Agenda item

Provisional Financial Outturn 2020/21


N Howcutt introduced the report and advised it was a provisional report because they were still producing the final financial statements for this year but this was the end trading position for the Council. He gave a high level synopsis of where this put the Council. He welcomed questions from the committee.


Councillor Tindall referred to paragraph 4.3 on page 30 of the report relating to commercial property income. He felt the figures stated were perfectly understandable but asked if they were thinking of developing a multiyear strategy due to the long recovery of Covid.


N Howcutt advised one of his key deliverables this year was an Asset Management Strategy for the next 3-5 years, particularly focusing on the commercial property portfolio. He said that was partly due to the response to Covid and the need to assess the portfolio but it was up for renewal this year anyway so the timing worked well.


Councillor Tindall referred to paragraph 5.1 on page 35 regarding pressures on the waste service. He questioned if the missed bins recorded were the usual missed bins or if that included assisted collections. He said it was important that the assisted bin collections were never missed.


N Howcutt advised there were several KPI’s around missed bins that were reported quarterly to the Strategic Planning and Environment Overview and Scrutiny Committee (SPAE OSC). He explained that part of the issue they had with missed bins was when a resident calls DBC about a missed collection they will usually say you missed my bin rather than I forgot to put my bin out so from that perspective there is a lack of clarity in what’s really going on. He said that Covid had put a massive pressure on the waste service yet they continued to collect all types of waste throughout the pandemic. He also pointed out the issue of parked cars/vehicles blocking roads due to more people working from home but the staff had carried on throughout and done an exceptional job.


Councillor Tindall said he appreciated all of that and felt the operatives should be congratulated on their efforts. He still expressed concern about the lack of clarity in the figures and asked whether extra effort could be made to define whether the missed bins were due to accessibility difficulties etc. or if it was assisted collections that had been missed.


N Howcutt said he would feed that back to the service.


Councillor Tindall referred to the £60k pressure in planning. He questioned if the pressure was due to an increase in staffing levels or if it was just a temporary maternity leave cover.


N Howcutt replied it was a combination of the two; there was maternity leave that needed covering but also some additional resources were brought in when the level of planning work exceeded what was achievable.


Councillor Adeleke sought clarification on the £90k pressure for Neighbourhood Delivery.


N Howcutt advised it covered two things; the Assistant Director of Neighbourhood Delivery which had been covered by an interim during 2021. Recruitment has been undertaken and a permanent employee started this week. The other element was linked to the food waste rollout programme that was carried out and continued into April, May and June early in the financial year.


Councillor Guest queried if the £2.7m slippage and £2.5m underspend in the HRA Capital Programme was Covid related.


N Howcutt drew attention to page 47 where there was a detailed outturn for the HRA Capital Programme. He advised that the slippage was directly Covid related with projects taking longer than initially intended, but the underspend wasn’t Covid related as this was projects being delivered to budget and not using the provisions that were allowed.


Councillor Guest then asked if having healthy reserves had protected the Council from an adverse economic impact of the pandemic.


N Howcutt explained the economic recovery reserve was set up in-year on the basis of putting £7m into the reserve to fund the next three years in the medium term impact of Covid, predominantly on income streams. From that perspective it was set up to support the existing budget, it wasn’t taken from anywhere else it just used existing reserves. He said they were lucky they had those reserves but pointed out that they were decreasing, as detailed on page 48 of the report. He summarised that reserves were useful for the short-medium term, which is what we expect from Covid, but we can’t rely on reserves for ongoing service delivery as that would soon deplete them.


Councillor Symington asked if N Howcutt could elaborate on the £1.2m reduction quarter-on-quarter from the HRA which was driven by technical accounting changes.


N Howcutt advised one of the biggest things that happened at year end was the valuation of our asset stock which happens annually. The HRA review happens on a rolling 5 year rota so that every asset is valued at least every 5 years. He explained that took into consideration a lot of financial assumptions such as the market investment and how things were going in terms of financial investments. When assets are valued at year end we need to apply depreciation to the value of the stock, and the asset stock increased in the HRA because house prices have gone up. He advised the other big change was the requirement to put £2m to one side to pay historical debts so from that perspective they were the two major changes in the last quarter of the year but both were accounting changes rather than service changes.


Councillor Symington referred to the pressures on waste at paragraph 5.3. She felt it didn’t give her a sense of what percentage of supplies and services was actually gross waste budget and what percentage that pressure represents of the amount we’re spending on waste.


N Howcutt advised he didn’t have those percentages to hand but to give a better picture he explained that waste overall was creating pressure on the Council this year of £1.3m and that was a combination of reduced income from HCC from the alternative funding method, £700k on staffing and £300k on loss of income from commercial waste and other waste services that we charge for. He said it was the single biggest pressure we’ve had this year, yet a service that we’ve continued to deliver as and when for residents and businesses of the Borough.


Councillor Symington said waste comes up repeatedly in these meetings and she felt that seeing the numbers in isolation made it hard to get a sense of what the overall budget normally was and what the overall pressure has been.


N Howcutt said he intends to change the system of these reports slightly to report more on a service basis rather than employees, supplies and services, income etc. He felt this would assist members in seeing an overall picture.


Councillor Symington queried what the revenue contribution to capital was.


N Howcutt explained every year they calculate how much revenue contribution would be required to fund the capital programme. As the capital programme has slipped this year we’ve had to use less revenue to support that. He advised that revenue contribution to fund capital was the last resort, they tend to try and use capital receipts, grants or other elements of spend because they like to keep fluid and be available to spend on services or service delivery. He said not having to spend as much on revenue contribution to capital is positive and that has gone towards the surplus that is being created in the HRA for 2021.


Councillor Symington sought clarification on the slippage of £7.8m for DBC commissioned capital works.


N Howcutt advised the vast majority was the repairs and maintenance programme for the year in terms of how much of that has had to be delayed into future years. It also included some of the HRA build and maintenance programme, so it was a combination of those two elements.


Councillor Symington referred to a recent Parliament publication saying the government was overly optimistic about Council finances. She asked how we move forward from this and if the Council have plans for dealing with this situation.


N Howcutt replied we have a three year plan that sets out using the economic recovery reserve to cover what we projected earlier in the year to be the impact of Covid over those three years, so we have a balanced budget. We will use a small amount of reserves for the short term but we expect and project to get back on our feet. In terms of the Medium Term Financial Strategy (MTFS), that is under review at the moment and normally goes to Cabinet in July so we will have a chance to review that and review the projections and assumptions in there so members will see how we’re projecting for the next 3-5 years. Coming back to the government perspective, he said he read a different benchmarking report on a daily basis and generally between 50-60% of Councils/S151’s are saying without additional funding the next three years are not sustainable. Whether the government was listening or not is a different matter. He said the government have recently said they hope to be able to outline what the funding mechanism for local authorities will be for the 22-23 financial year. He felt the government were very much pushing the boundaries to do that given there was no consultation out at the moment, they don’t know how to deal with the issue of local authorities funded by Council Tax, how to level that playing field, or how to deal with business rates in a very uncertain economic climate.


Councillor Townsend thanked N Howcutt for the efforts that go into these reports, he said they were very useful. He then referred to the employee overspend and asked if we were going to have the same issue next year or if we have increased the budget accordingly. He questioned if the increases would be a permanent feature.


N Howcutt expected there to be some pressure on waste this year because of the ways they have to work (such as additional rounds and staffing) but he didn’t believe that would continue through the whole year. In terms of the budget for 21-22, he said what they included was relevant at the time and he didn’t believe there was any significant changes to those assumptions and adjustments, however there was still a long way to go. He made reference to the leisure contract and said they were performing as expected in the first month of this financial year but given that they weren’t able to deliver the majority of their group training until mid-May, April’s performance was of little comfort. He felt it was very much a case of let’s wait and see. He added that they did a lot of work on the income streams particularly around commercial property and garages for 21-22 and he felt confident that we might be able to achieve those budgets.


Councillor Townsend queried if we budgeted for those additional requirements in the waste service.


N Howcutt replied they budgeted for what they expected to need at that point in time and suggested we were probably going to be tight on that budget but we were very early on in the financial year with a service that is very dynamic and reactive, so from that perspective we’ve got a lot we can do if we need to in terms of mitigating any pressures that do or don’t come about from that service.


Councillor Townsend referred to the depreciation of our stock. He said he couldn’t understand why we didn’t factor in and work out the depreciation based on the balance at the beginning of the year. 


N Howcutt explained the valuations were carried out in December every year and we receive a letter on 1st April that states the valuations they gave us in December were a true and fair reflection of the valuation of those assets at year end. He continued that we had to calculate the depreciation on the end of year value so we can only calculate depreciation once we’ve got that final valuation and that is what our Auditors insist on us doing.


Councillor Townsend felt it was a confusing approach and asked if that could be fed-back to the Auditors if possible.


Councillor Townsend referred to paragraph 7.8 and sought clarification on the provision for bad debts.


N Howcutt advised it was a historical issue and would be discussed at next week’s Housing and Community OSC to outline what the £2m related to. He said he couldn’t go into any more detail as it was a Part II report but he was happy to discuss it after that meeting. 


Councillor Adeleke referred to the pressure on car park income. He didn’t feel that car parking would ever get back to a normal level now that more people were working from home permanently. He asked if the 72% reimbursement from the government was a one-off or if it was something we could receive annually.


N Howcutt clarified that the gross loss on parking income was £1.4m at which point we were able to achieve a 72% reimbursement from the government, so the overall pressure came to about £600k in-year. The reimbursement is available again for the first quarter of 21/22 (the period covering April – June) so if parking is below we will be able to recoup around 71/72% of lost income in that period. At the moment there is no reimbursement or additional support from government. He summarised that parking would need to be monitored, we would need to monitor how behaviours may have changed and how the income levels may change over the coming months.




The report was noted.


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