Agenda item

Purpose: to report on the financial performance of the Council’s revenue budgets. This report is Quarter Four, the provisional outturn for the 2024/25 financial year. The report highlights the financial position at outturn and the impact on the Council’s General Fund position. This allows the Executive to consider the implications of the outturn on the 2025/26 financial year.

Resolved that: Executive note

To note the provisional management accounting outturn of £15.9m overspend, this is prior to the following adjustments noted below, which result in an adjusted overspend position of £6.77m.  Executive should also note that even with the adjustments, the outturn would have resulted in negative reserves without the application of EFS funding.  The adjustments are as follows:

·         The Dedicated Schools Grant (DSG) overspend of £6.68m.  The overspend is subject to a statutory override, enabling the Council to transfer the overspend to a separate reserve protecting the Council’s General Fund.  The overall cumulative deficit relating to the DSG held on the Council’s Balance Sheet as at 31.3.2025 is approximately £16.5m.  This is impacting the Council’s revenue budget with a capital financing cost of £750k per annum.  The deficit is projected to increase to £31-37m by the end of 2025/26, increasing the revenue impact to £1.4- £1.67m per annum.

·         The Public Health Grant underspend of £181k.  Public Health funds are ringfenced and cannot be deployed in support of the Council’s General Fund position.  Unutilised Public Health funding is held in a separate reserve to the Council’s General Fund.  The overall cumulative reserve Public Health reserve held on the Council’s Balance Sheet as at 31.3.2025 is approximately £1.19m. 

·         The Council has limited ringfenced revenue reserves beyond the General Fund.  The 2024/25 position utilises £17k from the Proceeds of Crime Act reserve and £428k from Commuted Sums earmarked reserves for open spaces, play equipment and highways. The overall cumulative non-General Fund reserves held on the Council’s Balance Sheet as at 31.3.2025 is approximately £3.4m (provisional). 

·         In accordance with the Council’s policy on the use of flexible capital receipts, application of £2.868m of capital receipts in the form of transformation funding against the revenue outturn position.  The remaining capital receipts balance held on the Council’s Balance Sheet and committed against future transformation projects, as at 31.3.2025 is approximately £4.5m (provisional).  

·         The annual Minimum Revenue Provision (MRP) adjustment of £4.36m.  MRP is a capital financing adjustment between the General Fund and unusable reserves relating to the provision for the repayment of debt in accordance with the CIPFA Accounting Code of Practice and CIPFA Prudential Code for Capital Finance. 

Members are informed:

·         That the provisional revenue deficit in the outturn is in excess of the Council’s General Fund position as at 1.4.2024 (start of the 2024/25 financial year).  The General Fund in essence is fully deployed in support of delivery of the Council’s revenue budget, with a further £2.4m deficit created. 

·         That it is anticipated as part of the finalisation of the Council’s 2024/25 financial statements, that the provisional EFS allocation of £13m relating to 2024/25 will be fully deployed to mitigate the Council’s outturn position and rebuild the Council’s General Fund to the minimum balance required to support the 2025/26 revenue budget, as detailed in the budget papers adopted by Full Council in February 2025. 

This decision is not subject to call in as:

·      Report is to note only

therefore it will be implemented immediately.

Councillor Iain Cottingham introduced the report (Agenda Item 7), which reported on the financial performance of the Council’s revenue budgets.

Councillor Cottingham referred to sections 1.3.and 1.4 of the report and highlighted that Exceptional Financial Support was a capitalisation of the revenue to the balance sheet, was not additional funding and in essence had already been spent.

Councillor Cottingham referred to questions that had been raised previously at Resources and Place Scrutiny Committee in relation to the report and noted that an overspend in the Resources directorate had been partly due to the audit fee almost doubling and a TVI invoice.

Councillor Cottingham referred to section 4.14 of the report and reported that an overspend in Finance, Property and Procurement had been due to the purchase of a housing benefit system which had launched in 2020 but failed to interface with existing systems resulting in unreconciled balances. He reported that an eventual reconciliation had discovered overpayments of £650,000 housing benefit to residents which was unlikely to be recovered. 

Councillor Richard Somner referred to section 4.18 of the report and a previous discussion at Resources and Place Scrutiny Committee relating to the ‘loss of £477,000 income due to the sale of commercial property’. Councillor Somner suggested that the loss was significant and that there was a need to establish if there were budget commitments from property income and consequently a need to ensure that money was fulfilled on the sale of such property. Councillor Cottingham commented that the apparent disparity was an accounting variance and that the budget figures were a snapshot in time based on what was known in February 2025.

Councillor Ross Mackinnon referred to sections 4.18 and 7.8 of the report and queried whether they contradicted the Property Investment Strategy which aimed to dispose of all property assets by 2028. Councillor Cottingham commented that the paragraphs highlighted the financial risk of disposing of the commercial property portfolio and noted that whilst the policy was to dispose, there were a lot of complexities to review and understand before doing.

Councillor Mackinnon queried whether Councillor Cottingham was considering retaining any property assets for the yield they would contribute to the revenue budget. Councillor Cottingham confirmed that he was not.

Councillor Mackinnon suggested that the narrative in section 4.18 of the report was consequently incorrect. Councillor Brooks stated that the status of the assets was kept under constant review.     

RESOLVED that: Executive

To note the provisional management accounting outturn of £15.9m overspend, this is prior to the following adjustments noted below, which result in an adjusted overspend position of £6.77m.  Executive should also note that even with the adjustments, the outturn would have resulted in negative reserves without the application of EFS funding.  The adjustments are as follows:

·         The Dedicated Schools Grant (DSG) overspend of £6.68m.  The overspend is subject to a statutory override, enabling the Council to transfer the overspend to a separate reserve protecting the Council’s General Fund.  The overall cumulative deficit relating to the DSG held on the Council’s Balance Sheet as at 31.3.2025 is approximately £16.5m.  This is impacting the Council’s revenue budget with a capital financing cost of £750k per annum.  The deficit is projected to increase to £31-37m by the end of 2025/26, increasing the revenue impact to £1.4- £1.67m per annum.

·         The Public Health Grant underspend of £181k.  Public Health funds are ringfenced and cannot be deployed in support of the Council’s General Fund position.  Unutilised Public Health funding is held in a separate reserve to the Council’s General Fund.  The overall cumulative reserve Public Health reserve held on the Council’s Balance Sheet as at 31.3.2025 is approximately £1.19m. 

·         The Council has limited ringfenced revenue reserves beyond the General Fund.  The 2024/25 position utilises £17k from the Proceeds of Crime Act reserve and £428k from Commuted Sums earmarked reserves for open spaces, play equipment and highways. The overall cumulative non-General Fund reserves held on the Council’s Balance Sheet as at 31.3.2025 is approximately £3.4m (provisional). 

·         In accordance with the Council’s policy on the use of flexible capital receipts, application of £2.868m of capital receipts in the form of transformation funding against the revenue outturn position.  The remaining capital receipts balance held on the Council’s Balance Sheet and committed against future transformation projects, as at 31.3.2025 is approximately £4.5m (provisional).   

·         The annual Minimum Revenue Provision (MRP) adjustment of £4.36m.  MRP is a capital financing adjustment between the General Fund and unusable reserves relating to the provision for the repayment of debt in accordance with the CIPFA Accounting Code of Practice and CIPFA Prudential Code for Capital Finance. 

Members are informed:

·         That the provisional revenue deficit in the outturn is in excess of the Council’s General Fund position as at 1.4.2024 (start of the 2024/25 financial year).  The General Fund in essence is fully deployed in support of delivery of the Council’s revenue budget, with a further £2.4m deficit created. 

·         That it is anticipated as part of the finalisation of the Council’s 2024/25 financial statements, that the provisional EFS allocation of £13m relating to 2024/25 will be fully deployed to mitigate the Council’s outturn position and rebuild the Council’s General Fund to the minimum balance required to support the 2025/26 revenue budget, as detailed in the budget papers adopted by Full Council in February 2025.