Agenda item

Agenda item

Global Monitoring and Budget Position

Report of the Deputy Chief Executive and City Treasurer.

 

This report outlines the projected outturn position for 2022/23, based on the latest expenditure and income activity as at the and future projections. It also outlines the updated forecast position for 2023/24 and beyond following a full review of income and emerging pressures.

Minutes:

The Committee considered a report of the Deputy Chief Executive and City Treasurer which outlined the projected outturn position for 2022/23, based on the latest expenditure and income activity and future projections, and the updated forecast position for 2023/24 and beyond.

 

Key themes and points of the report included:

 

·         An overspend of £20.1 million was forecasted for 2022/23;

·         The overspend was mainly due to the announcement of a higher than expected one year pay award offer for 2022/23 (£9.5m), additional utilities inflation (£3.9m), higher than expected price inflation (£3.6m) and other pressures, largely relating to income shortfalls (£3.4m);

·         The pay offer proposed from the National Employers is a flat £1,925 per employee regardless of where they are on the salary structure;

·         The implications of COVID-19 and record levels of inflation on the Council’s cost base would have a significant impact on the Council’s finances for a number of years;

·         The main demand-led services of Adults, Children’s and Homelessness were projecting to outturn at or below budget;

·         The Council was working to reduce the pressures where possible and mitigate the position by:

o   Daily monitoring of wholesale prices for gas and electricity to inform the best time to take up new contracts

o   Rigorous procurement practices and ongoing discussions with suppliers to contain inflationary increases where possible

o   Review of Sales, Fees and Charges income to reflect increased pay awards and other costs where possible.

o   All directorates to review budgets and identify in year savings and mitigations ;

·         Development of a parking strategy was underway to support the overall city centre transport strategy and rebase budgets to reflect the reduced level of off-street parking income; and

·         The Medium-Term Financial Statement (MTFS) forecasted the Council’s budget gap at £37m in 2023/24, increasing to £58m by 2024/25.

 

Some of the key points and queries that arose from the Committee’s discussions included:

 

·         Acknowledged the rapidly-moving situation within the budget process;

·         The increased workload anticipated in Revenues and Benefits this winter;

·         Potential difficulties in receiving council tax and business rates as the cost of living crisis escalates;

·         Whether any modelling had been undertaken regarding the local government pay offer, which was still under negotiation; and

·         Any additional measures the Council could provide to help residents living in socially-rented properties.

 

The Deputy City Treasurer advised that the current pay offer was a flat-rate £1925 per employee, irrespective of position on the pay scale. This meant that employees on the lowest pay would see the greatest increase in their pay. This constituted an average increase of 7% to the Council’s pay bill, amounting to £16.5 million in comparison to £7 million which was budgeted for.

 

The Deputy City Treasurer also advised members that this figure was still under negotiation and that the pay offer could amount to higher if the flat £1925 increase was rejected.

 

It was explained that the inflation rate was 3% when the budget was set in February 2022 and was projected to peak at 5%.

 

The Deputy Chief Executive and City Treasurer explained that a further Household Support Scheme had been announced and further guidance on this was expected. The provisional figure for the scheme was £6.5 million and the Council would work to identify how this funding could be best used.

 

It was acknowledged that the Council was unable to mitigate every consequence of the cost of living crisis but work was underway to assess how the Council makes best use of its resources and discussions were ongoing between the Council and landlords on how to support residents. Discussions were also taking place regarding housing revenue accounts and the level of rent increases.

 

The Deputy Chief Executive and City Treasurer also informed members of a reserve which had been set aside and the Council was assessing proposals on how this could be used.

 

The Executive Member for Finance and Resources commented that the Council was experiencing difficulty in absorbing inflationary pressures given the impact of COVID and the cost of living crisis and called on the government to recognise the severe and unprecedented pressures that local authorities are facing.

 

The Executive Member encouraged the government to commit additional funding in the fiscal event, which was anticipated in late September, to mitigate against soaring inflation so that essential services provided by local authorities are supported.

 

Decision:

 

That

 

1.    the Committee notes the report and

2.    the Committee endorses any efforts made by the Council to secure additional funding from the government.

 

Supporting documents: