7 Budget Update Report 2021/22 PDF 541 KB
To consider and provide a recommendation to Cabinet on the proposals set out in the attached report.
Additional documents:
Minutes:
Lee Colyer, Director of Finance, Policy and Development introduced the report that provided an update to the budget projections for the 2021/22 budget and subsequent years.
Discussion and responses to Members questions included the following:
- This was the second report in the process of setting the 2021/22 budget.
- In the absence of Government financial information for the next year, the projections had been made in something of a vacuum against the constantly fluid impact of the Pandemic.
- The Council was financially self-sufficient and received no revenue support grant from Government.
- To function without Government support the Council operated more as a business and generated its own income to fund local services.
- The most significant impact on the Council’s finances was the reduction in income from sales, fees and charges.
- The Council experienced income losses that reached £1m per month in May with a recovery as the economy started to open up but then a reduction in September as health concerns returned.
- Current projections were that by March 2021 the monthly loss of income would be £250k per month and this would indicate a total loss of income of £3m over the original budgeted levels for the financial year 2021/22.
- The latest current lockdown and with the potential for further restrictions going forward would likely increase the losses of income. As such it was also more likely that Government would extend the compensation scheme to support Councils.
- Locally, unemployment had quadrupled. The collection of Council Tax and Business Rates were already below target. However, they were nowhere near below target as first feared.
- The Government furlough scheme had now been extended until the end of this financial year.
- One way the Council had been generating income was through promoting economic growth and sharing in the process of additional Business Rates. This scheme was expected to continue for another year so might provide some help with funds that would help fund the Capital Programme.
- Projections were also on the basis that Council Tax would increase by £5 a year – as expected by Government.
- To avoid drastic cuts to services at a time when residents were most reliant upon them, it was proposed to temporarily use reserves to balance the budget. This could be afforded in the short term, but when able to do so, reserves would need to be replenished.
- Fortunately the Council entered the Pandemic in a healthy financial position with a track record of being able to balance its budget, maintaining healthy levels of cash reserves and with no external debt.
- However, the gravity of the situation was such that the Pandemic would result in fundamental changes to the economy and to the Council’s income streams. This would require the Council to review which services it could afford to deliver, how it worked and the cost and effectiveness of its large numbers of property assets.
- The budget update allowed for the immediate attention ... view the full minutes text for item 7