Members are asked to refer to the report included in the Cabinet agenda 24^th November, 2021.

This report presents the budget monitoring report 2021-22 as of 30^th September 2021 (period 6) for the General Fund, Dedicated Schools Budget (DSB), Housing Revenue Account (HRA) progress made against savings targets and the Council’s capital programme. It also 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  Noted that they were to have reviewed the MTFS refresh and Fees and Charges items this month, however these have now been delayed and subsequently moved to the January 2022 Budget meeting which adds further time constraints on the Committee to be able to effectively scrutinise the Budget process.

v  Was reminded that addressing the Budget process early has been an issue for the Committee throughout the years and noted the Chairs disappointment that it has now had to be moved to January 2022.  However, the Committees work programme has been revised to accommodate this change.

v  Observed that this is the half year budget monitoring report setting out how the Council is managing its Budget within the impact of Covid.

v  Noted that the overall position on the general Fund after the application of reserves is a forecast deficit on the year of £300,000, although there are some worrying variances and that position is supported by £19.6 million of extra funding. Whilst the Dedicated Schools Grant (DSG) is forecasting a small underspend on the year and the Housing Revenue Account ( HRA) an overspend of £1.4 million. The Directorate positions are that Housing is forecasting an overspend of £2.3 million; Children’s an overspend of £1.6 million; Resources and Governance a net overspend of £1 million and Place an underspend of 1.5 million.

v  Observed that regarding the reserves position is £20 million is the required minimum for the general fund and in addition £98 million in earmarked funds with restrictions, although a significant percentage of that is the collection fund smoothing reserve, which includes grants received in advance. We have another £75 million in earmarked funds, reducing to 70 million by year end. That sounds like a lot, but I remind you that expenditure is running at £19 million over budget, and in that context £70 million does not sound like such a significant cushion. The HRA position will see a call upon reserves of £1.4 million, leaving £50.9 million at year end. With regard to savings, the Budget was originally £28.9 million and this has been revised down to £20 million with £7.5 million forecasts to slip into future years and £1.4 million unachievable.

v  Noted that every year, but it becomes progressively more difficult to deliver savings and capital expenditure also foresees a certain amount of slippage into future years. However, despite some slippage, LBTH is  transforming the Borough through the capital programme the high streets and town centres, environmental projects, new Council homes, public realm improvements, Whitechapel is the gateway to the Borough, new schools, new medical centres, and new parks.

v  Noted that through the Capital Strategy Board LBTH is looking at outlay on leisure centres through the capital approval process and proposals are being put forward for significant investment in the LBTH leisure estate.

v  Commented that as the Consumer Prices Index (CPI) has seen a significant increase in 2020/21 and it is now at 3.8% the highest for 10 years.  Therefore, how has this been factored into the forecasts and what the impact might be going forward?  In response based on the current forecasts the increase is set to continue into the first quarter of the next financial year and then kind of stabilize this has been built into the medium-term financial strategy although that it is not expected to have a substantial adverse effects in terms of LBTH budgets for this particular financial year.

v  Noted that the breakdown of the Government's most recent spending decision announcements until the 14th of December, so there is still uncertainty around what the funding levels will actually be.  However, LBTH has been able to make some assumptions that are based on the overall national position that has been announced which gives LBTH a greater degree of certainty.

v  Commented that the report states it is important to note that the reserves position of the Council is uncertain pending the closure of this statement of accounts for the period 2016 to 21. In response it was noted that whilst the accounts are with the Councils auditors the latest forecast position is a relatively neutral impact on the general fund position although that could be subject to change.

In conclusion, the Chair thanked all those Committee Members in attendance together with (i) Councillor Candida Ronald  (Cabinet Member for Resources and the Voluntary Sector); (ii) Nisar Visram Director of Finance, Procurement and Audit, Finance; and (iii) Kevin Bartle (Interim Corporate Director, Resources and Section 151 Officer)for their contributions to the deliberations prior to the Budget Consultation on 13^th December 2021.