General Fund Provisional Outturn Report
The Committee was presented with the 2019/20 provisional General Fund Outturn Report, including movements in the General Fund working balances and earmarked reserves and the 2019/20 provisional General Fund Capital Outturn.
The Principal Accountant (General Fund) advised that the report was labelled as provisional as it was still subject to the external audit process and the receipt of the final audit opinion which will come to the Finance & Audit Committee in due course.
The Principal Accountant (General Fund) directed Members to page 14 of the report which held an Executive Summary of the information in the report pertaining to the:
- General Fund – Revenue
- General Fund – Capital
Members were updated on other key areas of financial performance that may impact on the
Council’s Medium Term Financial Strategy, Medium Term Financial Plan, or Financial Statements.
The Chair thanked the Principal Accountant (General Fund) for the detailed run through of the report and opened up the report to Members questions.
Cllr Ejaz Aslam requested that it be noted that the Conservatives had full confidence in the Finance Team and were proud to work with them to monitor Gravesham Council’s finances.
Following questions for clarification, the Principal Accountant (General Fund) elaborated further on several variances within the report:
- Covid19 Impact – additional bad debt provision: £377k adverse variance and Increased Sundry Debt bed debt provision £60k adverse variance – It was identified that more current debts which generally did not attract a bad debt provision would be at greater-risk of non-payment than was usually the case. Officers have undertaken various aged debt analysis modelling, and thus in the interests of budgetary prudence and in recognising these unique circumstances, a further bad debt provision of £377k was set aside. However it is just a provision at 32 March 2020; when the Council gets to year end 2020-21 the provision will be reviewed and if the sum was too cautious then it will be released back into the General Fund. The aim of the bad debt provision was to be realistic about certain debts which may not get paid due to the extenuating circumstances stemming from COVID-19
- Bank Charges: £37k adverse variance – The Council has been looking at different electronic methods of payment that are convenient for the customer and more efficient for money handling. An increased volume of electronic payments has been seen resulting in additional charges. New rates were negotiated with Worldpay but the contract negotiations were delayed and didn’t come into effect until February/March which affected the variance.
- St Georges’ Shopping Centre: £526k favourable variance – this position has been generated from rental income from the centre, included a rent guarantee sum from Reef and investment income generated from the initial investment balance received.
- Other Net Variances: £49k adverse variance – Significant variances of over £10k are reported for each area and highlighted within the report under a favourable or adverse variance. Other variances under £10k are reported as a net position in the report under ‘other net variances’. It should be noted that the £49K adverse variance under this heading is not considered significant when compared to the total net £4.9 million budget for Corporate Services
- Town Centre Improvement Works: £33k adverse variance –Initial spend was incurred to get projects underway within the Town Centre, as approved by Full Council in February 2020, including the purchasing of new cleaning equipment
The Director (Corporate Services) and the Principal Accountant (General Fund) fielded further questions from the Committee and explained that:
- There was a typographical error at 3.11.1 of the report; it should be a ‘£74K favourable variance’
- In response to a question around IT equipment and homeworking, it was explained that there had already been a large degree of investment IT equipment prior to COVID-19 as part of the council’s Brexit preparations to improve the ability for the workforce to work remotely due to potential risks around traffic congestion in the county. The lockdown situation accelerated this work further as the majority of staff had to be set up to work from home in a short space of time; currently the majority of the Council work force is still working from home. Moving forward, the council will look to further develop flexible working arrangements through the project to implement Microsoft Office 365, which had commenced prior to COVID-19.
- In response to a question regarding carry forward requests, the Younger and Older Persons Funds were requested to be rolled forward from the 2018-19 budget as funds were allocated but not fully spent by the end of the financial year.
- The total funding received from Central Government to assist the Council with the response to the pandemic had increased over the last week to £1.3 million
- A paper was submitted to Cabinet on 29 June 2020 setting out the initial estimates of the cost to Council from the COVID-19 pandemic and the most significant impacts were expected to be to the council’s income streams, for example from reduced Council Tax and Fees and Charges payments. The Council anticipated an impact of £3.75 million for the current financial year which was a significant figure when compared to the Council’s £11.4 million net budget for 2019-20; the cumulative impact as presented across the Medium Term Financial Plan from 2020/21 to 2028/29 has been initially estimated at £5.67 million. Due to the continued uncertainty of the future of Local Government funding and the significance of the impact from COVID-19, a follow up report will be submitted to Cabinet in September 2020. Before the budget setting in February 2020, the Leader has requested a paper be brought to Full Council to allow all Members to understand and discuss the impact of COVID-19 on the Council’s financial position
- The Council is a member of the Kent Business Rates Pool and as part of that arrangement certain monies that would have been paid to central Government as a levy can be retained by Kent as a whole or by individual local authorities. At year end, one way in which retained funds are held by the council is through the NNDR Growth Fund which is used to support economic development projects in the Borough
- The 2020/21 budget for Planning Services was based on there being a full establishment of officers; in the past there have been difficulties recruiting to the professional posts across the council, not just in Planning Services, but the team have been working towards ensuring the Planning Team are fully resourced
The Principal Accountant (General Fund) agreed to contact the budget holders for the following areas with adverse variances and circulate a document with further information about each of them to the Committee:
- Denton and Southfield Shaw Repairs: £93k adverse variance
- Waste Recycling Support Payment: £90k adverse variance
- Net income deficit within Car Parks: £106k adverse variance
The Director (Corporate Services) advised that a response would be circulated after the meeting regarding the Woodville’s auditorium floor and the price difference between maintaining the floor and fully replacing it as well as the reason it was not regularly maintained.
The Director (Corporate Services) agreed to circulate a document setting out the St Georges Centre financial transaction in August.
The Chair thanked the officers for their detailed responses.