P3 budget monitoring report is going to Cabinet on 22 September 2021 and includes details about General Fund revenue, Dedicated Schools Grant (DSG), Housing Revenue Account (HRA) and progress made against savings targets.

The Committee received a report that (i) presented the budget monitoring report 2021-22 as of 30^th June 2021 for the General Fund, Dedicated Schools Budget (DSB) and the Housing Revenue Account (HRA), (ii) detailed progress made against savings targets and the Council’s capital programme; and (iii) provided projections on General Fund earmarked reserves and the forecast impacts of Covid on the Councils finances in 2021-22. A summary of the discussions and questions raised is set out below:

The Committee

v  Observed that the report is going to Cabinet on 22^nd  September 2021 see following link

v  Noted that the projection for the General Fund outturn is for an overspend of £0.1m, which already considers the use of some earmarked reserves in delivering services (i.e. without the use of these reserves there would be a higher forecast overspend).

v  Noted that given the latest forecast financial position, earmarked General Fund reserves are consequently projected to reduce; from £173m to £166m by the end of this fiscal year.

v  Accepted that it is important to note that the reserves position of the Council is uncertain pending the closure of the statement of accounts for the period 2016 – 2021.

v  Noted that the Councils budget has been stretched for some time, but the pandemic has exacerbated the situation. It has increased the amount that the Council has had to spend on protecting the most vulnerable residents and sets the Borough on a path to rebuild and reboot for a fairer future.

v  In response to questions raised regarding the current interest rates and inflation noted that the Council has modelled the current and anticipated funding available for individual services within the projected resource constraint (e.g. sources of council revenue, including grants, local taxes, fees and charges, investment income).

v  Noted that the Medium-Term Financial Strategy (MTFS) is subject to a regular review and as part of that process the Council maintains an in-year contingency to address any ‘budget short fall’ and reserves can be used on a one-off basis.

v  Asked if an analysis could be provided on the impact of inflation on contracts especially if inflation remains at its current level.

v  Stated that there would benefit in undertaking a benchmarking exercise in the autumn in relation to the  New Homes Bonus. This exercise should primarily look at what assumptions have other boroughs made in their MTFS in relation to New Homes Bonus.

v  Stated that it would be useful to know what will the impact be of the National Insurance increase for Heath & Social Care have on the Council both as an employer and as purchaser of services? As this information would then help to inform scrutiny of the budgetary process prior to the publication of firm and detailed spending proposals.

v  Noted that the Place Directorate is forecasting a £4.8m adverse variance before proposed reserve drawdowns. The Directorate is projecting to drawdown £5.6m from agreed and ringfenced reserves, identified during the budget setting process, resulting in a net underspend after reserves of £0.8m. The reserves that are planned to be used form part of the Directorate’s budget and are not being used to offset a general overspend. Other reserves are funding target and approved projects such as clearing fly tipped materials at Ailsa Wharf £475k from the services reserve, replacing trees or upgrades to the vehicle workshop to allow the £23k capital receipt on that site’s disposal.

v  Indicated that asthe Council has a property portfolio and it would be helpful to have details of those assets to get a better understanding as to (i) the physical assets the Council has; (ii) what is being done with them; (iii) what are the costs either direct costs or income from those buildings. 

v  Was advised that the closure of leisure centres to mitigate Covid-19, had, had an impact on the Council’s leisure service contract provider, Greenwich Leisure Limited (GLL). It was noted that a management fee had been allocated to GLL for the period March – August 2020 to ensure the continued operation of the leisure service within Tower Hamlets. GLL are now in principal confident that they can repay that management fee in full and it is not anticipated that there will be a need for any further budget provision to support GLL.

Following a full and wide-ranging discussion, the Chair thanked all those Committee Members in attendance together with (i) Councillor Candida Ronald  (Cabinet Member for Resources and the Voluntary Sector); (ii) Hitesh Jolapara Interim Divisional Director, Finance, Procurement & Audit; (iii) Ahsan Khan, Chief Accountant: (iv) James Thomas (Corporate Director for Children & Culture) for their contributions to the deliberations on this significant topic.

Accordingly, the Committee resolved to:

1. Note the Council’s progress and position to date on its P3 budget monitoring report; and
2. Note the areas of concern (e.g. revenue overspends, savings target) in developing scrutiny questions.
3. Agree that an analysis should be provided on the impact of inflation on contracts especially if inflation remains at its current level.
4. Agree that as the Council has a property portfolio and it would be helpful to have details of those properties to get a better understanding as to (i) the physical assets the Council has; (ii) what is being done with them; (iii) what are the costs either direct costs or income from those buildings. 
5. Agree that there would benefit in undertaking a benchmarking exercise in the autumn in relation to the  New Homes Bonus. This exercise should primarily look at what assumptions have other boroughs made in their MTFS in relation to New Homes Bonus.
6. Agree that it wished to receive a report on the impact be of the National Insurance increase for Heath & Social Care have on the Council both as an employer and as purchaser of services? As this information would then help to inform scrutiny of the budgetary process prior to the publication of firm and detailed spending proposals.