To consider a summary of the current financial position for the Council at the end of the second quarter of 2023/24 forecasting to the year end.

That the current forecast unbudgeted surplus of £861,000 and the detail set out in Appendix A be noted;

That Full Council be recommended to amend the Capital Programme to take into account the changes set out in Table 4;

That the delegated decision of the S151 Officer in consultation with the Portfolio Holder for Finance on 5 October 2023 to prematurely repay the £20m of PWLB borrowing as per the Audit and Governance report attached at Appendix B be noted.

A report was presented to summarise the current financial position for the Council at the end of the second quarter of 2023/24 forecasting to the year end.

During his introduction of the report the Portfolio Holder for Finance made reference to:

·        General Fund Provisional Outturn - Quarter 2 data provided a 6-month view on which to base the full year forecast in what was a volatile and inflationary environment; these figures were therefore susceptible to further change.  The full year outturn based on current projections and assumptions was a forecast net service surplus of £861,000.

The major variances related to a reduction in car parking income, housing benefit and council tax related budget changes, increases in agency costs which had been off-set by increased investment income and additional garden waste income.  The forecast position by Assistant Director and Corporate Areas was detailed at Table 1 together with an analysis of  variations.

·        Savings Target - When setting the budget certain assumptions had to be made around inflation pressures particularly pay, fuel, power and support for IDB costs. As a result of this approach when the budgets were not required e.g. as budgets became more accurate, these were being offset again the savings target and this information was detailed in  Appendix A – Table 2 of the report. The current position was £1,305,000 of potential savings had been identified at quarter 2 against a target of £1,608,000 and further areas had been identified for detailed consideration.

·        IDB’s - The financial pressure generated by the Internal Drainage Boards had been supported by government for 2023/24 in the sum off £927,000 in respect of which the council was very grateful. However, the issue and challenge of a longer-term solution to this problem had been raised again with government officials at DLUC and BEIS in order to seek a resolution that enabled the Council to make use of the Council Tax it raised for the purpose set. A Special Interest Group had now been established and more activity was underway to support this lobbying effort.

·        Reserves - General Fund Specific Reserves had seen a reduction in balances of £1,439K. Further specific details were set out in Appendix A – Table 3 with associated narrative and members are requested to note the use of reserves detailed in that section.

The General Fund Reserve Balance remained at £1.822m.

·        Capital – General Fund - The total revised General Fund Capital programme for 2023/24 was £69.812m as detailed in Table 4 of Appendix A. It included an updated budget carry forward due to slippage on the GF Capital Programme of £0.087m, in addition to an adjustment to the UKSPF budget which was required and which was recommended for onward approval by Full Council.

·        Treasury Management - Section 2.4 provided details of the Council’s Investments held on 30 September 2023.

The original profiled net budget for investment income as at Q2 was £1.536m and actual investment income was estimated to be £2.399m. This was an increase in income above budget of £863k.

The original profiled net budget for investment income for 2023/24 was £3.071m and the forecast outturn was estimated to be £4.863m. This estimated outturn was an increase in income above budget of £1.792m.

The higher levels of investment income compared to the original budget were due to increased balances available for investment resulting from additional grant money being received and recent rises in interest rates on new investments.

The Council had external loans held with Public Works Loans Board totalling £20m at an average  fixed rate of 2.465%. Borrowing costs on this external borrowing were budgeted to be £493K for 2023/24.

On 9 October 2023 the Council prematurely repaid the £20m of external borrowing to the Public Works Loan Board (see Appendix B for further information). As this transaction falls into Quarter 3, the financial implications of this decision will be reflected in the Quarter 3 Finance Report.

During discussion the Chairman of Executive Board paid credit to the Officers and Portfolio Holder for Finance.

RESOLVED

1.   That the current forecast unbudgeted surplus of £861,000 and the detail set out in Appendix A be noted;

2.   That Full Council be recommended to amend the Capital Programme to take into account the changes set out in Table 4;

3.   That the delegated decision of the S151 Officer in consultation with the Portfolio Holder for Finance on 5 October 2023 to prematurely repay the £20m of PWLB borrowing as per the Audit and Governance report attached at Appendix B be noted.

Reasons:

To ensure the Council’s forecast  financial position for 2023/24 is considered and related decisions approved. It is important that the Executive are aware of the financial position of the General Fund to ensure that they can make informed decisions that are affordable and financially sustainable for the Council.

Other options:

To not approve the financial movements outlined.