Agenda item

Report of the Chief Executive on the revenue outturn position for the financial year 2020/21 and outlines the main variances from the original budget for both the General Fund (GF) and Housing Revenue Account (HRA).

(1)     Cabinet noted the revenue outturn position for 2020/21.

(2)     Cabinet approved the movements on earmarked reserves as detailed in section 3.4 of the report.

(3)     That delegated authority be given to the Section 151 Officer to adjust the 2021/22 budget for items of income and expenditure rolled forward through earmarked reserves.

(4)     Cabinet noted the position on debts set out in section 5 of this report.

Report of the Chief Executive on the revenue outturn position for the financial year 2020/21 and outlines the main variances from the original budget for both the General Fund (GF) and Housing Revenue Account (HRA).

The Council has suffered an adverse variance at this level of £3.7M, with a Covid related adverse impact of approximately £4.0M offset by £300k of other positive variances.

Adverse Covid impacts included lost commercial rental income of approximately £500k, (against our original estimate of £450k), lost business centre income of £200k, lost recoveries from court closures of £368k, additional expenditure related to homelessness of £966k, lost parking income of £892k, and lost income from the closure of Campus West of £1.1M.  However, the additional support required to Greenwich Leisure Limited (GLL) had not resulted in a significant cost to the extent originally estimated.

The £966k impact related to homelessness is the extent to which housing benefit payments have exceeded amounts received from the Department for Work and Pensions (DWP).  This adverse impact has risen sharply from that estimated at Quarter 3, and not all of this may be Covid related.  An officer group is currently investigating this issue.

The estimated adverse Covid impact has been offset by local authority support grants received of £1,790k, fees and charges compensation from central government of £1,460k, as well as a drawdown from a previously established Covid earmarked reserve of £222k.

This leaves an “uncovered” Covid adverse variance for 2020/21 of just over £500k, most of which related to the loss of commercial rents, which has not been covered by government support.

Council Tax receipts are shown as on budget for 2020/21.  Bear in mind that any lost revenue in 2020/21 will only impact us over the three years from 2021/22 onwards.  We had originally estimated a loss of £500k in respect of 2020/21 Council Tax, but this now looks overly pessimistic.

Although Business Rates are shown as being £14.6M, or £9.6M over budget, in reality this is simply a timing difference due to the way we are required to present Business Rate reliefs.  The reliefs received and administered in 2020/21 will be charged out in the next 3 years via the Collection Fund, so have been transferred to an earmarked reserve.  Business Rates should be seen as on budget for 2020/21, as any loss will only be borne in the three years from 2021/22 onwards.  We have estimated a future loss of £1.0M in respect of 2020/21.

Overall, as can be seen in Appendix A1, we have drawn down £1.6M from the General Fund reserves.  This results from the contribution to the pension reserve of £1.2M, plus uncovered Covid losses, partially offset by some positive other variances.  This leaves us with General Fund reserves at the start of the 2021/22 year of £6.9M.

We are increasing the Covid pandemic earmarked reserve by £242k, leaving a balance of £425k.  This is certain to be needed in 2021/22, as the level of government support for next year, beyond that already announced, is uncertain. Deferred Council Tax and Business Rate loss from 2020/21 will start to impact, and Covid related Business Rate reliefs are scheduled to end this Summer. Furthermore, it is very likely that loss of commercial rental income will carry on into 2021/22, and this element is not covered by government support.

As noted in the report, debtors continue to rise.  The most difficult area here is, unsurprisingly, the difficulties that a number of our commercial tenants face as a result of Covid restrictions.  This problem will persist into 2021/22.   We continue to manage debtors closely, and, where applicable, we are encouraging tenants to agree payment plans with us.   

There are no substantial variances in the HRA, as rent collection continues to hold up, to an extent that the necessary increase in the bad debt provision is less than originally forecast.  The announcement that Right to Buy receipts can be held onto for somewhat longer has relieved some of the previously estimated Covid related pressure on the HRA, and the latest projection indicates that there is no imminent need to remit such receipts to the government.

Considerable Covid related uncertainties remain, and these will persist into the current financial year.  But we can be pleased that, for financial year just ended, thanks to proactive financial management, previously accumulated reserves, and government support, we have weathered the storm in 2020/21 without having to cut frontline services.

The Leader thanked the Executive Member (Resources) and Officers for their hard work.

RESOLVED:

(unanimous)

(1)   Cabinet noted the revenue outturn position for 2020/21.

(2)   Cabinet approved the movements on earmarked reserves as detailed in section 3.4 of the report.

(3)   That delegated authority be given to the Section 151 Officer to adjust the 2021/22 budget for items of income and expenditure rolled forward through earmarked reserves.

(4)   Cabinet noted the position on debts set out in section 5 of this report.