Agenda item

The Leader introduced the first report on the agenda, which explained the Council’s outturn for the 2022/23 revenue budget and the key issues arising.

Against a net budget of £343million, the 2022/23 revenue outturn produced a net underspend, after planned transfers to and from reserves, of £5.1m, which represented a 1.5% variance against budget.

This final position represented an improvement on the position previously reported to Cabinet, mainly due to late, unexpected grant funding, additional income, and a slight reduction in demand in certain areas.

The Leader explained that in 2022/23 the underspend of £5.1m, was due to the following:

(i)                Underspends against non-service budgets, specifically the general and covid contingency budget. The contingency budgets were temporarily increased for 2022/23 following Covid, and were not required to balance the budget in this year.

(ii)               Overachievement of interest receivable due to interest rates rising, higher than anticipated investment balances and increased savings on interest payable due to the delayed need to undertake borrowing, caused by slippage in the capital programme. Additionally, there was underspend on the Council Tax reduction scheme.

(iii)              These underspends were, however, offset by overspending in service areas due to increased demand and rising costs resulting from high inflationary pressures. Emergency placements within Children’s Services and demand for temporary accommodation within Housing and Communities were the two most significant areas of additional demand. The higher than anticipated pay award for National Joint Council (NJC) staff across the council also significantly contributed to this position.

Detailed explanations of the over and underspending against budgets can be found in section 2 of the report.

Whilst the outturn overall was positive for the Council’s finances; there were specific issues which had the potential to impact on the forthcoming year. A number of these issues were addressed as part of the 2023/24 budget setting process, although some remain that could impact during the year. These risks were explained in detail within section 4 of the report and continued to be monitored by the Executive Team.

As school variances were managed via individual school’s balances, the overall underspend of £5.1m did not include the schools’ position. For 2022/23, schools collectively overspent by £1.3m which saw school balances reduce from £15.7m to £14.4m as at 31 March 2023.

In light of the significant level of savings that schools needed to make during the 2023/24 financial year, officers continued to closely monitor school balances over the medium term as part of the Council’s deficit avoidance and prevention strategy.

As part of this meeting, Cabinet, were being asked to approve the use of this underspend.

Before moving onto the considerations, the Leader invited colleagues to give their general comments on the report.

Comments of Cabinet Members:

§  Councillor Davies thanked schools for their hard work setting the balanced budget during these incredibly challenging times.  Councillor Davies reflected that school staff work very closely with officers in finance to ensure that balanced budgets were set and were determined to spend their budgets wisely and carefully.

§  Councillor Batrouni added that whilst the underspend was welcome the Council still faced challenges going forward.  Interest rates, pressures on council services and households meant more pressure on the Council going down the line.  Councillor Batrouni considered that overspend pressures in housing, social care, social services and out of care placements were not likely to abate.  Councillor Batrouni shared the forecast across Wales of a shortfall between £300 and £400 million of which the Council should be mindful.

Whilst the availability of one-off funding was extremely helpful both in the current year, and future years, to support the Council in delivering its corporate priorities, Cabinet, as mentioned by the Cabinet Member for Organisational Transformation, should be mindful that there were still challenges.

Section 5 of the report detailed how the £5.1m was proposed to be used:

?       £947k to support service delivery, including the provision of transport for pupils of St Andrews and Millbrook primary schools and empty homes enforcement interventions, financial assistance, and debt recovery,

?       £1.9m to manage operational risks in the context of reduced contingencies and pressure on budget, and

?       The residual balance of £2.17m be allocated to the capital reserve to boost the overall level of capital headroom and, in doing so, provide additional capacity to be able to support several one-off projects in relation to the capital programme.

?       Details of the projects will be clarified by Cabinet in due course, but there is a commitment to ensuring that at least half of this is prioritised for highways department to address the most problematic areas of potholes and other issues.

Given the current external environment, the Leader also sought Cabinet’s approval to move a proportion of that money to third sector partners in order to help alleviate holiday hunger for six weeks across Newport, pending the final figure to be determined.

The total reserves balance on 31 March 2023, following the transfers set out within the report, would reduce to £138.9m from the balance of £151.9m a year ago. The significant movements were summarised within section 5 of the report.

Comments of Cabinet Members:

§  Councillor Harvey mentioned that holiday hunger was a real thing and 95% of families were in work poverty, which was likely to get worse, therefore the Cabinet Member for Community and Wellbeing fully endorsed the funding.

§  Councillor Davies also fully supported the proposed.  Families in Newport were used to receiving school holiday vouchers, and children had become reliant on Free School Meals (FSM) and families budgeted accordingly for it.  Welsh Government were no longer able to provide these vouchers, but this remained a priority and therefore the Cabinet Member for Education considered that it was excellent news that the Council would support these families during the school holidays.

Decision:

That Cabinet

1.        Noted the outturn position, which was subject to audit; and the major variances for the year (sections 1-3);

2.        Approved use of the underspend and other reserve transfers as set out in section 5 of the report, noting the resulting level of the Council’s general and earmarked reserves;

3.        Noted the school’s outturn and the position on the individual and total school reserves (section 3).