To consider the corporate financial update for Quarter 1, 2020/21.
The Finance and Resources Portfolio Holder presented the Corporate Financial Monitoring report for Quarter One of 2020/21, highlighting the Council’s expenditure and income during the first three months of the financial year, but also including current projections of expenditure for the remainder of the year and officers’ planned actions to ensure a balanced budget by the end of the financial year. The report also detailed virement requests in relation to the Community Housing Fund, Next Steps Accommodation Programme and South Lakeland House/Kendal Town Hall. The report further sought approval for the continuation of the emergency decision to increase counterparty limits for Money Market Funds to £10m for the remainder of 2020/21.
The Finance and Resources Portfolio Holder drew attention to an error in the information contained within the report in the section on the Collection Fund, at paragraph 3.5.3. The Council expected to collection £44.5m of business rates during 2020/21 and retained 40% of the income, so the total value of the reduction was £300,000, and not £85,000 as shown.
The Finance and Resources Portfolio holder explained how the Council’s financial position had been made more complex by Covid-19, with an estimated loss of £1.7m income in Quarter 1 of the current financial year and spend around £300,000 more than originally budgeted. During the quarter, it had become clear that Covid-19 would have a major impact, so budgets had been revised and approved by Cabinet and Council in June 2020. Overall, it was estimated that the impact of Covid-19 on the total cost of services in 2020/21 would be £800,000 higher than the £2.1m approved in June 2020, but it was expected that the recently approved Sales, Fees and Charges compensation grant from the Government would reduce the impact by around £1.4m to £1.5m overall. While it was impossible to clearly split the impact of Covid-19 from the normal business as usual costs, an overspend of £69,000 was currently projected for normal service costs. The impact of Covid-19 and delays in recovery action had resulted in higher levels of debt compared to previous years. Recovery action had now restarted and it was expected that new recovery posts should help the position.
The Finance and Resources Portfolio Holder pointed out how the Council had not been distracted by the Covid-19 pandemic and had continued to monitor and control its budget and expenditure, and he thanked officers for their work during this busy time.
Members echoed thanks to the Finance and Resources Portfolio Holder and officers for their efforts in producing the update, for the underlying work in the financial planning and the clarity of the analysis in difficult and uncertain times.
The Leader asked the meeting if the motion was agreed. There was no dissent.
RESOLVED - That
(1) the contents of the report and Appendices 1-3 be noted;
(2) Council be recommended to agree to the continuation of the increase in counterparty limits for Money Market Funds to £10m for the remainder of 2020/21;
(3) receipt of the grant funding be authorised and authority delegated to enter into the funding agreement with the LEP as outlined in paragraph 3.3 of the report to the Director of Customer and Commercial Services in consultation with the Legal, Governance and Democracy Lead Specialist and the Portfolio Holder for Finance and Resources; and
(4) Council be recommended to agree the virements set out in Section 3.3 of the report.
Reasons for Decision
Regular budget monitoring forms part of the corporate governance arrangements that support all Council priorities.
Alternative Options Considered and Rejected
To return the counterparty limit on money market funds to £5 million. This will impact the Council’s ability to maintain short term liquidity and could result in higher balances being kept in the Councils bank account which does not earn any interest.
To refuse the requested virements. This will prevent the Council applying funds from Government within the district to improve housing and reduce homelessness.
There are no alternative options relating to Revenue Budget Monitoring, Capital Budget Monitoring or Treasury Management Review.