Agenda item

Revenue & Capital Budget Monitoring, Cash Limits and Virements – April to September 2022

The attached report presents the financial monitoring information for the Authority as a whole for the financial year 2022/23, using information available as at the end of September 2022.


Cllr Richard Samuel introduced the report, moved the officer recommendation and made the following statement:


“It was astonishing to me, when I took office, that the previous administration failed to produce quarterly budget statements. I was clear that every quarter needed to be reported to ensure transparency but also that management actions to deal with problems with budgets was initiated.


Today’s report I regret to say reflects the extremely difficult financial environment all councils are operating under at present.


We are expecting that, without direct intervention, the council is on course to overspend its budget by £4.5m this financial year.


There are four areas of variance causing this problem:


·  Surging demand for Children’s Services and the very high costs of placement accommodation charged by the private sector. A £5.4m overspend is expected.

·  Contract inflation, passing on the high levels of inflation in the national economy now exacerbated by Kwarteng’s disastrous foray into free market economics.

·  Hikes in energy costs.

·  The impact of the nationally agreed local government pay settlement creating £2.2m of unbudgeted pressure.

These pressures are mitigated to some extent by strong income from Heritage and the Commercial Estate and Parking.


I am not prepared to reach year end with such a deficit and so the management team have been requested to establish a range of measures to control and reduce in year spending, which will be managed through a Recovery Board reporting to me and the Leader. Measures such as a vacancy freeze, and limits on discretionary spending can be expected. I will report the impact of these measures to the February Cabinet meeting.


Finally, it is not all bad news. I can report that the 22/23 savings target is largely on schedule to be met.


There are some specific virements to note together with the changes to the capital programme. It is also pleasing to note that the increased costs for repairing Cleveland Bridge will not fall on local taxpayers as it has been met by external grant.”


Cllr Tom Davies seconded the motion and made the following statement.


“Colleagues, many of the financial and service demand pressures - especially in children’s services, highlighted in the Medium Term Financial Strategy have manifested themselves in the current year and are reflected in this quarter two monitoring report.

And I would just like to pause and reflect on the scale of some of these challenges - take children’s services, for example, with the report showing a 38% increase in the number of children in residential placements from 2021/22. This is just one example of the nature of additional service pressures which the Council is currently facing as we work to support our residents and community at this time.

My colleague, Richard Samuel, has provided further context and detail behind our current financial position, but I would again note that the Council’s leadership has already taken action to put a framework in place, through the Financial Recovery Board, to manage these pressures and work over this next quarter to further develop mitigating actions. We are also fortunate that the sound financial leadership over the past three years means that we are able to draw upon our contingency reserve to support our work at this extraordinary time if required. 

With my thanks to Richard and the officers for this paper and for all of their work over the coming weeks and months.”

RESOLVED (unanimously):


(1)  To note the 2022/23 revenue budget position as at the end of September 2022.

(2)  To note the revenue virements listed for information only in Appendix 3(i) of the report.

(3)  To note the capital year-end forecast detailed in paragraph 3.26 of the report.

(4)  To approve the allocation of £3m CRSTS Highways Maintenance Challenge Fund grant to fund the increased cost of the Cleveland Bridge repairs as highlighted in paragraph 3.27 of the report. 

(5)  To note the changes in the capital programme including capital schemes that have been agreed for full approval under delegation listed in Appendix 4(i) of the report.


Supporting documents: