Quarterly Integrated Performance 2020/21 - Q1
Decision Maker: Cabinet
Decision status: Recommendations approved
Is Key decision?: No
Is subject to call in?: No
A report to update Members on Finance, Risk
and Performance as at 30 June 2020.
The Head of Financial Services and Head of Business Improvement had submitted a report to update the Cabinet on Finance, Risk and Corporate Performance matters as at 30th June 2020.
Nigel Kennedy, Head of Financial Services, introduced the report. The position in relation to the General Fund was not significantly different from that previously reported in April. The Council was still sustaining heavy losses from commercial property rents, car parking and the commercial activity of its companies. The adverse variance for the present financial year was currently predicted to be about £8.9m. One change since the last report was the introduction of two new Government funding streams: £500m for expenditure of which the Council’s allocation was £267,000, most of the allocation having gone to County Councils and Unitary Authorities. The second related to income losses. Councils will be expected to absorb losses up to 5%, with the balance compensated to the level of 75%. Eligibility for this has yet to be finalised but it is most unlikely to cover commercial losses and will only be available until 2021. So while welcome it will still fall short of the estimated £24 million o increased costs and reduced income that the Council was forecasting for the next 4 year period.
For the Housing Revenue Account (HRA) there was an anticipated deficit of £2.2m, largely attributable to the consequences of Covid-19. There was no Government support for HRA related activity.
In relation to capital, slippage had increased by £24m from when last reported. This was largely accounted for by schemes which had been removed as no longer viable.
He drew attention to an increase in the costs (£423k) for the implementation of Aareon QL Housing Management Software. In relation to this there had had to be prolonged testing and increased consultancy fees. Progressing this project had been difficult. The company had been put on notice of an expectation of compensation for its part in the continually delayed introduction. The current focus, however, was on implementation by the latest anticipated go live date of October. It was noted that the Housing Company and Oxford Direct Services would also be dependent on Aareon QL and its delayed introduction was compromising their efficiency.
No Key Performance Indicators (KPIs) were included in this report, pending the imminent introduction of a new Council Business Plan with a revised set of KPIs.
Risks were recorded in relation to housing delivery; economic growth and development; and the ability to balance and deliver the financial plan. All of these had been significantly affected by Covid-19. In relation to housing delivery the Housing Company was reporting 9-12 month delays in its development projects.
The Chief Executive summarised the position about the extent of Government support in response to the consequences of Covid-19. The amount of funding promised for the present year would represent less than 50% of the costs to the Council and barely 20% of the anticipated costs over a four year period. This was significantly less than the Council had been led to expect at the outset.
While there was volatility in relation to income, data from the first quarter suggested that earlier forecasts about the immediate and longer term financial consequences of Covid-19 might prove to be optimistic. One of biggest risks now was that income losses wouldbe worse than projected; it was most unlikely that they would be better.
A significant area of activity in recent months had been the promotion and administration of business grants from Government to support local businesses. Some grants were still available to be claimed and it was important that they were given that Government would withdraw access to them after the end of August.
It was noteworthy that other councils were only now taking reports to deal with mitigating the consequences of Covid-19 whereas the City Council had made a start on this important work some months previously.
The Chair reminded Cabinet that she and others lobbied Government at every opportunity for proper recognition of the funding consequences of Covid-19 for the Council and re-emphasised the importance of encouraging businesses to take up those grants before they were withdrawn.
Cabinet resolved to:
1. Note the projected financial outturn as well as the current position on risk and performance as at 30 June 2020; and
2. Recommend to the Council an increase in the capital budget relating to the replacement housing management system of £423k funding as outlined in paragraph 16 of the report.
Publication date: 14/08/2020
Date of decision: 12/08/2020
Decided at meeting: 12/08/2020 - Cabinet