Members received the Revenue and Capital Monitoring 2020/21 – Final Outturn, the Draft Revenue Budget 2022/23 and the Draft Medium Term Financial Strategy 2022/23 to 2024/25, and the Draft Capital Programme 2022/23 to 2024/25, which were presented by the Director of Finance and Assurance.
Members were informed that the purpose of the draft Capital Programme report was to set out the Council’s additional capital proposals for investment over the years 2022/23 to 2024/25 which had been proposed as part of the Annual budget setting process. The proposals were over and above the existing Capital Programme agreed by Council in February 2021. The final Capital programme report, which would contain new proposals as well as the existing Capital Programme would be presented to Cabinet in February 2022.
The revenue budget in 2021/22 was £179.442m which was net of central Government and other specific grants. A list of external grants was shown at Appendix 3 of the report. The general fund capital programme budget in 2021/22 was £113.027m. The net forecast position on the capital budget at Q2 was £88.826m, which represented 79% of the total capital programme budget. The variance of £24.201m was made up of proposed slippage of £19.721m and an underspend of £4.480m.
A Member was concerned that there was no breakdown on a line-by-line basis on how the grants from the Government were spent, arising from coronavirus (Covid-19) disbursements.
It was advised that grants were spent across Council directorates, with the larger proportion going towards grants to businesses, and other monies being spent on the NHS “test-and-trace” and other programmes within the Council.
The Member asked about wage costs, and whether each directorate accounted for their employees, as reflected in the outturn figure. It was advised that each directorate did account for their staff, and the purpose of the outturn was also for monitoring.
The Member also asked how slippages were managed in the Capital Programme, and what lessons had been learned from that. It was advised that there had been deviations from the Capital Programme, such as funds for commercial investments, which had not been spent or completed. A number of the larger programmes have since been removed from the programme which has reduced reported slippages. The details had been covered in the report for the reasons of the slippages.
A member was asked about Appendix 3 of the Draft Revenue Budget 2022/23 and draft Medium Term Financial Strategy 2022/23 to 2024/25, paragraph 26-27, which showed a high needs need budget deficit of £5m. Given that the recovery plan would not clear it, what options were there for Harrow Council, as the Government would not give money for that.
It was advised that there was money to fund the high needs block, and the Council could move money between the various blocks. The deficit was not expected to build up. The Department of Education would send a spending plan. It was envisaged that the deficit would be brought under control. The Council was still lobbying for extra cash, however, that may not be enough to clear the deficit.
The member also asked if the amount of £750 00 allocated for SEN transport was adequate.
It was advised that it was, and that there was need to control demand.
The member queried whether the 2% inflation pay award was sufficient, and what whether the unions were content with that.
It was advised that there was a pay award coming through during the financial year, with 2% having been budgeted for. It was not known whether the unions would accept it as they were balloting their members. Furthermore, there was 2.75% budgeted for non-pay award.
The member also wanted to find out about any LIBOR (London Interbank Offered Rate) debt owed by Harrow Council. Was the Council engaging with its lenders about swapping this for PWLB (Public Works Loan Board) loans?
It was advised that Harrow Council had one LIBOR loan of £20m and could swap for lower rated PWLB loans if it was cost-efficient. However, the Council’s exposure to LIBOR loans was limited, and the situation was kept under constant review.
The member further asked how concerned the Council was about having a financial deficit, and was whether this would be sustainable going forward. Was the Council apprehensive about taking money out of reserves?
It was advised that it was not an ideal situation to have a deficit and having to use money in reserve to cover it. However, there was money in reserves, which could be used to cover any deficit. This would mean the Council did not have to borrow. There was sufficient money in reserves to keep the council going for the next 3-4 years. Most of the Council’s spending was on social care.
Members thanked the Director of Finance and Assurance for the reports and the clarification to their questions.
RESOLVED: That the reports be noted.