Agenda item

Financial Performance Report - Outturn 2020/1

Meeting of Cabinet, Monday, 12th July, 2021 6.30 pm (Item 100/21)

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 and Section 151 Officer, Chris Buss

Key decision: no

Decision:

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

RESOLVED: To

1. Note the draft outturn for the General Fund for 2020/21 being £65.8m over approved budget, which is a £1.4m improvement on the Period 11 position previously reported to Cabinet on 7^th June;

2. Note the forecast level of closing General Fund general reserves as £27.5m - after taking into account likely adjustments to the levels brought forward as part of the work to finalise the 2019/20 accounts audit process, and which is in line with the assumptions set out in the approved 2021/22 Budget and Medium Term Financial Strategy of March 2021;

3. Note the forecast outturn and level of HRA balances carried forward;

4. Note the draft General Fund capital outturn position for 2020/21;

5. Note the draft HRA capital outturn position for 2020/21; and

6. Approve the roll-forward of capital underspends into the 2021/22 Capital Programme for both the General Fund and HRA as set out in Tables 4 and 5.

Minutes:

The Cabinet Member for Croydon Renewal (Councillor Stuart King) informed Members that the report set out the council’s outturn performance for the 2020/21 financial year, which was subject to external audit. The report set out there was an overspend of £66 million against the council’s budget, which was within the £70 million capitalisation direction. As a result, the Cabinet Member stated the council would not need to borrow the full £70 million which generated a savings on the general fund budget from reduced interest rates.

The Cabinet Member highlighted the improvements towards th end of the year with a £1.4 million improvement on the Period 11 position following a £1.8 million improvement in period 10. Furthermore, it was noted that considerable savings of 80% had been made in the council’s capital programme following a review to ensure affordability. This reduction in spending had reduced the council’s borrowing requirement by £240 million.

It was also noted by the Cabinet Member that covid-19 had a devastating impact on families across Croydon and the council’s budget. The report set out that the pandemic had cost the council £76 million in the previous year, of which £33 million had been recovered from government funding.

The Cabinet Member informed Members that the council’s reserves were at £27.5 million, which was the highest level for a considerable period of time and was important given the uncertain times in the months and years ahead.

The Cabinet Member for Communities, Safety & Business Recovery (Councillor Manju Shahul-Hameed) noted that the delivery of the capital programme had been significantly impacted by the effects of covid-19. It was suggested that departments had requested that unspent budgets in 2020/21 were rolled forward to the 2021/22 capital programmes, and the Cabinet Member queried whether this would happen. In response, the Cabinet Member stated that it would be a decision of Cabinet to decide on the capital programme and that affordability would be central decisions.

Members were advised by the Interim Director of Finance, Investment & Risk (Chris Buss) that the figure of £74 million in appendix one of the report was the figure which would be added to the capital programme, subject to Cabinet approval. A subsequent review of the capital programme would be undertaken which would be considered by Cabinet at a future meeting.

The Shadow Cabinet Member for Croydon Renewal (Councillor Jason Cummings) welcomed the improved outturn position but stressed that there remained a £66 million overspend. Concerns were raised in terms of the tone of the report, with the Shadow Cabinet Member stating that he felt a mistake of the previous administration had been to spend too much explaining external factors rather than focussing on internal factors which were in the council’s control. Whilst it was recognised by the Shadow Cabinet Member that covid-19 had a significant impact on the council’s finances it was felt that the tone of the report could be seen as deflecting the blame.

It was noted that there were £22.2 million of undelivered savings listed as an impact of covid-19, however the Shadow Cabinet Member queried whether it was a reasonable figure to include and how likely it was that the council would have delivered those savings. Furthermore it was noted that there had been significant underspend in the capital programme, and the Shadow Cabinet Member queried whether the Minimum Revenue Provision (MRP) requirements and interest payments been netted off. In response, the Interim Director advised that the interest had been netted off. In terms of the MRP, Members were advised that there would have been little impact on the MRP but that there would be a positive impact on 2021/22 accounts.

In terms of the £22 million savings, the council had assumed those savings would be achieved however it had become apparent those savings could not be achieved, largely due to the impact of covid-19. It was noted that a number of councils in London were in similar positions and had applied undelivered savings to the cost of covid-19.

In response to statements in relation to the reduction to the capital programme, the Cabinet Member confirmed that some aspects of the programme had been reduced in response to covid-19, but that there had been conscious political decisions also.

The Leader further queried the assessment of the Shadow Cabinet Member that there was a change in tone of the reports, and stated that she did not feel that the report was overoptimistic nor over explained external factors.