Agenda item

Cabinet Member: Cabinet Member for Croydon Renewal, Councillor Stuart King and Cabinet Member for Resources & Financial Governance, Councillor Callton Young

Officer: Interim Director of Finance, Investment & Risk, Chris Buss

Key Decision: no

The Leader of the Council delegated authority to the Cabinet to make the following decisions:

RESOLVED: To

1.         Note the net projected general fund financial overspend of £67.2m for the full year as at the end of Month 11, February 2021 which includes all projected COVID-19 related expenditure and income of £40.9m, a net  decrease of £1.9m from  Period 10, see section 3 of the report. 

2.         Note that a number of risks may materialise which have been previously reported which would see the variance increase. These include dividends and interest receivable from Brick By Brick (both historic accrued and in-year expectations) of £20.6m, and pending external audit verification of assumptions around 2019/20 accounting treatment of MRP and Transformation funding that could impact by £6.0m. Should all these risks which total £26.6m materialise, which is unlikely, the impact on the current forecast overspend of £67.2m is an increased overspend to £93.8m, with draft general fund reserves of just £7.4m.

3.         Note, the above figures are predicated on forecasts from Month 10 to the year end and therefore could be subject to change. Forecasts are made based on the best available information at the time.

4.         Note that the Spending Control Panel which was set up at the beginning of November 2020 continues to meet on a daily basis.  Further details on the outputs of the SCP is provided within section 5 of the report.

5.         Note that ELT are to continue to take further immediate action to mitigate spend during the reminder of the financial year, and work with their departments to ensure forecast figures are thoroughly reviewed.

It was noted by the Cabinet Member for Croydon Renewal (Councillor Stuart King) that the report was the second monthly financial report to go to Cabinet and formed part of the increased financial rigour within the council to ensure Members were kept abreast of the finances of the authority. The report provided the situation in February 2021 and provided details of a confirmed overspend of £67.2 million which represented an improvement of almost £2 million since the previous report to Cabinet. The Cabinet Member noted that all of the movement was at a departmental budget level which was a positive step.

The use of the Spending Control Panel remained important and it was felt that the Panel was having a positive impact but that it was stressed that it was important that the council moved to challenging spend even where budgets exist to ensure where there was spend it was a necessary expenditure.

Members were informed that at section 3.1 of the report there was an error as it referred to when the Secretary of State may confirm the capitalisation direction whereas that confirmation had been received and approved and so the Section 114 Notice no longer applied.

The Cabinet Member for Resources & Financial Governance (Councillor Callton Young) noted that the Spending Control Panel was a good tool to manage spending more effectively but noted that the report did not provide a disaggregate of the figures. In response, the Interim Director of Finance, Investment & Risk (Chris Buss) confirmed that those figures would be provided in future reports. The Interim Director noted that of the risks identified in the report that the interest on the Brick by Brick loans would materialise, but that he did not envisage the rest coming to fruition and from having had early sight of the outturn he was hopeful that all the risks, including the additional money for Brick by Brick, would be manageable within the £70 million capitalisation direction.

The Shadow Cabinet Member for Croydon Renewal (Councillor Jason Cummings) stated that this was a rare occasion where overspend had gone down from a previous report and was welcomed, but noted that the overspend remained over £67 million. It was further highlighted by the Shadow Cabinet Member that £400,000 of the almost £2 million improvement had come from over performance of Penalty Charge Notices (PCNs) and queries whether Cabinet Members were comfortable generating money from residents and businesses.

In response, the Cabinet Member confirmed that whilst the overspend had decreased the overall picture remained bleak. The Cabinet Member reflected that over 50% of PCNs were issued to drivers who lived outside the borough and so stressed that it was incorrect to suggest that the charges were impacting mainly residents. Furthermore, it was highlighted that there was an independent appeal process should a driver feel the PCN was not correctly issued, but that for over 80% of the appeals the council’s case was being upheld. The Cabinet Member for Sustainable Croydon (Councillor Muhammad Ali) added that there were clear policies in place, such as improving air quality for schemes where PCNs were issued.

The Leader of the Council delegated authority to the Cabinet to make the following decisions:

RESOLVED: To

1.         Note the net projected general fund financial overspend of £67.2m for the full year as at the end of Month 11, February 2021 which includes all projected COVID-19 related expenditure and income of £40.9m, a net decrease of £1.9m from Period 10, see section 3 of the report. 

2.         Note that a number of risks may materialise which have been previously reported which would see the variance increase. These include dividends and interest receivable from Brick By Brick (both historic accrued and in-year expectations) of £20.6m, and pending external audit verification of assumptions around 2019/20 accounting treatment of MRP and Transformation funding that could impact by £6.0m. Should all these risks which total £26.6m materialise, which is unlikely, the impact on the current forecast overspend of £67.2m is an increased overspend to £93.8m, with draft general fund reserves of just £7.4m.

3.         Note, the above figures are predicated on forecasts from Month 10 to the year end and therefore could be subject to change. Forecasts are made based on the best available information at the time.

4.         Note that the Spending Control Panel which was set up at the beginning of November 2020 continues to meet on a daily basis.  Further details on the outputs of the SCP is provided within section 5 of the report.

5.         Note that ELT are to continue to take further immediate action to mitigate spend during the reminder of the financial year, and work with their departments to ensure forecast figures are thoroughly reviewed.