Agenda item

The Leader presented the report.  The report detailed the final outturn position of the Authority for the financial year 2020/21 that ended on 31 March 2021.

2020/21 had been a year like no other.  As the Covid pandemic developed rapidly from March 2020, services were reprioritised to deal with the immediate response to support communities across Newport and this lasted, to various extents, for all of the financial year.  Although there were significant additional costs incurred to deliver this response to our communities these costs were funded by the Welsh Government.

Not only did the council work closely with the Welsh public sector to support communities and businesses across Wales, we also acted as an agent for the Welsh Government in processing £51m of support payments across a number of government led schemes plus a further £20m of business rates holiday for the leisure and hospitality sectors.

The underspend of £14m had arisen, in the main, due to services being diverted from their regular activities in order to prioritise Covid response. Specifically:

·        The council received in the region of £23m of one off Welsh Government funds to compensate the Council for additional costs incurred in response to the pandemic and the lost income experienced due to Covid restrictions;

·        There were significant underspends across all service areas due to changes in service provision and working practices, and;

·        Linked to the above, there was an underspend against the general revenue contingency budget, council tax reduction scheme and council tax income – all of which were non-service budgets.

There had however been some one off and recurring issues that were raised within the report that would be addressed by officers, for example, the delivery of savings.  Whilst 82% of the savings target was achieved in 2020/21, there were delays in implementation due to the impact of Covid and robust plans were needed to ensure that these savings were fully delivered in addition to the new savings agreed for 2021/22.

Furthermore, impact on operational services due to the continuing pandemic and the additional work this created was unknown at this time.  Although, the Welsh Government hardship fund was set to continue for the first six months of 2021, what happened beyond this time remained unclear.

Section 4 of the report explained in detail the areas that had the potential to affect the financial position in the current year, 2021/22 and these areas would continue to require specific oversight from the Senior Leadership Team.

As for the position of schools, these variances were covered by the school balances reserve, the overall underspend of £14m did not include the schools position.  For 2020/21 schools underspent by £8.4m which would see school balances increase from £1.1m to £9.5m as at the 31 March 2021.  Schools made significant savings during the period of school closures, not only as they had the ability to claim for additional Covid related costs, but also due to over £4.7m of unexpected grants being received in late March. 

The projected school balances improved significantly in 2020/21 and this was largely due to that one off, non-recurring grant income.  Schools would, however, need to robustly monitor and manage their budgets effectively to ensure financial sustainability going forward within their core funding.

As part of this meeting, we are being asked to approve how this underspend was utilised. 

Having this one off funding available was extremely helpful to support the recovery of the City and in reviewing the use of the underspend, it allowed the Cabinet, to consider how to:

·        Support and invest in our communities to recover post Covid and improve resilience;

·        Support and invest in the business community and local economy to recover post Covid;

·        Invest in local communities infrastructure to encourage greater pride and cohesion;

·        Invest in the City’s ‘green infrastructure’ and carbon reduction initiatives;

·        Invest further in the Council’s assets; and

·        To protect the Council by enhancing its risk mitigation reserves.

Following this overview of our financial position, section 5 of the report detailed how the £14m was to be utilised under specific headings linked to Covid related activity, community resilience and cohesion, service delivery and risk mitigation. These were:

·        £500k for the creation of a community recovery fund

·        £500k for the refurbishment & cleansing of open spaces across the city

·        A further £116k additional support for highways road repairs which took the total level of funding in this area in 2021/22 to £1m                                    

·        £1m green recovery funding for the implementation of decarbonisation schemes

·        Almost £300k for homelessness prevention

·        There would be an additional £800k for additional support to schools

·        Furthermore, over £4m would be set aside for capital investment to support the growth and regeneration across the city.

The reserves balance at 31 March 2021 following the above approvals would increase to £107m – aside from this year’s underspend other significant movements were summarised within the report in paragraph 5.4.

Comments from Cabinet Members:

§  Councillor Davies mentioned that Education were able to utilise the money in a positive way.  The Cabinet Member referred to the commitment of the Council to the socio economic duty from Welsh Government, which was welcomed by council and part of this duty was to ensure that we addressed lower levels of health, lower paid work in relation to the inequalities, people were at more risk to being victims of crime.  The Cabinet Member therefore welcomed the opportunity afforded by the Council to allow the Chief Education Officer to access funding of £765,000 for access to education and help reduce inequality.  In addition, the £801,000 was an unexpected spend at St Andrews Primary School but was necessary to ensure that KS2 children were kept together for education to continue in a safe and appropriate manner on the Mendelgief site.  The Cabinet Member praised Cllr Jeavons and the Head Teacher for ensuring this provision was maintained.

§  The Deputy Leader agreed that this was a year like no other and how Newport City Council was funded during the pandemic was unique. Figures were still rising from the delta variant and we were not out of the woods yet, however the council had ensured the prudent management of funding.

§  Councillor Truman referred to the following paragraph outlined in the report:This report makes recommendations to utilise the one off underspend available to help the City recover from the impact of Covid; invest in the local economy and to protect the Council by enhancing its risk mitigation reserves.  Staff had put themselves at risk at an early stage with speed and efficiency.  The Cabinet Member made reference to the Covid Recovery fund and encouraged business to apply for this. Also that it was right and proper for the Council to planning in place with the funding received with the need to save and invest for the future.

§  Councillor Hughes also referred to the Covid Recovery Fund and hoped that communities would take advantage of the scheme and would hopefully introduce some exciting projects.  The Cabinet Member also welcomed the Green Recovery Decarbonisation support that was available and the schemes in place to support the city to meet these requirements and showed the Council’s commitment to sustainability agenda.

§  Councillor Cockeram also added, in relation to overspend that some staff in children homes had to sleep over because there were on some occasions no one to replace them and issues getting agencies to cover shifts.  The Council would see better results next year because of the Children’s Homes now in place and the cost that the Council would have incurred if this service had gone out to independent agencies.  Foster care agencies had also reduced with independent foster carers from 73% to 60%, which might sound small however, it was having a positive impact and it was hoped that more independent companies would make this move.

§  The Leader thanked the Cabinet Member for highlighting the importance of moving to new models of delivery, which would be a far better experience for our service users and mentioned the value for money in light of this.  The Leader also took the opportunity to thank the work of foster carers for their love and kindness, care and support provided for children within Newport by taking them into their homes.

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 as set out in section 5 of the report and noted the resulting level of the Council’s general and earmarked reserves;

3.        Approved reserves transfers as set out in section 5;

Noted the school’s outturn and the position on the individual and total school reserves.