Agenda item

Report of the Chief Executive on the revenue outturn position as at 30 June 2021 (Quarter 1) for the financial year 2021/22 and outlined the main variances from the original budget for both the General Fund (GF) and Housing Revenue Account (HRA).

(1)   Cabinet noted the revenue forecast outturn position as at Quarter 1.

(2)   Cabinet approved the virements, detailed in section 3.2.

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

Report of the Chief Executive on the revenue outturn position as at 30 June 2021 (Quarter 1) for the financial year 2021/22 and outlined the main variances from the original budget for both the General Fund (GF) and Housing Revenue Account (HRA).

General Fund

The original budget for the current year forecast a drawdown from non-ring-fenced General Fund reserves of £220,000.  At the time of setting the budget, it was unclear how Covid might continue to impact the Council beyond the end of 2020/21, so the budget was largely drawn up on a business as usual basis, though with some funding being put aside in earmarked reserves to cover potential future impacts.

The first three months of 2021/22 had seen further Covid losses, mainly to the income, of a forecast £2M on a full-year basis.

The principal components of this were loss of Campus West income of £1.1M, loss of parking income of £538,000, delays to the opening of Hat Tech of £144,000, and housing and homeless costs in excess of subsidy of £100,000.

Partially offsetting these losses was anticipated government support of £300,000 through the Sales Fees and Charges (SFC) scheme.  But this scheme only covered losses up to 30 June, 2021, whereas in 2020/21 it covered the whole year.

The net impact from the above of £1.7M on the General Fund would be partly absorbed by drawing down £425,000 of earmarked reserves for Covid established at the end of last year.  Furthermore, a planned transfer to earmarked reserves of £610,000 in 2021/22 will not take place now.

The net result was that the Council were now forecasting a drawdown from non-ring-fenced General Fund reserves of £878,000, instead of the £220,000 originally envisaged.

After only one quarter, it was customary to note a number of risks and opportunities without actually adjusting the forecast outturn, as to do so would be premature.  This was true of 2021/22, but whereas in past years, such items would frequently form into positive variances as the year went on, but it might not be the case this year.

As noted in the report, risks still existed to originally envisaged Greenwich Leisure Limited (GLL) savings, and to originally envisaged increases in parking income.  Furthermore, risks still exist to commercial rental income, although collections were holding up.

In the last quarter of 2020/21, a significant negative variance occurred on housing and homeless costs not covered by government grants.  Although this was not thought likely to recur on such a scale in 2021/22, analysis of the issue, which mainly concerns costs associated with supported housing providers was still continuing.

Councillor D.Bell, (Executive Member, Resources) believed the approach of not adjusting the forecast prematurely at Quarter 1 until more information was available was correct, and consistent with past years.  But thought that we should all be conscious that the risk to the General Fund was probably on the downside for the rest of the year.

We had always stressed that the financial impacts of Covid upon the Council would lag the pandemic itself, and this was now proving to be the case.

Nonetheless, Covid impacts should start to lessen, and the Council’s financial position remains strong.

Housing Revenue Account

The forecast drawdown from HRA reserves is £87,000 greater than budgeted, as set out in the report.

In Appendix D3, an adverse variance of £415,000 was highlighted on Mears responsive repairs.  Part of this was due to catch up from Covid delays, and so was unlikely to recur through the whole year, and no adjustment had yet been made to the HRA forecast for this.  Nevertheless, there was quite likely to be an adverse variance on a whole year basis, and an adjustment would be made to the forecast at Quarter 2 if necessary.

RESOLVED:

(unanimous)

(1)   Cabinet noted the revenue forecast outturn position as at Quarter 1.

(2)   Cabinet approved the virements, detailed in section 3.2.

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