Agenda item

The purpose of this report is to appraise the Policy & Finance Committee of the Council’s consolidated and this Committee’s forecast General Fund Revenue, Capital and Housing Revenue out-turn against the 2024/25 budgets which were approved by Full Council at its meeting of the 21 February 2024.  

The Group Head of Finance and Section 151 Officer introduced his Budget Monitoring Report covering Quarter 1 for the financial year 2024/25 and the period up to 30 June 2024, appraising the Committee of its revenue and capital budget forecast and the Council’s consolidated General Fund Revenue, Capital and Housing Revenue forecast against the 2024/25 budgets approved by Council on 21 February 2024.  The Committee was being asked to consider the report and provide Officers with any comments.

The first part of the report presented the Quarter 1 forecast for the financial year 2024/25 and included a consolidated Revenue Budget summary; Housing Revenue Account (HRA) summary; and Consolidated Capital Programme summary. The Committee’s financial report as of 30 June 2024 for the Quarter 1 period had been attached to the report at Appendix 1.

The following was reported:

·         On the consolidated Revenue Budget there had been underspending by £94k

·         A structural budget deficit remained with a projected £3.5m contribution required from reserves to plug the budget gap

·         The approved savings across Service Committees had been provided showing a savings total of £1.535m.

·         A risk of whether the Council could deliver those savings existed.

·         Information had been provided on variances. A continued funding pressure identified on homelessness expenditure despite receiving additional Homeless Prevention grant funding..

·         Salary variances were still high because of agency staff particularly in Finance and Legal, though this figure had been offset by employee underspends in Revenue and Benefits and within the Housing & Wellbeing Committee.

·         Investments continued to perform above expectation.

·         General Fund Capital Programme headlines included slippage from 2023/24 moved into 2024/25 budgets. As the variance figure was at Quarter 1 (end of June 2024), more work had been undertaken since to determine profiling on key major projects and so additional information would be brought to the Committee’s next meeting in December 2024.

·         Turning to the HRA, the table showed a revised full year forecast surplus of £863k against a budgeted surplus of £532k. The key objective remained to ensure HRA reserves were at a sustainable level.

·         The forecast end of year HRA reserve balance showed an increase to £1.47 m from an opening position of £608k. There were substantial risks attached to this forecast such as insourcing repairs from the main repairs and maintenance contract and increasing management costs. The Housing and Finance teams had invested much resource into managing and monitoring the HRA budget to ensure that it remained on track. A clearer picture would be provided at Quarter 2.

·         The HRA Capital Programme’s forecast outturn was £11.7m against  a revised budget of £26.9m and included slippage from the previous financial year. The £3m decarbonisation programme required externally matched funding before commencement. The Group Head of Housing was in the process of submitting a bid to the Warm Homes Fund. Other projects such as stock development and sheltered accommodation were subject to further feasibility studies and would result in a reprofiling of the budget.

·         Table 1 for the Policy & Finance Committee Revenue budget detailed the 2024/25 forecast revenue budget outturn at the end of Quarter 1 and anticipated an underspend of £156k. This listed the significant variances.

·         Group Heads’ underspend of £107k was attributed to the deletion of the Group Head of Wellbeing & Communities’ position. The Chief Executive £55k underspend related to the incoming CEO taking up post four months into the new financial year.

·         Table 2 at Section 4.6 of the report detailed the Committee’s General Fund 2024/25 forecast capital programme outturn at Quarter 1 for the Alexandra Theatre and Littlehampton Seafront projects.

The Chair invited questions from Members. The first question related to housing service repairs and since the Council had insourced this service, when would Members be able to review progress in terms of how this had impacted residents in terms of quality of service and whether this was worth replicating in other areas of the council. A question was asked around the £2m reserve HRA target and did this need reviewing, was this a suitable level of reserve? In response the Group Head of Finance and Section 151 Officer confirmed that the Group Head of Housing would be presenting the latest review of the HRA Business Plan to a future meeting of the Housing & Wellbeing Committee. Responding to the repairs and maintenance contract, time would tell as to its success, a clearer idea would be seen towards the end of the financial year. In terms of service performance, the Director of Environment and Communities confirmed that some analysis work could be undertaken. She could confirm that the in-house arrangement was working better, whether this meant that this arrangement should be rolled out for other contracts, was another issue as the market in other contracts was very stable and other contracts were performing well and efficiently. Also, the Council had to look at the cost of providing services which would likely cost more if the Council chose to insource. Contractors such as Biffa and Inspire Leisure were specialists with many centres meaning that their buying power was substantial.

Concern was raised over the capital slippage on the HRA, especially in relation to sheltered accommodation and whether there was any chance of this money being spent in this financial year so that work could progress. The Director of Environment & Communities confirmed that a response would be provided in writing.  The questioner repeated his grave concern over this delay and that reprofiling would need to take place when feasibility works commenced.

An update was requested on the Bersted Brooks project. The Group Head of Environment & Climate Change confirmed that progress had been impacted by other projects such as the Littlehampton Seafront Project, causing slippage. The budget would feed into the next financial year.

Further concerns were expressed over project slippage and whether there were other areas that needed investigation such as project management and how projects were managed in terms of their forecasting and budgeting. A suggestion was made that the Council’s internal processes in relation to project management required investigation. The Director of Growth responded. He confirmed that Officers would agree that improvements needed to be made and that there needed to be better understanding of potential expenditure, however there were all sorts of reasons why slippage occurred. A piece of work to develop this would be to have an enhanced understanding on expenditure as projects developed to achieve a realistic timeline whilst also looking at better ways to present information around projects. A positive to confirm was that the Council was doing a lot, and that there were many projects to take forward using limited existing resources.