Agenda item

The Leader presented the report to Cabinet, which detailed the final outturn position of the Authority for the financial year 2021/22 that ended on 31 March 2022.

The revenue outturn showed an underspend of £18.4m, after planned transfers to and from earmarked reserves, which represented a 6% variance against budget.

The 2021/22 underspend of £18m had arisen, in the main, due to changes in service provision and working practices caused by Covid and the receipt of significant one-off Welsh Government funds over and above those amounts claimed via the Hardship Fund.  Specifically:

o   The financial assistance from the Local Government Emergency Hardship Fund, unexpected grant income received from Welsh Government late in the year resulted in core spend being displaced and funded via external grant; therefore, increasing the overall underspend.  This additional funding was in the region of £6m.

o   Significant underspends across all services in relation to staff savings resulting from recruitment delays and planned/normal services not being undertaken due to the prioritisation of Covid response work, and:

o   Linked to the above, underspend against the general revenue contingency budget and the council tax reduction scheme, and a surplus in relation to council tax income.  Unanticipated capital grants at the end of the year also impacted on the Council’s borrowing requirement therefore creating an underspend against the capital financing budget.  These were all non-service budget areas.

Whilst there was significant underspend overall, there were some one off and recurring issues that were raised within the report and would be addressed by officers, such as the delivery of savings.  Whilst 94% of the savings target was achieved in 2021/22, there were delays in implementation due to the impact of Covid and robust plans were needed to ensure that these savings were fully delivered for 2022/23.

There are a number of risks being monitored by the Executive Team for 2022/23, which had the potential to impact upon the financial position in this year. Section 4 of the report explained in detail the areas that currently present the most significant risk.

As school variances were managed via individual school’s balances, the overall underspend of £18m did not include the school’s position.  For 2021/22, schools collectively underspent by £6.1m which would see school balances increase from £9.6m to £15.7m as at the 31 March 2022.  Schools made significant in year savings, mainly due to over £4.8m of unexpected grants being received late in the year. 

The projected school balances improved significantly in 2021/22, largely due to that one off, non-recurring grant income.  It was anticipated however, that schools would utilise a large proportion of their balances during 2022/23 to deliver upon the requirements of that grant funding. Schools would need to robustly monitor and manage their budgets effectively to ensure financial sustainability going forward within their core funding.

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

Having this one-off funding available helped the city recover from the impacts of Covid and invest in other priorities.  The full extent of the underspend would not be allocated at this point, consideration was given to a range of issues:

§  Investing in local communities’ infrastructure to encourage greater pride and cohesion, and

§  Protecting the Council’s financial resilience and achievement of its priorities by enhancing its risk mitigation reserves.

Following this overview of our financial position, section 5 of the report details how the £18m is to be utilised.  In order to allow the Cabinet sufficient time to carefully consider the full extent of the in-year underspend a residual balance of almost £8m would be allocated by Cabinet during our September/ October meeting.  The Leader mentioned a few of the one-off investments as they are really important:

£2.5m for parks and open spaces - In addition to the £300k permanent funding over two years to maintain play areas and equipment, agreed as part of the 2022/23 budget, additional resource was allocated to support the positive health benefits of being outdoors and spending time in green spaces.

£500k for domiciliary care support would be set aside to enable a response to increasing domiciliary care support service capacity through funding driving lessons and providing access to electric vehicles.

£7.5m was allocated to the existing MTFP reserve to support current and future budget risks.

The total reserves balance at 31 March 2022, following the transfers set out within the report would increase to £149m.  The significant movements were summarised within section 5 of the report.

Comments of Cabinet Members:

§  The Deputy Leader referred to Education saving and the grant funding settlement of £8M WG which came late in the year, therefore needed to robustly monitor the budget.  Supportive approach was key to this and welcomed by the Deputy Leader.

§  Councillor Lacey supported the proposal especially with regard to the community cohesion grant.

§  Councillor Batrouni welcomed the budget and noted that the heavy investment going into parks showed the council’s support for green spaces. It was also a prudent financial planning boosting reserves as we headed to winter, therefore the Cabinet Member supported the report.

Decision:

That Cabinet:

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

2.                Approved use of the underspend and other reserve transfers as set out in section five 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 three).