The Director of Corporate Services presented the quarter one budget and treasury monitoring report of 2022/23, based on the forecast outturn as at 31 May 2022. It was explained that whilst it was early in the financial year, the report highlighted known pressures and savings and potential budget risks at this stage.
In relation to revenue budgets, the forecast outturn position was a net deficit from reserves of £38,000. There was a saving of £74k on the grounds maintenance contract following a tender exercise. The reduced costs were due to the economies of scale as the contractor who was able to secure all tendered lots in the Lincolnshire framework.
There was a pressure of £25k against the insurance premium budgets, again following a tender exercise. Fuel costs were reporting a pressure of £48k, this was based on the price paid per litre in May (£1.42) and the consumption during 21/22. The latest price paid in June was £1.61 per litre which would increase the pressure the £90k if that price was maintained for the rest of the year. Fuel was a significant budget risk and both factors would be monitored with an updated position reported at quarter two. For context, every 1p increase in fuel price equated to around a £200 pressure per month. Income from the sale of parking permits was forecast to be £42k below budget, as many sectors continued to work remotely.
Another significant budget risk was the potential pay award for 22/23. Salary budgets 2022/2023 were based on a 2% pay award. This was not expected to be sufficient based on current inflation rates, and feedback from the East Midlands Council pay briefing. £250k of the 2021/2022 surplus was approved as a budget carry forward into 2022/2023 which would allow for up to a 4% increase. However, there would be an ongoing budget pressure from 2023/2024 to be considered through the MTFP and Budget Setting process.
FEES & CHARGES
There were changes to some statutory planning fees which the council had been made aware of in recent weeks, which were included within the report at section 2.3.2.
Members were asked to approve use of the unapplied grants reserve. £122.4k being the balance of the Outbreak Prevention Grant paid to West Lindsey in 21/22, which would be spent on agency staff to carry out food safety inspections to help clear the backlog due to the pandemic, and to ensure obligations were met. It was noted there might be a small underspend on this which would be known later in the year.
The Capital Forecast Out-Turn for 2022/2023 was £15.018m, a variance of £0.445m against the approved budget of £15.464m.
The Committee was asked to approve the following amendments to capital schemes:
1) Unlocking Housing (living over the Shop) - capital budget reinstatement of £0.070m. This scheme was closed in 2021/2022 with the balance declared as an underspend and removed as it was grant funded. However, the grant funding deadline has been extended.
2) Smart Device Refresh-Members - bring forward budget of £0.028m from 2023/2024 into 2022/2023, as refresh due to take place this year.
The Chairman thanked the Director of Corporate Services and invited comments from the Committee.
Members expressed concern regarding the costs pressures, particularly the potential pay award and energy costs. It was recognised that there would need to be close monitoring and the use of independent assessments to manage the associated risks.
With regard to the grounds maintenance contracts, a Member of the Committee enquired whether the service provided would remain the same, even if provided at a lower cost. It was confirmed this was expected to be the case, with standards being monitored and addressed if necessary.
In relation to the food inspection backlog, Members were assured there was an action plan in place in order to work through the backlog over the coming months.
In response to a question as to when the third month of the quarter would be reported, it was confirmed this would be included in the next monitoring report. It was also confirmed that Members would be provided with details as to the amended Officer post within the homelessness prevention team, following a concern raised that specialist Officers were being replaced with generic roles and whether this would impact negatively on the work of the team.
The Chairman thanked all for their comments and, having been moved and seconded, took the vote, whereon it was unanimously
a) the forecast out-turn position of a £0.038m net deficit from reserves as of 31st May 2022 (see Section 2) relating to revenue activity, be accepted
b) the use of Earmarked Reserves (2.4.1) be approved
c) the use of Earmarked Reserves during the quarter approved by the Chief Finance Officer using Delegated powers (2.4.2) be accepted
d) the contributions to Earmarked Reserves (2.4.3) be accepted
e) the amendments to statutory fees and charges for planning applications (2.3.2) be accepted
f) the current projected Capital Outturn as detailed in 3.1.1 be accepted
g) the capital budget reinstatement of £0.070m as detailed at 3.1.3, and to bring forward budget of £0.028m from 2023/2024 into 2022/2023, as detailed at 3.1.2, be approved
h) the report, the treasury activity and the prudential indicators be accepted.
The Chairman placed on record her thanks to the Officers for their efforts with the reports and to the Director of Corporate Services for her clear presentation.