Agenda item

Report of the Director of Finance & Corporate Services (Treasurer) (RC/23/18) attached.

The Committee received for information a report of the Director of Finance & Corporate Services (Treasurer) (RC/23/18) that provided the Committee with details of the second quarter performance (to September 2023) against the agreed financial targets for 2023-24.

The Director of Finance & Corporate Services (Treasurer) advised that, at this stage in the financial year, it was projected that spending would be £0.817m less than the budget of £85.413 at £84.596 representing an underspend of 0.96% of total budget.  He drew attention to the point that the reserve of £2.8m to cover the cost of pay awards arising post budget in 2023-24 would not be required due to better than anticipated in year investment returns.  This money would be returned to Reserves at the year end.  It was noted that the Executive Board continued to bear down on costs across the Service to try to close the budgetary gap in 2024-25, 2025-26 and 2026-27 as outlined within the Medium Term Financial Plan (MTFP).

The main drivers for this forecast underspend in 2024-25 were:

·       Wholetime pay – underspend of £0.745m due largely to a number of vacancies being held within the Service pending a review of shift patterns;

·       Professional and Technical staff – underspend of £0.708m due largely to a number of vacancies being held albeit that it was acknowledged that there were key posts that needed to be filled in some areas in due course;

·       Transport running costs and insurance – underspend of £0.244m due largely to the reduction in wholesale fuel prices; and

·       Investment income – over recovery of £1.055m -  the budget was set when interest rates were still low but the recent rises had resulted in a much healthier return than had been anticipated.

The Committee asked if posts not being filled was just a short-term measure.  Confirmation was also sought on provision for the anticipated pay awards in 2023-34.  The Treasurer responded that no decision had been made on wholetime posts yet but there would be an update given at the Authority’s meeting on 11 December 2023.  It was anticipated that the vacancies held may not be needed but this decision had not been taken as yet.  He added that he was keeping a close eye on the position on pay awards with an assumption of a 5% increase for Grey Book staff.  He indicated that approval may be sought at the Authority’s budget meeting in February 2024 to consider the use of Reserves should the pay increase be agreed above the 5% provision made.

It was noted that total Reserves held were £27m at the start of 2023-24 anticipated to be £12.303m at the year end.  The Capital Programme had slippage reported due largely to delays in the arrival of new vehicles and the station rebuild at Camels Head which was anticipated to commence in quarter 1 of 2024-25.

Outstanding debt was due largely to the historic position for Red One Ltd. but a repayment plan was in pace and this was due to be fully repaid in April 2024.

In terms of the MTFP, a shortfall of £8.556m was anticipated in 2026-27 but this was cumulative.  Key assumptions did not include a £5 council tax increase.  Such an increase would bring in revenue of £1.3million towards the budget gap of £3m in 2024-25 although this did not factor in a contribution to capital from the revenue budget.

Reference was made to the council tax collection rate which was showing no surplus in 2023-24 and the impact of the pension detriment.  The Treasurer stated that he was not expecting a direct cost to the Service as a  result of the pension detriment as Government was making available grant funding to cover any increases together with providing assistance to support the administration of the backlog of cases.  An actuarial evaluation would be undertaken and it was more likely that the costs of the employer pension contribution rate would increase in future rather than a one off hit.

It was noted that a 98% return rate on Council Tax was expected for 2023-24 but not all of the returns had been received from District Councils as yet.  The Committee asked if the Treasurer was confident on achieving the £1.3m income anticipated from tax on second homes.  The Treasurer advised that the Finance Team had contacted each of the precepting authorities to discuss the level of tax to be received and this was a conservative assumption bearing in mind that these were new rules subject to interpretation.  Each district council had invoked this decision and an 80% assumption on second homes had been built into the calculation.  There was there was secondary legislation in terms of what was classified as a second home which could also be invoked if necessary but it was unclear who would be policing this matter.  The Treasurer reassured the Committee that the assumptions would be reviewed to ensure that a prudent approach was maintained.