Council and Democracy

Agenda item

Deputy Leader - Budget Update

Report to follow

 

6.10pm to 7.10pm

Minutes:

The Deputy Leader, Service Director - Finance and Head of Accountancy & Finance attended to present an update report about Chesterfield Borough Council’s (CBC) budget.

 

The Council approved the original General Fund revenue budget for 2021/22 on 24 February, 2021. The Band ‘D’ Council Tax was set at £174.89. The forecast budget for 2021/22 was a deficit of £188k, which would be met from the Council’s Budget Risk Reserve if savings and efficiencies were not identified during the year.

 

Indications were that the medium-term outlook would continue to be challenging. The Medium-Term Financial Plan (MTFP) forecast approved by Council on 24 February 2021 showed deficits of £12k in 2022/23 rising to £181k in 2025/26, assuming the delivery of planned savings.

 

New and ongoing cost pressures had emerged, the most significant of which were the increased cost of providing a kerbside recycling service and the ongoing impact of Covid-19 on fees and charges income. At the end of the second quarter the forecast had worsened to a net deficit position of £1,005k. The Council had identified mitigations and management actions which had reduced this forecast deficit to £355k at year end.

 

The single biggest influence on the updated General Fund revenue position was the loss of income from fees and charges, most significantly from sports centres, venues, and car parking. Estimates of the initial impact of Covid-19 on fees and charges income were reflected in the month two budget monitoring report to Cabinet. These had been revised based on the latest position and assumptions at quarter two resulting in further reductions in income of £1,195k for sports centres, venues, and car parking. Although the Sales, Fees and Charges Compensation Scheme had been extended until 30 June 2021, the scheme only allowed for 75% of lost income to be claimed after applying a 5% deductible charge based on the approved budget for 2020/21.

 

Further income pressures because of the Covid-19 pandemic, which were not covered by the government’s income compensation scheme, were becoming apparent. These included a slower than expected return of tenants to the Council’s commercial and industrial properties and lower rent receipts from the Vicar Lane Shopping Centre.

 

The Council had four months left to recover the potential overspend within 2021/22 and work was ongoing to identify areas where spending could be contained, and income maximised to ensure projected departmental forecasts were managed within existing budgets.

 

A review of current reserves and provisions was underway to identify any earmarked money which could be repurposed to finance any shortfall that these activities fail to address. However, it was acknowledged that reserves should be used strictly for one-off events and not to meet service pressures or failures to achieve planning savings.

 

The MTFP approved at Council in February showed a more challenging outlook from 2022/23 onwards with annual forecast deficits peaking in 2023/24 at £292k.

 

Members asked for clarification about why the Cabinet report was longer than the report provided to Forum and the Joint Chair noted that in the pre-meet she asked the officer to provide an overview and would take the comments on board.

 

Members noted that the quarter two deficit had reduced to £355k, with three management items and enquired whether this reduction was aspirational or certain and raised concerns whether a balanced position could be achieved by the end of the financial year. The Service Director – Finance confirmed that she was confident that the savings were realistic and was committed to reducing the deficit through regular monitoring.

 

Members noted the reduced incomes from car parks and enquired whether this was seen as a long or short term trend and were advised that the reduction had been built into the forecast and working forward assumptions were including the scarring costs of Covid-19.

 

Members asked whether the underwriting of the rent for the Elder Way Co-op building was now being paid and it was confirmed this was being paid. The Deputy Leader explained that it was a very difficult situation because without the agreement the Premier Inn tenancy would not have progressed so the building would have been empty. It was also noted that the Economic Development Team were working very closely with the management company to achieve tenancy agreements.

 

Members asked whether recharging the HRA was a standard practice and the Service Director – Finance advised that it was because departments in the Council provide services for the HRA.

 

RESOLVED –

 

That the Budget Update report be noted

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