Agenda item

Cllr L Shires – Portfolio Holder for Finance and Assets introduced the report and informed Members that the outturn position was better than expected with previous forecasts suggesting a £900k overspend. She referred to p30 and noted that the surplus from the previous year had been placed into the general reserve to offset the impact of inflation, but the full £616k would no longer be required as the overspend was only £261k. It was noted that £500k had been allocated for net zero initiatives, and £250k for temporary accommodation. The DFR stated that the outturn position of the capital programme showed a significant underspend, with a planned budget of £16.3m against £6.8m spent. She added that the reasons for this related to slippage and delays in awarding contracts, with funds therefore carried over.

Questions and Discussion

       i.          Cllr C Cushing referred to the business rates shortfall and asked whether this would be recovered or remain a shortfall. The DFR replied that it was a fluctuation in income that would not recovered. Cllr C Cushing stated that in this case the overspend would be £0.782m and not the lower figure quoted. He then asked whether major project costs were reforecast to account for cost variations, and referred to the Fakenham roundabout project being a prime example. The CE replied that the capital programme reflected the Council’s aspirations and ambitions but they were complex projects to deliver, and slippage could therefore be expected. He added that the retained capital budget had reasons for delays listed, and in the case of the Fakenham roundabout, the Council had pledged a financial contribution of £900k, but the works could only be scheduled during autumn and winter due to it being a primary tourism corridor. It was noted that whilst efforts had been made to progress the project, nutrient neutrality regulations had also caused delays, and whilst the Cromer Coast Protection Scheme and refurbishment of Mundesley sea defences had received funding from the EA, they had also been subject to significant cost inflation. The DFR stated that there had been limited capacity available to update cost estimates within the Finance Team, but following recruitment of additional accountants, this could be given greater attention going forward.

      ii.          Cllr L Shires stated that any estimates completed in 21-22 would be inaccurate due to the significant inflation that had occurred, and asked whether Members sought regular updates to ensure accuracy or affordability. Cllr C Cushing stated that budget monitoring reports were provided regularly throughout the year, but anything that had been costed over six months ago was likely to be inaccurate. He added that estimates had to be as accurate as possible, otherwise it would be difficult to set and monitor the capital programme with any degree of accuracy.

     iii.          Cllr V Holliday stated that £781k was not a significant improvement over the originally forecast £900k deficit, and asked how long the general reserve would last if used to regularly fund deficits of £261k. She added that an executive summary would also be useful to cover key points of information with trend analysis. Cllr L Shires replied that she would be happy to review whether an executive summary could be added to reports, and reiterated that the deficit had been offset by an underspend from the previous year. The CE stated that the Council had for many years had a year-end surplus, and it was appropriate to use reserves to close a deficit gap as and when necessary, taking into account that a £617k underspend had been placed into the general reserve the previous year to account for inflation. He added that to close the year-end with a £261k deficit was a reasonable position given the financial pressures the Council had faced, and it was not a risk to the Council to offset this deficit with the use of general reserves. It was noted that officers would not recommend this on an ongoing basis, but actions would be taken to address deficits by other means going forward.

    iv.          Cllr A Brown stated that he was supportive of including trend analysis of the general reserve, and potentially also year-end surpluses or deficits to make the financial position of the Council as clear as possible for Members.

      v.          The Chairman stated that financial reports were complex, and he had therefore discussed the format with the DFR to seek improvements and provide a more holistic view of the Council’s financial position. He added that he expected many Members would have difficulty understanding all aspects of the report, and given the significance of financial decisions being made, it was crucial that all Members were able to properly understand reports. It was suggested that a workshop session may be helpful to improve reports going forward, enabling Members to better fulfil their financial monitoring responsibilities.

    vi.          Cllr J Toye stated that he agreed that reports needed to be made as clear as possible to enable Members to make the correct evidence-based decisions.

   vii.          The recommendations were proposed en bloc by Cllr S Penfold and seconded by Cllr J Boyle.

RESOLVED

To recommend the following to Full Council:

a)    The provisional outturn position for the General Fund  revenue account for 2022/23;

b) The transfers to and from reserves as detailed within the report (and appendix-c) along with the corresponding updates to the 2023/24 budget;

c) The deficit of £0.261m relating to service overspends be funded from the General Reserve;

d) The deficit of £0.561m relating to retained business rates be funded from the Business Rates Reserve;

e) The financing of the 2022/23 capital programme as detailed within the report and at Appendix D;

f) The balance on the General Reserve of £2.649m;

g) The updated capital programme for 2023/24 to 2025/26 and scheme financing as outlined within the report and detailed at Appendix E;

h) The roll-forward requests as outline in Appendix F are approved.

i) The transfer of £0.500m from the Delivery Plan Reserve to a new reserve ‘Net Zero Initiatives’ set up specifically to fund projects, initiatives and works to achieve net zero.

j) The Provision of Temporary Accommodation capital budget for 2024/25 and 2025/26 of £0.250m per year be moved into 2023/24 giving a total budget of £0.750m in 2023/24 and that this be funded by temporary borrowing until it can be replaced by preserved right to buy capital receipts.