Members received and considered the report of the Finance Manager on the Revenue Budget and Capital Programme Monitoring Quarter 1 2020/21.  The report contained details of the significant variations of the Revenue Budget and updated Capital Programme.

Since the detailed budget had been approved by Cabinet in February 2020, there had been two reportable virements. Firstly, savings of £422,000 had been achieved by reducing the staffing structure and incorporating them into departmental budgets, leaving a balance of £78,000. Secondly staff turnover of £282,000 was originally budgeted centrally but had since been consolidated into departmental salary budgets.

The cost of services showed a deficit of £3.082m and non-service budgets increased the forecast over-spend to £4.536m.  This was reduced by £2.607m mainly due to additional grant income from the Ministry of Housing, Communities & Local Government (MHCLG).

The Council’s response to the COVID-19 pandemic had inevitably put the budget under enormous pressure despite some costs being partially offset by non-ringfenced grants from the MHCLG. The net impact of the virus was forecast to be £1.719m.

The main reasons for the variations were detailed in the report. The variances specifically relating to Departments had been split between those arising as a result of the pandemic and those arising as part of normal operational activities.

Environmental Services was forecast to under achieve its income budgets by £43,000 in the areas of Food Safety training, Licensing and Pest Control, however this was mainly offset by vacant posts in the Pollution and Food Safety teams.

Strategy and Planning was forecast a shortfall of £186,000 against Planning fees and Land Charges, which suffered a downturn due to the pandemic.

A provision for property rental income shortfall of £200,000 had been included in the forecast due to the impact of the pandemic; no rents had yet been written off at that stage.

Cabinet had previously agreed to provide financial support to Freedom Leisure until 31 March 2021 and the estimated cost to a maximum of £415,000 was included in the forecast.  If costs looked to exceed the maximum, a report would be brought back to Cabinet.

Interest income from investments was expected to be £148,000 below budget.  This was in line with expectations as the pandemic has had a major impact on global financial markets and the forecast would continue to be subject to fluctuations due to the level of uncertainty.  The Council had invested £8m in two property funds and most of its interest income was returned by these. However, their current market values had fallen by about £0.5m and could fall further still as the crisis continued, but Members noted that these were long term investments and were expected to recover over time.

The Council Tax part of the Collection Fund was currently 1.58% below the annual estimate.  The Business Rates Tax part of the Collection Fund was broadly in line with the annual estimate and the previous year’s performance.  The collectible debit and income received were much lower due to the additional reliefs announced by the Chancellor in the March budget statement. They had been replaced with additional section 31 grant payments.  The MHCLG had recently announced that any Collection Fund deficits incurred during the year could be spread over a three year period. There would be no impact in the current financial year and any future impact would be included in the Medium Term Financial Plan to be reported to Cabinet later in the year.

A summary of spend by capital project for 2020/21 and financing sources was shown at Appendix A to the report and an overall five year capital programme had been updated for Member decisions and slippage from the 2019/20 outturn at Appendix B. The five year capital programme totalled just under £60m.

The Quarter 1 forecast out turn for 2020/21 was a deficit of £1.9m and included the impact of the Coronavirus pandemic which had resulted in a £1.7m overspend.

Members thanked and congratulated staff on the enormous amount of work carried out during the current crisis and for the improvement to the reception area of Town Hall, coordinated by the Customer Services Manager.

RESOLVED: That the report be noted.