Agenda item

Budget monitoring report is a key tool in scrutinising the Council’s financial performance and is designed to provide an overview to all relevant stakeholders.  It is essential that the council monitors its budgets throughout the year to ensure that it is meeting its strategic objectives within its resource limits and, where necessary, corrective action is taken.  A key principle of budgetary control is to align the budget holders’ financial responsibilities and their management responsibilities.

This report shows the expected financial position over the three year medium term based on the Council’s actual financial performance at the end of period four (31 July 2023) set against the latest budget.

Recommendation:

To Council:

1.    That the revenue budget virements as set out in appendices 1 to 3 be approved and incorporated into the three-year medium-term financial plan.

2.    That the revenue budget supplementary estimates as set out in appendices 1 to 3 be approved and incorporated into the three-year medium-term financial plan.

3.    That the revenue variances to be managed as set out in appendices 1 to 3 be noted.

4.    That the capital variances as set out in appendices 1 to 3 be approved and incorporated into the three-year medium-term financial plan.

Councillor Keith Martin moved the recommendations in the report.  The Committee were being asked to increase the budget which had been agreed at the February Council meeting in order to be able to keep providing our services.  Key points highlighted to the Committee were the impact of the high inflation, how difficult it was to forecast recycling, pay award and salaries.  It was also pointed out to the Committee the situation with business rates with a 56% increase in Three Rivers which is the highest in the country.  Businesses would be able to appeal against the increase and if successful we would need to pay them.  The Local Authority funding model is broken and had asked the Government to change the model.  Some Councils had issued Section 114 notices, but we are in a much better position with healthy reserves.  It was emphasised that the risk register which was part of the report, was reviewed by the Audit Committee at each meeting.

The Director of Finance advised that if no action was taken, we would have sufficient reserves to cover the shortfall and still have a minimum reserve level of £2 million.  The Council were not near a Section 114 level and officers were already starting to work on budget strategy for next year and identify savings for the current year.

Members raised the following points:

Q Wished to understand why the Committee were being asked to agree a 12% increase in such a short period since the budget was agreed in February with inflation now coming down.  Should we have not budgeted for the pay increase when setting the budget.

A Inflation had been forecast to come down quicker by the Bank of England than it had and economic commentators agreed with this.  Local Government don’t usually get as good a pay deal as some other public sector workers and we had forecast around 3% at that time and if we had gone higher the danger is you make savings and staffing reductions you don’t need and is why we have reserves.  Kerbside recycling had been impacted by the wider economic environment and is worse than had been predicted in February.  The figures in the report on this and the pay award are forecast and were not being built into the changed budget.  The changed budget is things we know about around applying new grants and the brought forward figures from last year.  In terms of savings, we will look at grants we can apply against core services to reduce the costs to the Council and look at any efficiencies we can make.  Hopefully in the next monitoring report we should be showing an improved position, but we are at the will of the external economic environment.  Looking at vacancies our rate is quite high and if that continues it is likely to result in underspends.

Q Will we be improving on forecasting in the future?  Had we not forecast the insurance premiums increasing.

A The 12% increase was for the whole year.  The insurance premiums do tend to increase in the final year, but we are due to retender (undertaken every 4 years) and it is likely the premiums will go down although there is only 3 insurance companies in the sector now.

On being put to the Committee the motion was declared CARRIED by the Chair the voting being 10 For, 0 Against and 3 Abstentions.

RECOMMEND:

1.     That the revenue budget virements as set out in appendices 1 to 3 be approved and incorporated into the three-year medium-term financial plan.

2.     That the revenue budget supplementary estimates as set out in appendices 1 to 3 be approved and incorporated into the three-year medium-term financial plan.

3.     That the revenue variances to be managed as set out in appendices 1 to 3 be noted.

4.     That the capital variances as set out in appendices 1 to 3 be approved and incorporated into the three-year medium-term financial plan.