Agenda item

To consider a report on the provisional outturn for the General Fund, Schools Finance, Housing Revenue Account, the financial and delivery aspects of the Investment Plan and the delivery of the Treasury Management Strategy for the financial year 2019/20.

Cabinet received a report which set out details of the provisional outturn for the General Fund, Schools Finance, Housing Revenue Account, the financial and delivery aspects of the Investment Plan and the delivery of the Treasury Management Strategy for the financial year 2019/20.

The budget for 2019/20 had been approved by full Council on 21 February 2019.  The net General Fund revenue budget had been set at £155.730 million including efficiency savings of £10.533 million. The monitoring report up to 31 January 2020 had projected pressure of £2.932 million and the final position was an underspend of £0.050 million.  In addition to this, the Authority had received a one-off £0.637m dividend receipt from the Airport, as well as a one-off £0.400m dividend receipt following the closure of the Keir NT Joint Venture. 

In other years where a surplus had been generated this would be held in reserve for future investment in the Borough but in light of the significant and unexpected impact of the Covid-19 pandemic, it was proposed that these balances were transferred into General Fund Balances (£0.195m) and the Strategic Reserve (£0.842m) to support the increased financial impact and risk to the Authority expected during 2020/21 and future years.  The remaining balance of (£0.050m) was also proposed to be taken to the Strategic Reserve.  With these final transfers included, the General Fund Revenue Budget would show spend on budget for 2019/20.

As part of the 2019/20 financial statements, amounts had been set aside as provision and reserves for known liabilities, risks and uncertainties that remained in future years.

The Housing Revenue Account had year-end balances of £7.803 million, which was a £2.831 million improvement against the in-year budget.

School balances had decreased from £1.599 million to £0.165 million. These balances included a significant amount of committed funds and the permitted carry forward of grants for the remainder of the academic year

The final capital expenditure position for the year was £59.080 million, with a recommendation for Cabinet to approve reprogramming of £6.262 million into 2020/21.

In terms of Treasury Management, the Authority had acted in line with the agreed strategy that the security of the Authority’s resources was of greater importance than returns on investments.  The level of investments at 31 March 2020 was £52.100 million (£35.100 million with HM Treasury and £17.000 million with other local authorities).  The level of borrowing (excluding PFI) was £466.913 million (up from 2018/19 level of £450.146 million) which was well within the capital financing requirement agreed as part of budget setting. This was primarily due to continued level of internal borrowing. 

Details of new revenue grants were set out in the report.

Like all local authorities, North Tyneside Council had felt the impact of the ongoing Covid-19 pandemic. The Authority had received a £6.822 million share of the Government’s Local Support Grant in March 2020 to support local authorities with the additional costs and income lost due to Covid-19.  As ‘Lockdown’ measures had only been announced on 23 March 2020, the impact in 2019/20 was £0.733 million and the remaining balance of £6.089 million had been moved to a ringfenced reserve, ready to be utilised in 2020/21 when the greater impact was expected. 

A further tranche of the Local Support Grant of £5.709 million had been received in May 2020 bringing the total received by the Authority to £12.531 million.  After the carry forward from 2019/20, the Authority currently had £11.798 million of Local Support Grant funding in reserve.  As the majority of the financial impact would be felt in 2020/21, work was ongoing between Finance and the wider service areas to quantify the impact of costs and income forgone against the 2020/21 Budget.  Monthly returns were being submitted to the Ministry for Housing, Communities and Local Government containing the latest estimates of the financial impact of Covid-19 on the Authority. The May 2020 return projected the financial impact to be £24.930 million (both General Fund and HRA), far in excess of the current funding that had been made available to the Authority from the Government.  The impact of Covid-19 on the medium-term financial plan was currently being considered and a refreshed plan would be presented in a future report to Cabinet.   

In addition to the Local Support Grant, the Authority had also received a £38.494 million grant from the Government aimed at supporting small businesses during the pandemic.  Initial estimates were that 3,014 small businesses would be eligible to apply for this grant at a cost of £34.270 million.  At the end of May 2020, the Authority had made payments to 2,567 (85.17%) of the eligible businesses, totalling £29.495 million, with payments still being made on a daily basis.

Cabinet considered the following decision options:

Option 1 - agree the recommendations as set out in Section 1.2 of the report. 

Option 2 - disagree with all or some of the individual recommendations set out in section 1.2 of the report.

The Elected Mayor thanked everyone for achieving the provisional outturn position and for the achievements made in delivering capital projects in 2019-20.

Resolved that (1) the provisional 2019/20 outturn for the General Fund, Schools Finance and Housing Revenue Account, together with a financial overview of the year, as set out in the report, be noted;

(2) the decisions made under the Reserves and Balances Policy be noted;

(3) the Authority’s Investment Plan spend during 2019/20 and the financing put in place be noted;

(4) reprogramming of £6.262 million within the Investment Plan be approved;

(5) the Council’s Treasury Management performance be noted;

(6) the performance against the Capital and Treasury Management prudential indicators be noted; and

(7) the receipt of £46.103 million of new revenue grants be approved.

(Reason for decision: The proposals set out in section 1.2 of the report form part of the 2019/20 Statement of Accounts. Reprogramming of the Investment Plan will ensure successful delivery of projects included within the Investment Plan).