Agenda item

The COVID-19 emergency continues.  This report outlines the latest projections of income and expenditure against budget in 2020/21 and highlights the significant projected net adverse variances from budget which arise as a result of the known impacts of the COVID-19 pandemic on the Council’s services and finances. The extent of any further funding from government is currently unknown and therefore this report presents contingency proposals to address the latest projected budget shortfall on an emergency basis. These proposals have been prepared jointly by officers and the Executive and are presented to the Value For Money Overview and Scrutiny Committee for pre-decision scrutiny ahead of the Executive meeting in July and the special Council meeting in early August.

This report contains the following Annexes:

Annexe 1 – Schedule of projected variations from general fund budget in 2020/21

Annexe 2 -  Budget summary and proposed mitigation measures to address budget shortfall

Annexe 3 – Options and alternative mitigation 

Annexe 4 – Schedule of projected reserves and balances

Annexe 5 (Exempt) – Leisure Centre operator impact and proposal

Recommendation

It is recommended that the Value for Money Overview & Scrutiny Committee considers the financial position presented in this report, scrutinises the mitigation proposals set out, and passes comments and observations to the Executive to consider prior to seeking Council approval to the revised budget for 2020/21.

Prior to discussing this item the Chairman highlighted that Annexe 5 – Leisure Centre operator impact and proposals, would need to be discussed in an closed session at the end of the meeting due to the confidential nature of the content relating to the financial position of Waverley and Places Leisure.

Graeme Clarke introduced the report which outlined the latest projections of income and expenditure against budget in 2020/21 and highlighted the significant projected net adverse variances from budget which had arisen as a result of the known impacts of the COVID-19 pandemic on the Council’s services and finances. He advised that the Council was still awaiting confirmation of further funding from the Government.

Cllr Mark Merryweather, Portfolio Holder for Finance, Assets and Commercial Services then gave a presentation highlighting issues the council faces. This presentation had been given to all Members earlier in the week at an All Member Briefing.

Cllr Stephen Mulliner had submitted a number of questions in advance of the meeting, which had been circulated to Committee Members along with officers’ responses. Questions related to the impact of the actual 2020/21 deficit on General Fund reserves, the timeframe for rebuilding reserves, the timetable for the 2021/22 budget, and the impact on headcount and Transformation team costs.

The Committee had some concerns about reducing the levels of discretionary reserves, and would like a better understanding of the risk assessment of these reserves when the MTFP is reviewed in the autumn. The Committee agreed that the Government should be lobbied to get as much funding as possible to cover Covid expenses and loss of income, and that the first call on any additional funding received should be to reinstate reserves that had been drawn upon to mitigate the impact of Covid.

The Committee was disappointed that there were not more options outlined in Annexe 3 but discussed the pro’s and con’s of the options outlined. Officers advised that the extent of the shortfall meant that urgent action was needed to mitigate the impact, but some of the options required more time to establish whether they could be realised, and it would be premature to ‘bank’ the savings at this point.  

The Committee observed that out of the alternative options presented the most serious and worth consideration were widening the definition of the Council’s criteria for Better Care Fund, raising the cost of a green waste subscription for a year by £5 and cutting grass verges to the standard allowed by the funding from SCC as opposed to topping up the funding with funding from Waverley. The Committee also recommended reconsideration of the SANG reserve in order to contribute to meeting the short term financial shortfall.

The Committee noted that the cost savings of £699k included in the base budget for 2020/21 had largely been secured, and suggested that this could be made clearer in the report, to provide reassurance that the revenue cost savings proposed as mitigation were not double-counting.

The Committee agreed to forward the comments above to the Executive for consideration prior to making recommendations to Council on approval of the contingency revised budget for 2020/21.