Agenda item

General Fund Budget Monitoring Report - Quarter 2 2020/21


Members were provided with information on actual performance against the approved Revenue and Capital budgets for 2020/21, including projected variances agreed or identified through budgetary control activity for the second quarter to 30 September 2020. The Committee was also 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 Principal Accountant (General Fund) introduced the report and drew Member’s attention to the Executive Summary and gave an update on the General Fund that had a year-end projected overspend of around £2.36m.  A few items had contributed to the adverse variance with the analysis being heavily dominated by Covid-19 related matters such as the anticipated income deficits within The Woodville and Market services where activities and thus income-generating opportunities, had been limited by the Covid-19 restrictions. However, it was noted that in the case of The Woodville, a sum of £325k was projected to be received back as part of the Government’s Sales, Fees & Charges compensation scheme. There were also adverse variances relating to rental income and within parking. Adjustments relating to the closures of Horn Yard and Market Square had also been taken into consideration as The Charter development came forward.

The Committee was advised of some good news within the Housing & Operations Directorate as additional income of £37k and £15k had been realised from the Garden Waste Collection Service and from Recycling credits respectively.

Investment income was another aspect of the Council’s finances affected by the Covid-19 pandemic with reduced returns forecast from Property Funds, Multi- Asset Funds and more traditionally-invested cash balances.  The results of all the variances were set out in a table on page 20 of the report which also showed the year-end position for Working Balances as being around £8.86m, which could be broken down into three elements:

·                    The Minimum General Fund Working Balance of £2m

·                    The General Fund Reserve £3.25m

·                    Usable Working Balances of around some £3.6m.

The Director (Corporate Services), the Principal Accountant (General Fund) and Principal Accountant (HRA) responded to questions from the Committee as set out below:

·                     The accuracy of the sales, fees and charges forecast remained subject to actual outturns and refinement of the compensation scheme by government. The scheme would operate on a reimbursement basis which currently stood at £300k at the end of September. The next figure would be produced in January 2021 and then in April 2021 for the end of the financial year.

·                     Members were advised that it would take approximately 2 to 3 years for the construction of The Charter and a start on site was forecast for early 2021. The Council would borrow for 3 years which would mainly be Public Works Loan Board monies. The Council would then re-assess to suit the project and the best offering in relation to borrowing.

·                     Paragraph 2.1 of the report set out a projected revenue overspend of £2.36m and it was confirmed that this would be met from Working Balances if other measures such as assistance from the Government were not forthcoming. If this amount was taken from the reserves then this would have a knock on effect on the Council’s Medium Term Financial Plan. The Director (Corporate Services) confirmed that by drawing money out of the working balances a new budget gap had appeared which had been caused by the pandemic and officers were basing their assumptions on the best information available at the time. The officers had met with MHCLG colleagues via the Kent Finance Group who continued to lobby the Government for support for the sector.

·                     Paragraph 2.7 of the report set out a projected capital spend for The Charter development works of £14.2m and Members were advised that this amount was part of the £82m set aside for this project. An earlier start on site had been hoped for and this would be updated in the quarter 3 monitoring report.

·                     Following a question on who oversees money received by the Council from the Government to ensure the funding was correctly utilised, Members were advised that the Borough Council had so far received £1.3m to meet expenditure pressures. A separate code had been created in the ledger which was kept under review by the Director (Corporate Services) and the Principal Accountant (General Fund) and in future, by the Assistant Director (Corporate Services). The funding had been used for mobilising the workforce and enabling homeworking, support for vulnerable residents which had included food parcels, befriending services and support for Council partners involved in the Council’s Covid-19 response. In addition, funding had also been used for signage to reinforce the Government’s safety message, PPE for office based and non-office based staff and screens in the Civic Centre. A series of monthly returns for the Government were also completed which were being used to inform the Government’s funding decisions. It was noted that the most recent lockdown had caused new and additional pressures.

Resolved that the report be noted.

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