Report of The Head of Finance
To
Overview and Scrutiny Committee (Corporate Resources)
On
15 February, 2022	

REVENUE AND CAPITAL FORECAST YEAR-END POSITION, AT QUARTER 3

1.	SUMMARY

1.1	This report provides the Council’s forecasted year end position for the revenue and capital budgets for the 2021/22 financial year at the end of the third quarter (December 2021) of the financial year, and the impact on both the General Fund and Housing Revenue Account (HRA) level of general Balances.

1.2	Where there have been significant variations between budget and the actual forecasted position for each service, the explanations have been provided.

2.	RECOMMENDATIONS

2.1	That the General Fund and Housing Revenue Account Revenue forecasted outturn position for the 2021/22 financial year, at quarter three, be noted.

2.2	That the General Fund and Housing Revenue Account Capital forecasted outturn Position for the 2021/22 financial year, at quarter three, be noted

3.	BACKGROUND

3.1	The Council approved its revenue and capital budgets for the 2021/22 financial year at its full Council meeting on 27 January 2021, and this report sets out the forecasted outturn position against the budget, taken at the end of quarter three (December 2021).

3.2	A summary of the outturn position for each of the General Fund and Housing Revenue Account (HRA) revenue budgets and capital programme is contained within this report with a breakdown of significant variances (over £10,000) contained within the relevant Appendices.

3.3	Covid-19 

3.3.1	The 2021/22 budget for both General Fund and Housing Revenue Account (HRA) was approved during the Covid-19 pandemic, however it was not anticipated that restrictions would still be in place in this year.
3.3.2	Like other local authorities, Mansfield District Council has played a vital role in supporting people during this time of crisis, and as a result this has meant that the Council has incurred expenditure outside the normal course of its business; expenditure which was not anticipated when setting the budget.

3.3.3	The Council has been monitoring the impact of Covid-19 on its financial position, and providing monthly returns to Central Government.  The information contained within this report is based on the financial position provided as part of the Covid-19 return to Central Government as at 31st December 2021.

3.3.4	It is uncertain if there will be significant costs associated with the pandemic and related restrictions which will continue to be felt for the remainder of the financial year. 

3.4	General Fund Revenue – Forecasted Year-End Position (at the end of Quarter 3)

3.4.1	The General Fund contains all services that the Council is responsible for providing, other than services in relation to delivering its responsibility as a landlord to Council tenants.

3.4.2	For the 2021/22 General Fund budget, the Council set a balanced budget which relied on a corporate Transformation Programme aimed at generating additional income and delivering efficiency savings and cuts against Council services totalling £3.403million. 

3.4.3	At the end of the financial year, the General Fund is expected to be in a surplus position of £394,000 against its budget, which will mean the amount of general balances held will increase or the surplus is held within reserves for specific purposes. 

3.4.4	Table 1 shows a breakdown of the position by the Council’s Head of Service structure, with further information provided within the Appendices to this report of the significant variances by each of the Portfolios:
Table 1 – General Fund – Quarter 3, Budget Forecasted Position

(Where a (-) negative variance indicates a surplus against the budget, and a positive variance indicates a deficit against the budget).
3.4.5	As a result of the forecasted position, General Fund Balances are expected to increase as at 31st March 2022, as set out in the following Table:

Table 2 – General Fund Balances Forecasted to 31 March 2022 at Quarter 3

3.4.6	It is forecasted that by the 31 March 2022, General Fund Balances will stand at £2.741million which is £641,000 above the minimum level of balances the Council approved as part of the budget setting process.

3.5	Housing Revenue Account (HRA) Revenue – Forecasted Year-End Position (at the end of Quarter 3)

3.5.1	The Housing Revenue Account contains all the transactions relating to the provision, maintenance and management of the Council’s housing stock in its role as landlord.

3.5.2	The Council set a balanced budget for the Housing Revenue Account whereby all expenditure is paid for by dwelling rents and other fees and charges relating to its landlord duties. 

3.5.3	Table 3 shows the forecasted year end position at the end of quarter three for the Housing Revenue Account which is forecasting a year-end deficit of £1,464,000.

Table 3 – Housing Revenue Account – Quarter 3, Budget Forecasted Position

(Where a (-) negative variance indicates a surplus against the budget, and a positive variance indicates a deficit against the budget).

Table 3a – Housing Revenue Account – Quarter 3, Budget Forecasted Position

3.5.4	As a result of the forecasted deficit position, Housing Revenue Account Balances are expected to decrease at the end of the financial year, as set out in the following Table:

Table 4 – Housing Revenue Account Balances forecasted to 31 March 2022, at Quarter 3

3.6	Transformation 

3.6.1	The current 2021/22 budget includes £3.403million of transformation savings to be achieved for the General Fund, and £1.179million for the Housing Revenue Account. These savings are being achieved through a variety of workstreams, which will also reduce the target for 2022/23, as shown in Table 5.

Table 5 – Transformation Savings achieved, at Quarter 3

3.6.2	The Council will continue to progress its transformation programme in the final quarter of the financial year, which will reduce the savings target left to find, in both this financial year, and future years. 
	 
3.7	Capital Outturn Position – Forecasted Year-End Position (at the end of Quarter 3)

3.7.1	The current approved capital programme for 2021/22 is £66.405 million which includes carry forwards from 2020/21 of £9.578 million. Table 6 shows how the programme is split between the General Fund and the Housing Revenue Account and the current forecast position.

3.7.2	Due to the Covid-19 pandemic and subsequent economic restrictions, there has been slippage in the capital programme, which has affected both the General Fund and Housing Revenue Account. Spending against each scheme in the capital programme for quarter 3 is shown in Appendices 3 and 4.

Table 6 – Capital Programme – Quarter 3, Budget Forecasted Position

4.	OPTIONS AVAILABLE

This report is for information only.	

5.	RISK ASSESSMENT OF RECOMMENDATIONS

	There are no Medium or High risks associated with this report

6.	ALIGNMENT TO COUNCIL PRIORITIES

6.1	This report shows the outturn in respect of the budgets approved by Council which reflected the Council’s priorities at that time.

7.	IMPLICATIONS

(a)	Relevant Legislation: The Council has prepared the General Fund Accounts and Housing Revenue Account in accordance with the Statement of Recommended Practice and nationally approved Accounting Standards and Principles. This report indicates the outcome of these processes. 

(b)	Human Rights: No impact.

(c)	Equality and Diversity: No impact.

(d)	Climate change and environmental sustainability: No impact.

(e)	Crime and Disorder: No impact.

(f)	Budget / Resources: This report is to note the out-turn position on the General Fund Account and Housing Revenue Account.  Financial implications are contained within the report.

8.	COMMENTS OF STATUTORY OFFICERS

Section 151 Officer – Own report

Deputy Monitoring Officer – No specific comments

9.	CONSULTATION

9.1	Heads of Service and Service Managers have provided details and explanations for variances.

10.	BACKGROUND PAPERS

	None

Report Author	-	Chloe Edlin	
Designation	-	Group Accountant	
Telephone	-	01623 463145	
E-mail	-	Cedlin@mansfield.gov.uk	

Appendix 1

General Fund – Finance 

General Fund – Finance 
•	Council Tax Collection - Hardship, Care leavers Section 13A expenditure covered by reserves leaving savings in year.
•	Benefits Administration – received additional grants for the year.
•	Financial Services - agency costs covering maternity.
•	Insurance premiums are lower than anticipated at budget setting following the tender process.
•	Mansfield I-Centre – General ongoing repairs to the I-Centre part of which will be met from a reserve. Property services in negotiation with NCC about sharing the costs of this facility.
•	Commercial Development - increased costs include repairs & maintenance, utility costs, reduced fees and charges income due to vacant units.
•	Industrial Development - currently forecast lower for repairs and maintenance but this may change if urgent works required later in the year. 
•	Town Hall - due to this being the first year of lettings budgets were estimated. Some of these costs will be recoverable through tenant’s service charges.
•	Housing benefit subsidy - the forecast is based on 2021/22’s initial claim.
•	Benefits Admin New burdens fund - unanticipated grant received. 
•	Verify Earnings & Pensions - unanticipated income.
•	Covid-19 – Covid related expenditure. This is covered by additional grant.
•	Investment Properties Edinburgh - The rental income is forecast to zero as the property was part of a CVA and was then sold on 17 Jan 2022.
•	Investment Properties Doncaster – Rental start date for vacant units 2 & 4 delayed until April 2022 due to the pandemic resulting in loss of rental and fees and charges income.
•	Investment Properties Reading – reduction in expected rental income.

General Fund – Health and Communities – Significant Variances 

•	Emergency Planning – vacancy savings.
•	Palace Theatre various - closed due to Covid and less take up estimated once opened covered by the sales, fees and charges grant. 
•	Museum Administration - Reduction in NNDR charges. Also, less expenditure on buildings repairs and electricity due to closure as a result of the pandemic.
•	Recreation Admin Water meadows - less car park refunds being issued due to reduction in use as a result of Covid. This is offset by a reduction in car park income.
•	Licensing Act - as a result of Covid there is less income due to a reduction in the number of licensed events and businesses.
•	Taxi Inspection - less income due to a reduction in the number of drivers.
•	Environmental Protection - vacancy underspends.
•	ASB - vacancy underspends.
•	Neighbourhood Wardens - vacancy savings, restructure approved December 2021.
•	CCTV - higher costs from new cameras at civic and town centre.
•	
General Fund – Neighbourhood Services– Significant Variances 

•	Parks - vacancy savings.
•	Cemeteries – Income for sales of grave spaces and monuments is higher than original budget estimates. The pandemic has impacted on this service area and levels of demand.
•	Burial of the Destitute - There are fewer public health funerals in 2021/22 than in previous years. This is a very adhoc service for those who have no family or funds to pay for funeral expenses.
•	Public Conveniences - lower income due to Covid.
•	Refuse Collection Domestic – increased agency and vehicle hire due to Covid. Also overspending on bin replacements due to them coming to the end of life.
•	Refuse Collection Glass - Income higher than forecast as collection levels higher than anticipated for first year of operation.
•	Street cleansing - vacancy savings.
•	Markets Operations - lower income due to Covid. 
•	Car parks estimated - loss of income due to Covid restrictions and reduced footfall in the town centre, this will be offset against Sales, fees and charges grant.

General Fund – Planning and Regeneration – Significant Variances

•	Design Services - overspending on agency costs.
•	Development Management - overspending on agency costs.
•	Planning Policy - vacancy underspends.
•	Urban Regeneration - overspending on agency costs. 

General Fund – People and Transformation – Significant Variances

•	Business Transformation Unit – JADU subscription overspend until savings realised to cover the cost.
•	Customer Support - vacancy savings.
•	Civic Centre – agency costs due to vacancies.
•	Apprenticeships - new strategy being proposed to cover ongoing costs.

General Fund – Law and Governance – Significant Variances

•	Legal Services - unanticipated income from right to buy properties.
•	Democratic Support – Salary costs to cover extra duties to be recovered by elections salary savings.

General Fund – Housing – Significant Variances

•	Increased contribution for permanent and agency staff to deliver mandatory & discretionary grant schemes & additional assistance.

General Fund – Financing – Significant Variances

•	Council Tax income - estimated surplus distribution for 2020/21 was unknown at budget setting.
•	Housing Company Loan Interest - Interest accruing on loans to the Housing Company due to it taking longer than expected to sell the remaining houses.
•	PWLB Interest - saving on new borrowing expected due to slippage on the capital programme and higher than expected bank balances.
•	Interest paid Gross- HRA. - Interest paid to the HRA expected to be lower than expected due to low interest rates.
•	Non-Ring fenced Government Grants - we have received unanticipated Covid grants which have been offset against additional expenditure.
•	NDR Income - forecast is based on NNDR1 this information wasn’t available at budget setting.

Appendix 2
Housing Revenue Account – Dwelling Rents – Significant Variances

•	Dwelling Rents - the income variance is due to voids increasing since the budget was set. Actions are being taken by Housing to reduce the level of voids.
•	Temporary Accommodation/ Tideswell court - vacant units due to Covid.

Housing Revenue Account – Charges for Services and Facilities – Significant Variances

•	Landlord Services/ District heating some boiler houses have been demolished resulting in lower income and expenditure.

Housing Revenue Account – Repairs and Maintenance– Significant Variances

•	Housing Needs/ Hospital Discharge Scheme – Manpower budgets have been realigned from relevant service area meaning a saving has been realised.

Housing Revenue Account – Supervision & Management – Significant Variances

•	Assist Poppyfields – Additional contribution towards assist technology.
•	Landlord Services/ Housing General - increased contribution for permanent and agency staff to deliver mandatory & discretionary grant schemes & additional assistance.
•	Landlord Services/Repairs – increased material costs.
•	Landlord Services/ District Heating – some boiler houses have been demolished resulting in lower income and expenditure.
•	Services reviews - ongoing work to identify savings.

Housing Revenue Account – Rent, Rates & Taxes – Significant Variances

•	Housing Allocations Council Tax - MDC charge for void properties, some have been charged up to 300% above the normal annual cost.

Housing Revenue Account – Investment Income – Significant Variances

•	Item 8 Credit - interest paid to the HRA expected to be lower than expected due to low interest rates.

Appendix 3
Capital Programme – General Fund – Variances against budget

Appendix 4 - Capital Programme – Housing Revenue Account – Variances against budget