Agenda item

That (A) the potential impacts of Covid 19 on the budget for 2020/21 and the Medium Term Financial Plan be noted; and

(B) a review of the Capital Programme and the updating of business cases for major projects be undertaken as part of the 2021/22 budget setting process.

The Executive Member for Financial Sustainability submitted a report providing an update on developments to the council’s financial position since the previous meeting of the Executive.

Councillor Williamson highlighted the main points set out in the report, relating to the impacts of Covid-19, using best available information to provide indicative figures, on the 2020/21 Budget and Medium Term Financial Plan. The report also addressed the need for updated business cases for major projects within the Capital Programme.

Councillor Williamson said during the three months since the previous report there had been some significant developments. It was therefore important that the financial information was regularly updated.

In relation to the budget, the update points included the fact that additional grant funding of £200,000 had been received, taking the total unbudgeted grant received to £1,702,811; information was awaited on a compensation scheme for lost fees and charges income, but certain features of the scheme had been announced, as detailed in the report. The council’s total budgeted income for the year was at the end of April £12.3 million, but adjusting this figure for items likely to be excluded from the scheme reduced the annual budgeted figure to £7 million. The calculated monthly compensation due was approximately £400,000.

Councillor Williamson then took Members through the projection for the additional use of reserves which had been adjusted to give a range of four to six months loss of income, rather than between three and five months. The additional grant and compensation for losses on fees and charges was deducted to arrive at the new predicted range of outcomes. The range of additional use of reserves in 2020/21 ranged from an optimistic forecast of £400,000 to a less optimistic one of £1,200,000. Due to the off-sets of the compensation scheme, the level of concern for the financial position for the current year had reduced from what had previously been predicted.

Councillor Williamson then referred to the Medium Term Financial Plan (MTFP). He said when setting the budget for 2020/21 savings proposals and additional income generation plans had been identified, which had closed the budget gap for the current year. However, the budget gap which had previously been identified had now increased from £420,000 to £1,102,000 in the year 2021/22; from £551,000 to £901,000 in the year 2022/23 and from £610,000 to £1,960,000 in the year 2023/24. The three key areas for income generation were from investments from the Financial Sustainability Committee, from Millstream and from car parking. No adjustments had been made to the first two income generation streams, but it was reasonable to remove the additional income target of £200,000 from parking income. Additional costs were also required for the waste service, in respect of adding new properties to the district, and there would need to be a new separate food waste collection in the final year of the MTFP. Other costs to be included in the MTFP related to support for the Harlow Gilston Garden Town work, and for an additional resource on information governance.

Finally, it was clear that the capital programme major projects required re-evaluation of the business cases for these schemes. It was important that decisions around continuing with the existing programme were based on up to date information. Councillor Williamson said his report recommended that a review take place of the business case for major projects as part of the 2021/22 budget setting process.

The Leader thanked Councillor Williamson and Officers for this report. She said the council was in a better financial position than some authorities, but it was important not to be complacent.

Councillor Pope agreed with the points made regarding the capital programme, and asked when the evaluations of the major projects would take place.

The Interim Head of Strategic Finance and Property said the instruction had been issued to project managers to re-evaluate the business cases and conduct scenario planning. A range of figures would be provided to Members by the end of September.

Councillor Williamson proposed, and Councillor Cutting seconded, a motion to support the recommendations in the report. The motion, on being put to the meeting, and a vote taken, was declared CARRIED.

RESOLVED that (A) the potential impacts of Covid-19 on the budget for 2020/21 and the Medium Term Financial Plan be noted; and

(B) a review of the Capital Programme and the updating of business cases for major projects be undertaken as part of the 2021/22 budget setting process.