Agenda item

To report the level of spending and exposure against the Council’s Revenue budgets and reserves and balances for the first 4 months to 31 July 2022.  The report also includes an update on the Medium Term Financial Plan 2023/24 – 2026/27 for scrutiny.

Mr Steve Thompson, Director of Resources provided an overview of the financial monitoring as at month 4 2022/23 and the Medium Term Financial Plan noting that there had never been more uncertainty in the system. He highlighted that the total adverse full-year forecast budget variance as at the end of month 4 of 2022/23 was £11.9 million. Of that overspend, £4.4 million was attributed to Children’s Social Care, however, the current management team of the service was having a positive impact and reducing the level of overspend through work to safely reduce the number of children in care.

Other significant areas of overspend included Adult Social Care, however, Mr Thompson advised that he expected the service to return to a break even position by year end.

The overall financial performance had been notably impacted by predicted pay awards including an increase to the living wage, inflation and increasing energy and fuel costs. Interest rates had also had an impact and further pressures were expected as short term lending deals came to an end.

Mr Thompson emphasised the level of uncertainty, noting that the Consumer Price Index was currently at 9.9% and the Retail Price Index at 12.3% with the next announcement due within the following seven days. He also noted how cost increases were having an impact on all aspects of the Council’s budget such as external auditor fees which were to increase by approximately 150%. All areas considered it was predicted that the budget gap for the following financial year would be significant.

The Board thanked Mr Thompson and his team for their work and queried how the increases in interest rates were impacting upon the Council’s loan fund. In response, Mr Thompson advised that some loans were fixed at the time the loan was drawn whilst others were on a variable rate, but all were covered by asset security. The pooled rate utilised by the Council was slower to react to increases and decreases in interest rate and was currently at 3.5%, however, this would increase as short term borrowing came to an end and new deals were entered into. In response to a further question, Mr Thompson reported that every loan had its own risk register and the Business Loan Group met regularly to monitor affordability of loan repayments and security of debt.