Agenda item

The Budget Monitoring Report sets out the Capital, Housing Revenue and General Fund Revenue budget performance to the end of December 2022.

The Interim Group Head of Finance and Section 151 Officer presented the Budget Monitoring Report outlining progress against budget covering the Quarter 3 period up to 31 December 2022. The Committee was being asked to note the Budget Monitoring report with the detail being set out in Appendix 1 of the report.

Members’ attention was drawn to the General Fund table at paragraph 2.3 of the appendix showing a General Fund underspend of £268k against projected to the end of December 2022. This was a favourable variance. The report also detailed cost pressures with the main ones being identified as homelessness and inflation which were being contained within budget and from the £500k earmarked reserve for inflationary pressures which had been set up at the end of last year and was now exhausted. Other favourable variations identified were planning income at £337k and £296k in corporate underspends, the detail of which had been set out in the tables at sections 2.7.2 and 2.7.3 of the appendix. The main source of funding for the corporate underspends had been from additional interest on investments (£700k) as interest rates had increased.

The estimated outturn was an additional £161k to be taken from balances as detailed in table 7.2. The Housing Revenue Account (HRA) showed the revised budget as approved by Full Council on 18 January 2023. Table 9.2 showed the estimated outturn which had been approved by Full Council on 18 January 2023. The Council had also approved that the recommended minimum balance level be £2m. Turning to Capital Receipts, there was significant slippage in the capital programme with the main component of these being the Levelling-Up Fund (LUF) schemes which were not due to expend a significant proportion of their expenditure until next year.

Questions presented related to ongoing concerns about HRA overspend.  The original budget for the year had been a balance at the end of this year of £3.5m and Members were now being told that the HRA should have a minimum of £2m when in fact the Housing & Wellbeing Committee had been happy to see this being reduced to £600k. This was rapid movement for just one year and so assurance was requested that this situation would not worsen again edging the Council nearer to an illegal situation. The Director of  Environment and Communities responded confirming that the situation with the HRA for all authorities at this time was very difficult. The HRA Business Plan had been presented to the Housing & Wellbeing Committee and all Members of the Council via an all Member Briefing in January 2023 where all the points raised had been explored in great detail.

In response, a major component was the continuing use of large numbers of agency staff to cover increasing staff vacancies over the last 2 years. The Committee asked what progress was being made and how reassured could Members be that the current overspend was not going to continue into the forthcoming year. It was explained that the staffing situation was not unique to Arun, this was a national problem with many other authorities struggling to recruit specialised staff. This was also being experienced in other areas of the council such as legal and planning and reflected a problem across the country. In response, the Council had started a programme of recruiting some of the posts. There had been some successes but where this had not been possible, the use of agency staff continued as it was essential to provide a continued service to customers who had the greatest needs. Other factors had been the increase in the cost of repairs due to cost of materials and fuel. There had been a raft of issues that had impacted the Business Plan all of which had been brought to Members’ attention along with the measures in place to resolve such issues. The Committee was reassured that the Council had a good Business Plan in place and that the budget would require close monitoring and a lot of work. Officers had therefore committed to provide a further update to the Housing & Wellbeing Committee six months’ time. The assurance that could be provided now was that all the right controls were in place and the right work was being undertaken.  But it could not be argued that the Council was in a difficult position.

The Chief Executive confirmed that the Council’s Corporate Management Team had instigated monthly performance boards which would closely monitor the HRA budget. The assumptions were in place and part of the process would be to ensure that the recommendations within the HRA Business Plan would be overseen and monitored allowing the Council to take remedial action more quickly.

          The content of the report was noted by the Committee.