Appendix 1

 

 

 

 

 

 

Part A: Executive Summary & Overview                                        Page 2     

 

Part B: Revenue Budget Q1 2020/21

B1)    Revenue Budget                                                              Page     5

 

Part C: Capital Budget Q1 2020/21

C1)     Capital Budget                                                                           Page 10

 

 

 

 

 

 

 

 

 

 

Part B

 

This report provides members with a financial update for the first quarter of 2020/21, covering activity within this committee’s revenue and capital accounts for this period, and a projected outturn for the year.

Members will be aware that since the budget was agreed in February, the position for 2020/21 and future years has changed significantly as a result of the Covid-19 pandemic.  Specific impacts include:

-        Redirection of existing resources to support vulnerable people

-        Administering government support schemes, notably business rate reliefs and grants

-        Temporary closure of many Council facilities

-        Reduction in levels of activity in many other Council services

-        Income generating activities severely impacted by overall contraction in economic activity

-        Change in working patterns, with almost all office-based staff now working from home

-        Reduced levels of Council Tax and Business Rates collection.

 

This has resulted in many service areas reporting or projecting adverse variances against the budget for 2020/21, particularly in relation to income.  The overall projection for the council is summarised in table 1 below, and shows that the potential impact of Covid-19 on the council’s financial position is £8.547m.  These projections are based on information submitted to central government as part of the monthly financial monitoring return which councils have been asked to complete to enable a comprehensive picture of the financial impact of Covid-19 on local authorities to be compiled by the Ministry of Housing, Communities and Local Government.  The projections are based on the information available to finance officers at the time of submitting the return and are being regularly updated as the situation unfolds and further information becomes available.

	£000
Additional Spending	1,377
Income Reductions:
Business Rates (MBC share)	1,901
Council Tax (MBC share)	950
Other Income	4,319
Total	8,547

                                     Table 1, Covid-19 financial impact

 

Income reductions related to business rates and council tax were based on estimates made earlier in the financial year.  Collection rates have actually proved better than anticipated so this will mitigate the financial impact, although there will still be a significant loss overall.

It should be noted that the projections detailed within table 1 will not necessarily align to the in year budget outturn projections.  This is partly due to the statutory accounting arrangements for council tax and business rates which impact on the timing these losses reaching the general fund balance.  In addition to this, the variances above reflect an estimate of the financial impact of Covid-19 and do not take into account other factors which may impact on the budget outturn.

To date, support totalling £2.2m has been received from the government.  A further support package to compensate for fees and charges losses has been announced recently and will be confirmed later this month.  Any residual in year deficit will need to be met from reserves.  Given the all-encompassing impact of Covid-19 across many of the council’s services, mitigation for losses will be treated as a corporate exercise, and we will therefore not necessarily seek to apportion all unringfenced support received across service committees. The impacts which arise from areas within this committee’s remit are detailed within section B of this report.

Headline messages arising from other sections of this report are summarised below:

Part B: Revenue budget – Q1 2020/21

·         Overall expenditure at the end Q1 for the services reporting to CHE is £0.963m, compared to the profiled approved budget of £1.078m, representing an underspend of £0.114m. The forecast year end outturn for CHE is a shortfall of £0.136m.

·         We are anticipating funding to mitigate the impact of losses from fees and charges income, however, the value of support to be received will not be confirmed until October.  Initial calculations indicate that this funding could be in the region of £1.7m for the council as a whole.

 

Part C: Capital budget – Q1 2020/21

·           Capital expenditure for the services reporting to CHE of £0.540m has been incurred against the approved budget of £23.947m. Forecast spend for the year is £11.077m.

 

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B2)   Revenue Budget  

B1.1  The table below provides a detailed summary on the budgeted net income position for CHE services at the end of Quarter 1. The financial figures are presented on an ‘accruals’ basis (e.g. expenditure for goods and services received, but not yet paid for, is included). 

CHE Revenue Budget & Outturn

B1.2  The table shows that at the end of the first quarter overall net expenditure for the services reporting to CHE is £0.963m, compared to the approved budget of £1.078m, representing an underspend of £0.114m. It should be noted that this forecast does not take into account further government support for income losses announced recently.  The planned scheme will see councils absorbing losses of up to 5% of planned sales, fees and charges income, with the government compensating for 75p in every pound of ‘relevant losses’ thereafter.  We are therefore confident that the position will improve from the forecasts set out in tables 2 and 3 above.

B1.3  The table indicates that in certain areas, significant variances to the budgeted income levels have emerged during the first quarter of the year.  The reasons for the more significant variances are explored in section B2 below.

B2)   Variances

B2.1  The impact of Covid-19 and lockdown can be seen most significantly in those areas where income is a significant element of the budget. For this committee the areas that are most impacted are licencing and depot operations, with a lack of demand for both services. A further issue is an anticipated increase in the demand for temporary accommodation should the current restrictions on landlords evicting tenants cease. The year end forecast is for a shortfall of £0.136m, but that does not include the potential recovery of fees and charges from the government outlined earlier in this Appendix or measures taken to mitigate the overspend such as deferring recruitment plans and cancelling non-essential expenditure.

B2.2  The forecasts are based on the circumstances as they stand at present, and assume a gradual return to normal levels of activity, but the timescale of that is less clear, and of course the possibility of a second wave of the virus remains a risk that needs to be considered.

	Positive Variance Q1	Adverse Variance Q1	Year End Forecast Variance
Communities, Housing & Environment Committee	£000
Parks & Open Spaces – This variance has arisen due to vacant posts and less overtime payments due to the parks being closed during the lockdown period.	41		43
Crematorium – The service has seen significant additional demand due to the higher number of mortalities that have occurred from Covid-19.  This trend is expected to reverse in the second half of the year.	99		158
Licencing – Due to the impact of Covid-19 a shortfall in income is now forecast for the end of the year.		-15	-101
Recycling Collection – Demand for green bins and wheeled bins continues to high and is forecast to continue to increase for the remainder of the year.	44		60
Community Hub – The hub was set up to help vulnerable people in the community during the early stages of the Covid-19 outbreak. All the costs are expected to be funded by the end of the year.		-97	0
Homelessness Temporary Accommodation - The forecast overspend arises from additional costs to accommodate rough sleepers during lockdown.  84 rough sleepers were brought into temporary accommodation during this period.  Additionally, under the emergency Covid19 measures, landlords were prevented from evicting tenants during lockdown.  This presents a possible risk of increased demand for temporary accommodation as the restrictions are eased.		-6	-106
Depot Operations – This covers the MBS Support Crew and Commercial Grounds Maintenance, and due to the impact of Covid-19 there will be a shortfall in income expected.		-35	-157

 

 

       

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

B1)   Capital Budget: Communities, Housing & Environment (CHE)

B1.1  The position of the 2020/21 CHE element of the Capital Programme at the Quarter 1 stage is presented in Table 3 below. The budget for 2020/21 includes resources brought forward from 2019/20.

Table 4:     CHE Capital Programme 2020/21 (@ Quarter 1)

B1.2  Comments on the variances in the table above are as follows:

·         Housing Investments – Phase 4 of the purchase and repair scheme to acquire properties for temporary accommodation is now underway. In addition there is a proposal being considered for the purchase of a larger property also for temporary accommodation.         

·         Brunswick Street and Union Street – Construction at both sites was delayed due to Covid-19, and both schemes are now around 4 months behind schedule, but they are both due to be completed by the end of the financial year.                                                              

·         Indicative Schemes – A number of schemes are being considered and are at various stages of development. Where a decision is taken to proceed a more detailed report will be brought forward for consideration as with two schemes which were considered at the last meeting of Policy & Resources Committee.