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 2021/22.

Cabinet received a report which set out details of the provisional outturn for 2021/22 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 together with the associated Prudential Indicators for capital and treasury.

The end of the financial year 2019/20 saw the beginning of the Covid-19 Pandemic and the impact continued throughout 2020/21 and 2021/22. Cabinet and all Members had been kept up to date in terms of the response and approach to recovery the Authority had implemented throughout the various stages of the pandemic and what that meant for essential services being maintained for the most vulnerable residents of the borough. The Authority had been required to provide a sustained and varied response to the pandemic, with all services impacted one way or another. There had been periods when restrictions meant a range of services had to be suspended or limited, such as the leisure and culture offer and as a result there had been a significant financial impact on the Authority arising from additional costs and lost income during 2021/22. There had been sustained support to the Social Care Sector for both Adults and Children’s in 2021/22. The Authority had been responsible for acting as agent for a number of grants to support the businesses in the borough and again this continued throughout 2021/22.

There had been a range of financial interventions introduced by the Government, these were set out in section 5 of the Annex.The Authority had received its share of the Government’s Local Support Grant of £5.576m to support council services in 2021/22. £1.476m from the 2020/21 award was still available to support 2021/22 so the total funding available was £7.052m. Of this, £5.668m was allocated to support revenue activities with the remaining £1.384m being carried forward to support the identified on-going impact on Covid-19 into 2022/23.

Local Authorities were also compensated for losses incurred against their sales, fees and charges budgets in quarter 1 of 2021/22. North Tyneside Council received £1.335m from this grant to support services and this was fully allocated. This represented 71.25% of the fees lost, the balance being born by the Authority.

In addition to receiving support for council services, the Authority received grants to support the businesses in the borough. £12.773m was received and £11.731m was brought forward from 2020/21. A total of £18.240m was paid across to businesses. The remaining balance of £6.264m was transferred to reserve and £6.262m was being held in anticipation of repayment to Central Government. This related to the Business Support Top-up, Local Restrictions Grants, Additional Restrictions Grant, Restart Grant and Omicron Hospitality & Leisure Grant, where the schemes had ended and the authority was awarded more funding than was required.

£4.258m was allocated to the Authority to support its residents, including financial support for the most vulnerable and also to allow the Authority to put in place measures to allow residents to continue to enjoy the coastline, town centers and the many attractions throughout the borough, when restrictions allowed.  A balance of £6.908m was brought forward from 2020/21 and £9.277m was spent during 2021/22.  £1.889m was carried forward to 2022/23.  The majority of the funding carried forward related to the Contain Outbreak Management Fund.  This grant was to help the Authority support the prevention of Covid-19 outbreaks or manage any that did occur in the borough. The Authority had a range of proposals to spend this funding to help contain outbreaks as the country continues to recover from the pandemic.

£5.418m was provided by government to help support the Care home market and had a brought forward figure of £0.544m from 2020/21 meaning the total available funds were £5.962m. The majority of these funds were passed directly to care homes with a total allocated in 2021/22 of £5.666m. The balance of £0.296m carried forward had been committed to be spent in 2022/23. The Authority also received £2.572m to support its schools which along with £0.309m brought forward from 2020/21 meant that £2.881m was available for 2021/22. £2.637m was allocated to support schools to ensure children were not detrimentally impacted by being unable to attend classes in school. The remaining balance of £0.244m was to be allocated in early 2022/23.

The budget for 2021/22 had been approved by full Council at its meeting of 18 February 2021. The net General Fund revenue budget had been set at £150.154m including efficiency savings of £4.537m. The monitoring report up to 31 January 2022 had projected a pressure of £2.902m and the final position was an underspend of £5.815m. projected a pressure of £2.902m and the final position is a underspend of (£5.815m). This was driven by two factors. There was a business-as-usual deficit of £0.078m, which had arisen substantially from pressures in Children’s Social Care, Facilities and Fair Access and Law and Governance.  It was proposed to cover this deficit via a £0.078m drawdown from the Strategic Reserve. In addition to the business-as-usual position there was also a surplus of (£5.893m), which was as a result of a Minimum Review Provision (MRP) review resulting in a lower charge of MRP being made than the Authority had budgeted for in 2021/22. The balance of (£5.893m) was proposed to be transferred to a new MRP earmarked reserve. Following these transfers, the General Fund would outturn on budget.

The Housing Revenue Account had year-end balances of £0.489m. The HRA showed an underspend of £0.442m against the in-year 2021/22 Budget, plus a £0.047m improvement in the budgeted brought forward balances, which cumulatively brought the HRA to £0.489m better than the budgeted position for 2021/22.

School Balances had decreased from £3.721m to £3.398m, 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 for the year was £63.045m, with a recommendation noted above for Cabinet to approve reprogramming of £15.424m into 2022/23.

The Authority had acted in line with the agreed strategy that the security of the Authority’s resources is of greater importance than returns on investments.  The level of investments at 31 March 2022 was £60.794m (£22.000m with HM Treasury, £25.000m with other local authorities, and £13.794m with banks and other deposits).  The level of borrowing (excluding PFI) was £397.443m (down from the 2020/21 level of £417.913m) which was well within the capital financing requirement agreed as part of budget setting.  This was primarily due to continued level of internal borrowing and receipt of grant funding.

As part of the 2021/22 final accounts, a full review of all provision and reserves had been undertaken to ensure that appropriate consideration had been given to known liabilities, risks and uncertainties that remained in future years; in particular where conditions associated with Covid-19 grant funding required that unspent monies were carried into future years.

A table containing details of new Revenue Grants received during February and March 2022 was set out in section 1.5.14 of the report.

During discussion, the Chief Executive made reference to the changed methodology of the calculation of the MRP (section 1.1.6 of the report)  and stated that work was underway in relation to what information needs to be provided to Council.

The Deputy Mayor thanked everyone for achieving the provisional outturn position and for the achievements made in delivering capital projects in 2021/22.

Cabinet considered the following decision options: to accept the recommendations set out in paragraph 1.2 of the report; or alternatively, to not accept the recommendations.

Resolved that

(1)the provisional 2021/22 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 2021/22 and the financing put in place be noted;

(4) the receipt of £2.355m new revenue grants be approved;

(5) reprogramming of £15.424m within the 2021/22 Investment Plan be approved;

(6) reprogramming of £34.622m, ready for the 2022-2027 Investment Plan be approved;

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

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

(9) the changed methodology for the calculation of the Minimum Revenue Provision be noted;

(Reason for decision: The proposalsset out in section 1.2 of the report form part of the 2021/22 Final Statement of Accounts process. Reprogramming of the Investment Plan will ensure successful delivery of projects included within the Investment Plan).