Agenda item

The Committee considered a report regarding the Council’s 2021/22 outturn position in respect of its revenue budget and capital programme.

The delivery of the 2021/22 budget had been interrupted early in the financial year by the identification of a c.£920k (8%) deficit arising from the accounting treatment for pensions, as subsequently reported to Members and investigated by Grant Thornton. The budget was then rebalanced without the £800K transfer to reserves as originally intended. As well as delivering the budget, the Council had been undertaking the Finance Transformation Programme which included the findings of the Grant Thornton review. Despite these challenges, the outturn report had been produced six months earlier than for 2020/21 and with a significantly lower variance to budget, i.e.:

·      a surplus of £458k against the revenue budget comprising:

-    a net underspend of £239k relating to one-off events

-    a net underspend of £573k relating to staffing costs; offset by

-    net overspends totalling £355k (already factored into the 2022/23 budget)

·      an underspend of £10.5m against the £24.1m capital programme comprising:

-    slippage of £10.4m, proposed to be carried forward (38%);

-    slippage not proposed to be carried forward of £0.3m (1%);

-    a new project of £0.5m; and

-    an underspend of £0.2m.

The report recommended that the revenue surplus be transferred to reserves. Approval of the proposed £10.4m capital programme slippage was also sought. 

In response to Members’ questions, the Committee was advised that:

·      as well as being legally compliant, reserves had to be sustainable over the medium term to mitigate against risks - the previous trajectory of diminishing reserves could have increased the prospects of having to issue a ‘Section 114’ notice    

·      the Council was awaiting a response to its application to Government for permission to use capital receipts to bolster reserves

·      the most significant risk regarding the capital programme was whether the schemes could be delivered in 2022/23 as opposed to the budgets being exceeded as a result of inflation – the intended outputs from capital schemes would be reviewed and projects may need to be rescoped to manage inflation within scheme budgets

·      the quality of services remained a priority  

·      there was no recruitment freeze, i.e. the £200,000 vacancy factor in the 2022/23 budget represented savings arising from the time lag between staff leaving the Council and their replacements taking up post  

·      not all of the Housing Benefits budget could be reclaimed from Government

·      there was unlikely to be any further funding to offset outstanding Covid related deficits.       

            R E S O L V E D – that:

A.    the Council’s revenue and capital outturn positions for the year be noted;

B.    the following transfers to reserves from the revenue outturn position be approved:

·      £117k unused contingency and £200k additional contingency to mitigate against financial uncertainties/risks in the medium-term and to support budget resilience, especially due to the impact of inflation

·      £75k to support the Future Tandridge Programme, subject to further approval by this Committee

·      £50k to support Phase 1 of the Debt Management Review

·      £16k residual underspend to the General Fund

C.    capital carry forwards of £10.4m from 2021/22 to future years be approved, subject a full review of the extent to which the capital programme is deliverable, including these carry forwards.