.3 of the report summarised the service performance which had generated the reported surplus and a number of items showed significant variance against the budget.  Employee costs showed a saving of £700,000 largely due to staff turnover and vacancies in a number of service groupings; payments to third parties was overspent by £280,000 which was mainly due to planning appeals and there were £300,000 of gross costs against various activities which were supported by external grant funding and shown as part of the surplus on income.  In terms of offsetting the expenditure, there was a £215,000 saving on the Materials Recovery Facility (MRF) gate fee due to changing provider.  COVID-19 expenditure amounted to £807,000 in total and the report included a breakdown as to where that had been spent.  A line was included to highlight projects funded externally such as the Joint Core Strategy, Garden Town and Heritage Action Zone and this supplemented income by £1.6m, mainly through transport modelling for the Joint Core Strategy.  Additional income of £1.4m had been generated during the year by service areas exceeding their budget, in particular, within Development Management, planning fees had exceeded budget by £434,000 and £277,000 grant funding had also been received for a range of activities including the planning application tracker.  A full explanation of all variances exceeding £25,000 at a group subjective level was attached at Appendix A to the report.

26.3          In terms of corporate codes, the treasury outturn for 2021/22 was a £101,000 gain against budget as a result of increased investment income of £84,000 and savings of £17,000 on expected borrowing costs.  With regard to commercial activity, the Council’s property portfolio was performing well, although there had been a reduction in gross rental income circa £116,000 as a result of the re-letting of units at Clevedon at lower market rents and vacancies across the portfolio; however, all vacant units were now fully let and the commercial property reserve had been used to cover the shortfall.  With regard to business rates, there was a surplus of £415,000 against budget.  Members were advised that this was a volatile income stream – there was a gain of £290,000 from the Gloucestershire Business Rates Pool but there had also been a £2m refund to Virgin Media due to a reduction in rateable value.  In terms of COVID funding, over £1m had been received in year - the Council had received a fifth tranche of general support funding totalling £424,927 in the first quarter and significant new burdens funding for its work on administering business grants, compensation for losses on sales, fees and charges and a direct allocation of Contain Outbreak Management Funding.  Delivery of the budget in 2021/22 had required less use of reserves than envisaged as a number of projects, such as the delivery of in-cab technology, had not moved forward in the financial year; however, the allocation for those projects would remain within the Council’s earmarked reserves for draw down when they commenced.  Overall, a £4.2m net underspend would go forward to support the Council’s reserves, a breakdown of which was attached at Appendix B to the report.

26.4          Total revenue reserves of the Council stood at £29.55m as at the end of March 2022.  Whilst £4.2m was transferred into the reserves from the general fund surplus, there was an overall decrease in revenue reserves of £2.06m as a result of expenditure against existing earmarked reserves in year.  The general fund surplus allowed the Council to support a number of existing reserves as well as setting aside new reserves; two new reserves had been set aside this year for inflation – this had risen dramatically since the budget for the current year was set based on known costs in quarter three 2021/22 so a new reserve of £250,000 had been set aside to mitigate this – and the pay award – the current year budget included the assumption of a 2% pay award for 1 April 2022 but, given the current rates of inflation, the pay claim submitted by the Trade Unions which at the highest level totalled 11.1% and the impact of the projected rates for National Living Wage, a new reserve of £500,000 had been created.  A lot of external funding had been received for specific projects and that had been set aside in ringfenced reserves which included 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.

26.5          The Council’s planned capital programme for 2021/22 was £3.9m but actual delivery had totalled £1.3m - £2.6m less than the budgeted amount.  An underspend of £2.1m was reported against Council land and buildings which was due to delays with Ashchurch Bridge, mainly as a result of the High Court planning appeal, and there were savings in terms of the purchase of vehicles.  The Council’s Disabled Facilities Grant showed an overspend of £31,000; however, Members were informed that all expenditure was covered by capital grant funding from the government which was administered by the County Council.  The summarised capital programme was shown at Appendix C to the report and the overall capital position as at year end was a balance of £1.54m.

26.6          A Member noted the reduction in business rates and raised concern about the refund to Virgin Media.  He asked why lessons were not being learnt in that regard and whether this was there was still a risk of further reductions.  The Head of Finance and Asset Management clarified that the Valuation Office Agency had agreed a reduction on one of two rates assessments so there was a further reduction in value following the significant reduction in 2013/14 – this dealt with all outstanding appeals; however, they could of course appeal again in future.  Tewkesbury Borough Council had suggested to Government that, as Virgin Media was part of the national television network, it should be placed on the central list rather than local authorities which were disproportionately affected.  The Government was considering some items being moved to the valuation list but this was one of many issues which needed to be considered and determined.

26.7          A Member drew attention to Page No. 75 of the report and asked what ‘Projects Funded Externally’ related to in respect of Development Services.  The Head of Finance and Asset Management explained that £150,000 funding had been received from the Department for Levelling Up, Housing and Communities to support development of a planning application tracker; this was progressing well and was expected to be delivered in September.  The Member noted that the total savings against ‘Projects Funded Externally’ was £1.4m and clarification was provided that the planning application tracker was one specific project and the total savings included a range of grants, the main one being £1m in relation to the transport strategy for the JSP.  The Member went on to draw attention to Page No. 69 of the report which showed that the Council was only spending a third of what had been budgeted and he asked why the savings were not passed on to Council taxpayers.  In response, the Head of Finance and Asset Management advised the savings were from a number of sources, for instance, in relation to COVID or external funding from other sources which had not been budgeted for.  The £4.2m savings would go into the Council’s reserves, for instance the Medium Term Financial Strategy reserve which could be used to support the Council’s financial needs going forward – there had already been 12 years of austerity and the continued reduction in government funding meant that the Council would face significant financial challenges so that money may be necessary to ensure services could continue to run at the current level; Should that not be the case, it could be used to fund other ambitions.  In response to a query as to why savings were all included in the general fund as this may be making the picture look more positive than it actually was, Members were advised this was the only fund for in-year expenditure – whilst it was fantastic that the Council received that amount of money, a proportion was from external funding and there were limitations as to how that could be spent.  Another Member noted that not all of the COVID-19 grant had been spent and she asked if it was intended to spend that during 2022/23.  The Head of Finance and Asset Management explained this was un-ringfenced and had been offset against direct expenditure in-year – some committed expenditure had been carried over into the next year and the rest would be used as seen fit to support the reserves balance at year end; the vast majority was spent directly on COVID.

26.8          A Member noted the £700,000 underspend on staffing services and asked if consideration had been given to using agency staff in areas which appeared to be struggling, such as Planning.  The Head of Finance and Asset Management advised that most services were on target and the Deputy Chief Executive and One Legal had contributed two thirds of the savings; however, part of the impact was not having staff to attract extra income so one had offset the other.  Tewkesbury Borough Council was one of four partners in One Legal and there were a number of locums, contractors and agency staff within the team – and across the Council – due to a higher level of turnover than in previous years, partly due to COVID and lifestyle choices as well as rising competition in the private sector.  Vacancies were being backfilled with temporary staff where necessary and recruiting permanently where that was possible.  Consideration was being given to a range of options to ensure the Council had the staff required to deliver services.  In response to a query regarding staffing in Planning, the Head of Finance and Asset Management explained that a service review was being undertaken currently with further support going into the team.  A Member felt that consideration should be given to outsourcing and was informed there were now less outsourcing contractors available in local government so opportunities were less prevalent – the biggest one previously used by the Council was in Revenues and Benefits and was no longer in the market for a deal.  Nevertheless, where opportunities were available, assurance was provided that these would continue to be explored and he pointed out that consideration was being given to bringing in extra resources for peak workloads in a number of departments, for instance, to do a specific task or to deal with a backlog.

26.9          Having considered the information provided, it was

RESOLVED           That the financial outturn report 2021/22 be NOTED.

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