Agenda item

To receive the Financial Management report for the current financial year that reflected the financial position as at 31 July 2020.

The Head of Resources presented the 2020/21 Financial Management report to 31 July 2020 that had been considered by Cabinet at its meeting 21 September 2020.

The report was the second monitoring report of the 2020/21 financial position and provided the second indication of the potential revenue and capital position of the Authority at 31March 2021.  The report explained where the Authority continued to manage its financial pressures. 

North Tyneside Council was in a significant period of financial uncertainty with the impact of the Covid-19 pandemic increasing the challenge of being able to forecast the financial impact across the Authority.

The Authority continued to see areas of pressure across Adults and Social Care, but there are significant impacts on income particularly across Sport and Leisure Services, and Catering Services.

The Authority’s approved net revenue budget of £161.361m was forecast to outturn with a pressure of £11.410m.  The budget includes £0.805m of savings as agreed at Council on 20 February 2020.  Table 1 in paragraph 1.7 below sets out the variation summary across the General Fund.

The Authority continued to take a prudent approach to forecasting including in relation to identifying the impact of Covid-19 which was forecast to add pressures of £27.549m to the General Fund in 2020/21. 

The total Local Authority Support Grant had received from Government was (£12.531m) of which £0.733m was required to offset Covid-19 issues in 2019/20.  A third tranche of funding had been announced with the share for North Tyneside Council being (£1.777m), that included the remaining (£13.575m) was being applied against the forecasted pressures along with two specific grants for costs linked to Test and Trace (£1.140m) and Infection Control (£2.205m) leaving an amount of £10.629m over and above grant funding.  The resultant pressures relating to normal business activities across the Authority were in the region of £0.781m and compare favourably with the same in recent financial years.

Through close monitoring of Covid-19 implications the forecast position would change throughout the year.  The report acknowledged the impact of additional cost and lost income and noted that the Authority had seen a reduction in service costs and was working with its partner Engie to how to identify the financial benefits.

Member were given the opportunity to raise questions in relation to the information provided in the report raised that information provided.

It was raised that in relation to Children Services the chart Comparative Performance in Rates of Children in Care per 10,000 Children under 18 provided data up to 2018. It was asked if this was the most up to date information. In response it was stated that further updated data would be sought for the next report.

In relation to school’s finance, school deficit clarification was sought to the meaning of structural deficit. It was explained that there were twelve schools with a forecasted deficit budget plan for 2020/21.  Each school has a 3-year budget plan to reduce their deficit and most were in line to do so. However, those that were forecasted not to reduce their deficit within 3 years were classed at being in structural deficit. It was stated that there was positivity as most schools were seeing continued reductions to their deficits.

A member asked for insight to the reasons for the rise in rent arrears. It was stated that the rise had been seen in rent arrears due to Covid-19 and the increase of tenants moving onto Universal Credit. It was also stated that for the first few months no enforcement action had taken place due to Covid-19.

A member questioned the savings the Authority had made due to the low interest rates. It was stated the forecast at 31 July 2020 was an underspend of £1.314m due to a combination of interest savings, reduced interest rates and Investment Plan reprogramming to the year end 31 March 2021.

A member asked for clarification to the payment of the public health grant received from Central Government. It was stated that for the 3 years prior to 2020 there had been an annual reduction of public health grant with approximately £1m reduction over the 3 years. It was stated that a small increase was received in 2021 but this was in relation to the agenda for change pay costs.

In relation to school meals provision during the school holidays the member stated there was uncertainty to the receipt from Central government for covering cost during the October half term break, it was asked if the Authority received funding for this period. In response it was stated that no finding was received for the October half term and the Authority used its Poverty Intervention Fund to provide meals. It was stated that government support had been provided for periods previously and the funding was given direct to schools.

Agreed that the 2020/21 Financial Management Report to 31 July 2020 be noted.