Agenda item

The Cabinet Member for Finance, Performance and Core Services presented a report on the Council’s revenue budget monitoring position for the 2020/21 financial year at 30 November 2020 (period 8).

As a consequence of COVID-19 and subsequent economic impacts, the Council hadexperienced a high level of additional costs and pressures including loss of service income from fees and charges. As a result of underlying financial pressures including increased costs, demographic and other demand growth, savings not yet delivered and other risks, there was an underlying budget variance of£5.743m, largely in the service areas of Care and Support and My Place.

The Cabinet Member commented that the period 8 monitoring report had been compiled prior to the latest lockdown and, consequently, the resultant latest financial effects would become clearer in the coming months.  As had been anticipated, the financial position had worsened by £1.3m since the last report in December 2020, meaning an overall expenditure variance of £27.913m.

Taking into account un-ringfenced grant support funding and claims as compensation for loss of income, the total predicted overspend as at the end of November 2020 was £3.568m.  The Cabinet Member pointed out, however, that the impact of increased infection rates and the continuing restrictions over the rest of the winter period meant that the year-end position could result in an overspend of circa £16m based on the most pessimistic projections, which would need to be met through a combination of budget support and General Fund reserves. 

The Cabinet Member highlighted the continuing financial difficulties that the Council had faced over the period of the pandemic and the longer-term legacy of austerity.  In that respect, he repeated his previous remarks about the lack of Government funding particularly for care and support services, highlighting the fact that the Government had again decided to place the onus on local authorities to raise additional income for those vital services through the Social Care precept on Council Tax.

The Cabinet Member also referred to the proposal in the report regarding the B&D Energy Business Plan for developing the Barking Town Centre (BTC) District Energy Network (DEN), which was approved by the Cabinet in March 2019.  Tenders for the construction of the underground pipework and substation infrastructure had come in over budget, mainly due to the small number of suppliers in the market and compounded by “risk pricing” associated with COVID-19.

B&D Energy proposed to contribute £267,000 from its operational budget towards the additional costs and was seeking an additional loan facility of up to £2.769m from the Council while it explored further options for potential Government funding to help bridge the gap

Cabinet resolved to:

(i)  Note the projected revenue outturn forecast for the 2020/21 financial year as set out in sections 2 to 4 and Appendix A of the report and the potential impact on the reserves position as set out in section 7 of the report,

(ii)  Note the update on key savings programmes, as set out in section 5 of the report,

(iii)  Note the update on the impact of COVID-19 and the lockdown, as set out in section 6 and 7 of the report; and

(iv)  Approve an additional capital loan facility of up to £2.769m to B&D Energy to bridge the funding gap in relation to Energy tenders as set out in section 9 of the report, subject to the condition that any third-party funding that was secured would reduce the loan amount required by the full funding amount.