Agenda item

An analysis of forecast expenditure against the Council’s overall revenue budget of £11,351k, as at the end of June 2022 (Month 3) was presented. A £573k overspend was forecast, split between the four policy committees as follows:

·         Community Services: £200k

·         Planning Policy: £124k

·         Strategy & Resources: £244k

·         corporate items: £5k

Potential mitigations totalling £484k through the following planned contingencies were identified, namely:

·         £100k – reserve contribution held within the 2022/23 budget

·         £117k - general contingencies within the 2022/23 budget

·         £317k – set aside to meet known 2022/23 risks as part of theR2021/22 outturn, less £50k used for the £450 cost of living support proposal as referred to below.

The shortfall in property rental income could also be met from the Income Equalisation Reserve, totalling £215k, should it be deemed necessary. 

Upon reviewing the Revenues & Benefits budget, it was considered more logical for £270k of income items held within Strategy & Resources to be transferred to ‘corporate items’ as part of collection fund management.  A virement between the two budgets was recommended to that effect, bringing the Committee’s budget down to £6,222k.

The Capital Programme was forecasting £60k of slippage in the Housing General Fund.

The report also covered the following two matters:

(i)           Confirmation that the Council’s application to Government for a capital dispensation (initially to replenish General Fund Reserves and to secure flexibility for a further amount to fund the transformation programme) had been refused. This was based on the Government’s assessment of the Council’s overall financial position, including the current level of reserves and measures underway to meet the identified budget pressures.  In the meantime, sector-wide flexibility to use capital receipts to fund transformation initiatives had been extended, so plans to fund the Future Tandridge Programme were not at risk. While the Government regarded capital dispensation as a measure of last resort, a further application would be considered should funding for the Council in 2023/24 be insufficient to meet emerging risks.

(ii)          A proposal to make a one-off payment of £450 to staff on grades TC1 to TA2, given the absence of a cost of living pay increase for 2022/23. While the Council’s financial position remained extremely challenging, management recognised the impact of the cost of living crises upon staff. The payment would cost the General Fund c.£50k (funded from the surplus from the 2021/22 outturn position) and the Housing Revenue Account c.£10k. The contingencies listed above had been adjusted for this.

A wide range of views were expressed regarding the recommended £450 payment to staff referred to in (ii) above. Councillor Gillman, in light of the responses to his Standing Order 30 questions, proposed an amendment that, if such a payment was to be awarded, it should be restricted to those staff (on grades TC1 to TA2) who had not received an increment for 2022/23. This amendment was not seconded, so did not proceed to a vote. Other Members of the Committee were in favour of the original recommendation. 

Various matters were discussed regarding the £573k forecast overspend, including:

·         the inflationary impact of price indexation within waste services and the need to ensure that, for contracts in general, the Council (as client) was not burdened with an unreasonable share of financial risks

·          the wider adverse impact of inflation upon the Council’s building contracts, the extent of which would become more apparent in monitoring reports for Q2 and subsequent agenda items for the Housing Committee

·          the scope for making future budget monitoring reports more transparent by distinguishing ‘in-house expenditure’ from contractual costs, without causing a disproportionate amount of work for the finance team

·          the fact that posts in the Development Management team were now being filled by permanent staff, which would help to bring salary costs under control

·         an explanation of injunctions served in respect of Green Belt incursions and the intention for this to deter future breaches of planning control, notwithstanding the fact that associated Counsel costs were unrecoverable

·          the desire to increase income from Council office rentals.

R E S O L V E D – that:

A.      the virement of £270k between corporate items and the Strategy & Resources Committee, set out in section 3 and slide 13 of Appendix A to the report, be agreed;

B.     a £450 one-off payment to staff on the lowest grades of the Council’s pay structure, set out in section 15 of the report and funded from £50k of the 2021/22 outturn surplus and £10k from the HRA, be approved;

C.       the forecast revenue and capital budget positions as at Quarter 1 / M3 (June) 2022 be noted.

In accordance with Standing Order 25(3), Councillor Gillman wished it recorded that he voted against resolution B above.