Agenda item

To present the Council’s forecast 2024/25 financial position as at end of December 2024.

The report covers the following areas:

•         General Fund Revenue Budget

•        Housing Revenue Account Budget

•         Capital Programmes – General Fund and Housing Revenue Account

•         Reserves overview – General Fund and Housing Revenue Account

The Leader of the Council presented the report on the finance update for the period April to December 2024.  He thanked Officers and the Finance Team for the work that had been undertaken and which put the Council in a strong financial position.  Due to the scheduling of the meetings the Cabinet had approved the report at the meeting held on 11 February 2025.  The report presented the forecast position for the current financial year as at the end of December 2024, it was the final forecast report before the outturn position which would be confirmed at the end of the financial year.

It was stated that the authority was in a strong financial position with positive variances for both the General Fund and the Housing Revenue Account (HRA). Investment income had continued to perform above the budgeted levels due to the high interest rates with good investments being secured at rates above those budgeted.

The Leader highlighted key factors which had contributed to income performing strongly and these were:

•         Car Parking – change in tariffs and an hour’s free car parking at certain car parks

•         Planning Fees – increase in applications

•         Budget assumptions for fuel and salaries had been set at levels higher than actuals

A reclassification of expenditure had been required in respect of the General Fund and the HRA which had originally been capital but was now revenue expenditure in nature.  Therefore, some of the underspends in both capital programmes had been offset by overspends in the revenue budgets, however these had balanced out and there was no overall financial impact.

A Risk Register had been included within the report which highlighted the financial risks to the Council and the mitigating controls in place to help address them.  It was stated that the Cabinet had discussed this at length, but it was stressed the risk in red as shown at number one on page 15 of the report was not an immediate risk but something which could be a risk in the coming years.

A question was asked about Local Government Reorganisation and what happened to the Council’s “money”.

The Leader stated that it would not be put in to “one big pot” and shared out.  Some money, like the HRA had to be kept separate.  Reference was made to Northamptonshire Council and the individual arrangements there which were still being dealt with year later, it was stressed there would be no rush to spend money.

The Deputy Chief Executive and S151 Officer stated that although it was not clear, all the respective balance sheets and financial structures of each council would be amalgamated over a period of time, ultimately being condensed into one new council.  Each council would pool their resources, although the Housing Revenue Account (HRA) was different and would sit separately due to the ringfencing rules around the HRA and the fact that the Council had an outstanding self-financing debt thorough the abolition of the subsidy system. It also depended on who the Council amalgamated with as not every Council has a HRA.  In simplistic terms there would be consolidation of every councils’ finances be it their debt level, their reserves, their balances, their liabilities into one balance sheet.

One Member referred to some graphics that he had circulated to Members which showed the variation in council debt between different Councils, one map showed area, the other per resident. He appreciated that it may be an oversimplification, but he was concerned about the level of debt that some councils had and which South Kesteven may be amalgamated with.

A discussion followed. One Member referred to work carried out some years ago by the audit sector in respect of the amalgamation of councils and the timeframes in combining balance sheets which could take years.  Another Member referred to a “scorched earth strategy” in respect of funds to which the reply was the Councill would not be spending money in this context but would continue to spend money for the welfare of its residents.  Income investment would be spent prudently in the best interest of residents such as work carried out in respect of the Earlesfield Community Centre, the refurbishment of Beeden Park, the investment in leisure centres and clean energy such as solar panels.  Also works carried out in respect of Bourne Leisure Centre’s roof and works to the wave machines at Bourne and Stamford Leisure Centres. 

The Deputy Chief Executive and S151 Officer stated investment rates were not only driven by better interest rates than those originally forecast.  He reminded the Committee that these had been set in October 2023 so there had been a time gap between budgets but, there had also been a forecast underspend on the Capital Programme, £10m less on the General Fund and £3m less on the HRA was the latest projection, therefore, cash balances were higher to enable more money to be invested. It was not just investment rates but also the Council’s balances at any particular time which had to be taken into consideration.

It was stated that any underspends or additional income at year end would be considered by Cabinet and Governance and Audit Committee for them to make recommendations about where the money would be better used.  The short-term recommendation would be to place the money in the Local Priorities Reserve.  The budget was due to be discussed at Council at the end of February and Members would see a continued reduction in the Council’s reserve balances.  This is due to them being used to fund the capital expenditure in lieu of external borrowing which was excessively high at the current time.

Further discussion followed with Members encouraged to see the content of the report and the underspend at year end.   A comment was made about safety checks in respect of gas and electricity and housing tenants. It was stated these checks were up to date, it was only when a tenant refused access to a property to carry out the checks that figures were affected and court orders had to be applied for.

More discussion on consolidating accounts due to reorganisation followed. 

The Chairman thanked the finance team for the balanced budget and the Committee noted the report.