The Outturn and Performance Report attached will be considered by Cabinet on 21July 2021. Nigel Kennedy, Head of Financial Services, and Anna Winship, Management Accounting Manager, will be available to present the report to the Panel and respond to any questions.

The Panel is asked to note the report, having any agreed any recommendations to Cabinet arising from it.

Anna Winship, Financial Accounting Manager, presented the Financial Outturn Report 2020/21 to the Panel.

Headline figures showed a deficit of a little over £2m for the General Fund owing to the effect of Covid, with the recommendation being that, as previously agreed, the deficit would be covered by the use of reserves. The level of reserves stood at £68.4m, of which 17% was reserved for Covid-related costs. It was hoped, however, that reserves in later years would be replenished. The HRA showed a favourable variance of £8.4m, with £1.9m to be carried forward and £6.5m being transferred to the HRA reserves for future capital spending. Capital Spending stood at £68.8m, a favourable variance against the latest budget forecast of almost £10m.

Within the General Fund most service areas reliant on income were showing adverse variance owing to having not achieved the expected income targets. Big drops in income were noted particularly with regards to Building Control, Community Services (particularly the Town Hall), car parking and corporate property. Bad debt provision was being made for the income not received in the last year from the Council’s corporate tenants. Further, no interim dividend was declared by ODS.  In addition, the local cost of benefits showed an adverse variance of £0.85m, arising from loss of subsidy due to local authority error of around £350k (0.5% of total spend and a figure lower than many recent years) and a reduction in overpayment income raised compared to last year, due to increases in benefit entitlement and reduced ability to collect arrears, all in relation to COVID 19. Favourable figures relating to interest payable arose because of not having to borrow as much as anticipated. Another favourable variance, on funding arose because higher losses from car parking meant an increase in government support for lost sales, fees and charges. Although presenting as a favourable variance, overall the recompense of the government did not cover losses which precipitated the government support.

Councillor Amar Latif joined the meeting at this point

In response the Panel raised a number of questions, including the degree to which income losses could certainly be apportioned to Covid and not be masking alternative issues. Officer views were of the view that losses in income were directly attributable, the rapid rise non-payment of rent in commercial properties, the closure of the Town Hall and loss of income, and the precipitous drop in car parking coinciding precisely with Covid. Future expectations of commercial property arrears were discussed, with the existing bad debt provision being expected to be fully used. When setting the budget, a long-term impairment of income of £2m was forecast. Other income streams were anticipated to bounce back more fully and swiftly.

When set against other authorities Oxford’s position, though not easy, was better than many. In the last week a further Council, Slough Borough Council, had had to issue a s.114 notice, declaring its inability to deliver a balanced budget. The Audit Committee had also raised similar questions, and the Council’s auditors had shared a similar view. That said, the Council’s strategy of trading to underpin service levels necessarily involved greater inherent risk than similar-sized councils choosing to make cuts to services instead.

The Council’s contractual relationship with Fusion was questioned. The contractual management fee scheduled to be paid by Fusion had been mutually agreed to be waived for the remainder of the contract, expiring in 2024.

The quantum of government support for sales, fees and charges was raised. It was confirmed that approximately £7m had been received. Contrary to previous expectation the Council was not anticipating any audit in regards to that figure, providing greater certainty that the figure would not alter. The Panel was informed that losses incurred after the first quarter of the current year would cease to be reimbursed by government.

Anna Winship, Management Accountancy Manager introduced the Capital Spending element of the report to the Panel at this point. Budgeted spend was £143m, with actual spend being almost £69m and a slippage of £74m. The majority of the slippage, and in particular where building was concerned, was related to Covid with access to buildings and supply chain issues proving very disruptive. On the HRA capital scheme, a lot of the rolling repairs made to Council homes stopped being delivered by ODS to protect both staff and tenants from infection risks. The programme was being scheduled to be caught up over the coming 24 months.

An update was requested by the Panel concerning the implementation of the Aareon QL system. The system did go live on 18^th of May following a significant delay, but there had problems since the go-live date, including difficulties paying suppliers and the Councils wholly owned company ODS for work done, as well as the provision of financial information to both ODS and the Council.. A team of officers from ICT, Housing, Finance, and from ODS and the IT supplier Aareon were working together on a project team to address those problems. The Council was seeking to mitigate these problems by making direct bank payments manually, but it was resource-intensive for all areas involved and unsustainable. Latest forecasts was the ‘business as usual would be achieved from September. The Panel requested an update on progress at its next meeting.

Discussion was held over the challenges of maintaining income from Council tenants whilst at the same time protecting those in arrears from homelessness at a time of vulnerability. Due to changes in processes to provide earlier intervention the Council had actually improved its collection rate despite Covid, all whilst not evicting tenants or taking other enforcement action. The Panel expressed a wish that lessons from this be learnt for the future and expressed praise for the work of the team responsible.