To inform Finance, Economic Development and Corporate Services Overview and Scrutiny Committee of the Council’s 2022/23 financial position as at the end of June 2022.
During the current financial year, the Finance, Economic Development and Corporate Services Overview and Scrutiny Committee were to be provided with regular finance reports that monitored and assessed the current economic conditions for the Council. This first report only showed actual costs incurred up to 30 June. Subsequent reports would show the projected outturn position as at 31 March 2023.
The report was presented by the Chief Finance Officer who confirmed that the budget carry forwards were to be confirmed subject to approval by Cabinet. This had been subsequently approved at Cabinet on 12 July 2022. There had been some amendments to the framework which were set out within the tables in the report.
The Chief Finance Officer explained that the focus was currently on inflationary pressures due to an unprecedented and unforeseen increase in inflation, fuel and utility costs. In a rural area such as South Kesteven, fuel consumption could not be significantly reduced, although the Council had ensured an optimum price for its usage. The Council was notified that from April 2022, gas tariff rates would increase by 70% and electricity tariff rates would increase by 100% from October 2022.
The utility running of the public buildings and streetlighting were among significant costs and the staff move from the Council Offices was being accelerated but there was more work on a strategy to mitigate these costs. An update was to be brought before the Committee at a future meeting.
The creation of an inflation reserve of £500,000 was recommended for the General Fund to absorb potential cost pressures in the short-term but further expected increases remained a concern and additional monies would be required. A potential pay award would add to the budgetary pressures, for example an increase of 1% would translate to an additional £120,000 and the Council was unable to rely on Government assistance.
During discussion Members raised the following points:
· The proposed action of the creation of an inflation reserve to mitigate the effects of inflation on the budget were welcomed, although it was understood that the reserve was currently insufficient and would require increasing to cope with future expected rises in inflation.
· Could the Council identify savings to help with energy and transport costs?
· What proportion of the budget was spent on fuel and transport and could it be ensured that staff continued to consider whether journeys were necessary or meetings could take place virtually instead?
· Members acknowledged the difficulty in planning ahead in uncertain times and establishing objectives to be measured against. It was suggested that more needed to be done to anticipate and prepare for the impact of future economic events.
· Could the Council consider the selling of any assets to raise funds?
· Clarification was sought on the Housing Revenue Account amount of interest payable.
The Chief Finance Officer informed the Committee that a strategy was required in order to reduce the overall utility costs as the Council currently has a significant number of buildings and facilities where it is responsible for the operational costs. Many services, such as Waste Collection, had established procedures and processes in place that could not be amended quickly. A number of reserves had been set up and transformational savings provided funding in the short-term. The Officer clarified that the Housing Revenue Account was repaying a loan and this was shown in the table in the report.
Decisions were being made in line with the advice received. The Officer explained that borrowing to fund revenue expenditure is not an option and Council Tax, fees and charges have been set for the financial year. The selling of assets was an ongoing consideration that was being looked into. The energy and transport costs were to be significant but impossible to specifically confirm at this stage but an update would be brought before the Committee at a future date.
a) That the Committee reviewed and noted the actual 2022/23 position for the General Fund and HRA Revenue and Capital budgets as at the end of June 2022.