To provide Cabinet with an update on the Council’s financial position as at 30th September 2017 and to seek approval for any virements over £100,000 as required by the Council’s Financial Procedure Rules.

The Head of Finance and Section 151 Officer presented a report providing Cabinet with an update on the Council’s financial position as at 30^th September 2017 and to seek approval for any virements over £100,000 as required by the Council’s Financial Procedure Rules.

He reported that on 1^st March 2017, Council approved a net revenue budget of £258.093 million for 2017-18, along with a capital programme for the year of £63.854 million, which had since been updated to £57.574 million taking into account new approvals and slippage of schemes into 2018-19. The Council’s net revenue budget and projected outturn for 2017-18 was shown in table 1 of the report. The overall projected position at 30^th September 2017 was a net underspend of £2.495 million, comprising £710,000 net overspend on directorates and £3.208 million net underspend on corporate budgets. This took into account the draw down by directorates of £1.763 million from earmarked reserves during the year.

The Head of Finance and Section 151 Officer explained that there had been a number of virements between budgets during quarter 2 and gave a brief explanation of each one.

He reported that he was still not in a position to know the full impact of any price rises for both gas and electricity following the transfer to the new energy supplier so the position would be monitored during quarter 3 and any adjustments made when the figures became more certain. The contract was through the National Procurement Service so all Councils were in the same position.

The Head of Finance and Section 151Officer reported the latest position with budget reductions for 2016-17, at quarter 1 there was still £755,000 outstanding and the position had not changed during quarter 2. There was a projected shortfall on the savings target for 2017-18 of £1.726 million or 29% of the overall reduction target.

A Budget Reduction Contingency was established in 2016-17 and used to partly mitigate shortfalls on a number of budget reduction proposals. This reserve was increased at the end of 2016-17 to provide capacity to support shortfalls on budget reductions in 2017-18. During the financial year he would consider applications from directorates to the MTFS Budget Reduction Contingency Reserve to mitigate some of the shortfalls.

The Head of Finance and Section 151 Officer explained the position regarding earmarked reserves. The cumulative drawdown by Directorates was £1.763 million from specific earmarked reserves and there had been net additions of £602,000 as shown in the report.   

Members requested more information regarding early indications that the increase in energy costs could be as high as 30% with a financial impact of £750,000 to £1 million. The Head of Finance and Section 151Officer explained that energy was purchased in dollars and Brexit had had an adverse effect on rates. The procurement process was based on buying tranches of energy at different points in time and that was the reason why it was difficult estimating a price.   

Members raised concerns about the forecast of school deficit balances. The Head of Finance and Section 151 Officer explained that at this time of year a number of schools were predicting that budgets would be fully spent but this was not always the case.  

Members recognised the challenge but asked for reassurances that the savings identified in Table 3 of the report would be met. The Corporate Director, Social Services and Wellbeing explained that she was making a focused effort and that recovery plans were in place. Changes were being made and this had to be managed and this was taking longer than anticipated. Changes needed to be sustainable in the long term with increasing demand and timescales were ambitious.   

The Deputy Leader welcomed the update and the positive moves to establish the savings. 

The Cabinet Member for Social Services and Early Help referred to the apprenticeship levy in table 1 of the report and asked if this was down to failure to recruit apprentices. The Head of Finance and Section 151 Officer explained that this figure related to the forecast in terms of meeting the levy and not the number of apprenticeships and agreed to email further information to Members.

RESOLVED:                         Cabinet:

·         noted the projected revenue and capital outturn position for 2017-18 and

approved virements over £100,000 as outlined in the report.