Agenda item

To consider a report on the provisional 2022/23 outturn for the General Fund, Schools Finance and Housing Revenue Account.

Cabinet received a report which set out details of the provisional outturn for 2022/23 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 Finance Outturn report was the final monitoring report for the financial year 2022/23.  It showed in detail how the Authority had performed against the budget.  It also formed an important supplement to the Statement of Accounts which were presented to Audit Committee for formal approval on 31 May 2023.  The figures in this report were provisional until the audit of the accounts was completed, and the accounts were approved.

The 2022/23 financial year was challenging in many ways.  The Authority continued to see areas of pressure across Adults’ and Children’s Social Care, but there were also significant impacts on income particularly across Sport and Leisure Services, Home to School Transport and Catering Services.

In addition to pressures seen in previous financial years, a number of global issues emerged during the financial year, including the war in Ukraine, leading to more supply chain issues and adding to rising inflation, especially in utility costs.  The impact of these factors is driving a ‘cost of living crisis’, further increasing demand on the Authority’s services, which added significant financial strain to the Authority’s budgets.  It was therefore essential that, the Authority remained prudent to ensure that the financial position of the Authority continues to be managed effectively.  The impact of both the challenges and opportunities, on the Authority and its financial position were described in detail throughout the report and the Annex to the report.

With regard to the General Fund Revenue position, where details were shown in Tables 1 and 2 of the report, there had been an improvement of £2.005m from the forecast figures previously reported to Cabinet across most Services leading to an overall deficit for the year of £6.081m.

As communicated in previous reports to Cabinet and full Council, it was proposed to deal with the £6.081m overspend via a drawdown from the Strategic Reserve.  After the final transfers, the General Fund Revenue Account showed spend on Budget for 2022/23, with a reduced closing balance on the Strategic Reserve of £6.345m and unchanged General Fund balances of £7.000m. 

The Strategic Reserve balance would fall below the Authority’s aim of holding at least £10.000m in this reserve.  The likelihood of needing to use this reserve was projected throughout the financial year and the 2023-2027 Medium Term Financial Plan (MTFP) included a plan for a £9.000m replenishment over the four-year period.

One of the benefits of the Authority’s regular budget monitoring process had been that its outcomes could inform both budget setting and final accounts preparation. Budget setting, budget management and final accounts could therefore be seen as related parts of a continuous process of financial management by the Council.  As each year unfolded, fresh financial pressures would occur and the issue of managing these must be addressed: in effect, this was a statutory requirement under the Local Government Act 2003, a responsibility  Cabinet took very seriously.

Financial management actions and one-off transactions in the later part of the year had enabled a small usage of the Strategic Reserve than then projected amount in January.

School balances had decreased from a surplus of £3.398m at the start of the financial year to a deficit of £0.382m as at 31 March 2023.  Sixteen schools were in a deficit position however, most of these were marginal, with four schools making up 96% of the total.  Overall, the 2022/23 position improved by £5.151m from initial projected overall deficit balances of £5.533m although a worsening from the two previous years, which were detailed in Section 2 of the Annex.

The Housing Revenue Account (HRA) had year-end balances of £3.315m.  The HRA showed an underspend of £0.185m against the in-year 2022/23 Budget, plus a £0.061m improvement in the budgeted brought forward balances, which cumulatively brought the HRA to £0.246m better than the budgeted position for 2022/23, which were detailed in Section 3 of the Annex.  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.

The initial approved Investment Plan for 2022/23 was £64.431m.  Net variations and reprogramming of £22.885m were approved by Cabinet during 2022/23 to give a revised Investment Plan of £87.316m.  Capital expenditure for the year was £77.442m (88.69% of the revised plan).  This outturn included further reprogramming of £9.781m and variations relating to gateway approvals and grant determinations of £1.698m for the 2022-2027 investment plan as shown in Section 4 of the Annex.

A specific update was also provided in the report on Treasury Management in Section 5 of the Annex.  This section outlined the treasury strategy undertaken and the performance of Treasury Management activities during the year.  The Authority continued to delay long-term borrowing by maximising the use of internal resources and undertaking short-term borrowing to reduce the long-term cost to the Authority.  This approach had secured savings for a number of years.  Recent increases in interest rates had provided opportunity for the Authority to maximise returns on investments while maintaining a low appetite to risk. Cabinet was assured that continued monitoring of interest rates was undertaken to manage risk and the Authority’s borrowing position. With regard to the Prudential Indicators (also included in section 5), all transactions during 2022-23 had been completed within the indicators set.

As part of the 2023-2027 Medium Term Financial Plan, approved by full Council on 16 February 2023, a higher-than-normal balance was allocated to contingencies.  This was set aside to help address some of the main pressures the Authority faced in 2023/24 and beyond.  The Authority proposed to allocate £16.702m from Contingencies and £1.779m from Corporate Growth balances within Central Items into the base Budgets of various service areas via Budget virements.  Further information was included within section 6 of the Annex.

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 2022/23 outturn for the General Fund

Schools Finance and Housing Revenue Account (Annex 1) together with a

financial overview of the year, be noted;

(2) the decisions made under the Reserves and Balances Policy (paragraph 1.5.8, and Appendix A), be noted;

(3) the Authority’s Investment Plan spend during 2022/23, and the associated capital financing (Annex 1);

(4) the permanent allocation of centrally held contingencies (Annex 1), be approved;

(5) the receipt of £0.649m new revenue grants, be approved;

(6) reprogramming of £9.781m within the 2022/23 Investment Plan (Annex 1 and Appendix C), be approved;

(7) variations of £1.698m to the Investment Plan (Annex 1);

(8) the Authority’s Treasury Management performance (Annex 1), be noted; and

(9) the Authority’s performance against the Capital and Treasury prudential indicators (Annex 1 and Appendix D), be noted.

(Reason for decision: The proposals set out in section 1.2 of this report as it forms part of the 2022/23 Final Accounts process. Reprogramming of the Investment Plan will ensure successful delivery of projects included within the Investment Plan.)