Issue - meetings

To receive and consider the attached report and recommendations (to follow) from the Cabinet meeting held on 1 December.

Purpose.

The purpose of this report is to update members on the current Revenue Budget position of the Council as at the end of the second quarter for 2020/21 in accordance with the proposals set out in the “Portsmouth City Council - Budget & Council Tax 2020/21 & Medium Term Budget Forecast 2021/22 to 2023/24” report approved by the City Council on the 11th February 2020.

RECOMMENDED that:

(i) The forecast financial shortfall of between £6.1m & £12.6m across the General Fund and the Housing Revenue as consequence of the Covid-19 Pandemic be noted.

 (ii) The following Revised COVID-19 Deficit Recovery Strategy be approved in the sum of £11.9m (being sufficient to cover the Council's pessimistic forecast COVID-19 related overspend of £11.8m):

·         Earmarking £5m of the Council's Corporate Contingency - leaving a residual £5m for all other known and unknown financial risks that may arise during the year

·         Earmarking £5m of the MTRS Reserve which currently holds an uncommitted balance of £8m - leaving just £3m only to fund future Spend to Save schemes and any costs of redundancies that may be required

·         Removal of Capital Schemes that have been funded by Revenue with a total value of £1.927m

·         Should any funding remain after meeting the financial impact of COVID- 19, that it be returned to the MTRS Reserve / Contingency to be available for any short-term legacy impacts of COVID-19 that continues into 2021/22 Confidential Draft - Subject to Change

(iii) In accordance with the Revised COVID-19 Deficit Recovery Strategy it is recommended that the schemes up to the value shown are removed from the approved Capital Programme.

The forecast General Fund outturn position, inclusive of funding Losses, for 2020/21 be noted:

(a)    The Base Case forecast of COVID-19 related overspending of £5,362,000 after expected government funding.

(b)    That the Base Case forecast overspending of £5,362,000 remains uncertain and in a pessimistic scenario could see that overspending rise to £11,800,000

(c)    The COVID-19 forecasts do not currently make any provision for additional costs or losses of income / funding that may arise from the new national restrictions.

(d) Non COVID-19 related underspending of £4,094,100

(e) Taking account of the likely range of COVID-19 forecast overspends, the combined overspending for the Council is forecast to be between £1,268,100 and £7,706,100.

(v) Members note that in accordance with approved policy as described in Section 8, any actual non COVID-19 overspend at year end will in the first instance be deducted from any Portfolio Reserve balance and once depleted then be deducted from the 2021/22 Cash Limit.

(vi)  Members note that at the time this report was prepared the Country had just entered a period of new national restrictions. Due to the wide ranging and rapidly changing implications arising from the COVID-19 Pandemic, the overall financial impact of COVID-19 over the remainder of the 2020/21 financial year and into the medium term remains very uncertain and maintaining headroom within the Revised COVID-19 Deficit Recovery Strategy is vital in order to ensure that the financial resilience of the Council is not compromised and the council continues to remain financially resilient into the medium term.

(vii) Directors, in consultation with the appropriate Cabinet Member, consider options that seek to minimise any forecast non COVID-19 overspend presently being reported and prepare strategies outlining how  any consequent reduction to the 2021/22 Portfolio cash limit will be managed to avoid further overspending during 2021/22.

(i)           The forecast financial shortfall of between £6.1m & £12.6m across the General Fund and the Housing Revenue Account as consequence of the Covid-19 Pandemic be noted

(ii) The following Revised COVID-19 Deficit Recovery Strategy be approved in the sum of £11.9m (being sufficient to cover the Council's pessimistic forecast COVID-19 related overspend of £11.8m):

·         Earmarking £5m of the Council's Corporate Contingency - leaving a residual £5m for all other known and unknown financial risks that may arise during the year

·         Earmarking £5m of the MTRS Reserve which currently holds an uncommitted balance of £8m - leaving just £3m only to fund future Spend to Save schemes and any costs of redundancies that may be required

·         Removal of Capital Schemes that have been funded by Revenue with a total value of £1.927m

·         Should any funding remain after meeting the financial impact of COVID-19, that it be returned to the MTRS Reserve / Contingency to be available for any short-term legacy impacts of COVID-19 that continues into 2021/22

(iii) In accordance with the Revised COVID-19 Deficit Recovery Strategy it is recommended that the following schemes up to the value shown are removed from the approved Capital Programme.

*Scheme is complete/substantially complete and unused resources can be released

(iv)  The forecast General Fund outturn position, inclusive of funding Losses, for 2020/21 be noted:

(a)  The Base Case forecast of COVID-19 related overspending of £5,362,000 after expected government funding.

(b)  That the Base Case forecast overspending of £5,362,000 remains uncertain and in a pessimistic scenario could see that overspending rise to £11,800,000

(c) The COVID-19 forecasts do not currently make any provision for additional costs or losses of income / funding that may arise from the new national restrictions.

(d) Non COVID-19 related underspending of £4,094,100

(e) Taking account of the likely range of COVID-19 forecast overspends, the combined overspending for the Council is forecast to be between £1,268,100 and £7,706,100.

(v)  Members note that in accordance with approved policy as described in section 8, any actual non COVID-19 overspend at year end will in the first instance be deducted from any Portfolio Reserve balance and once depleted then be deducted from the 2021/22 Cash Limit.

(vi)  Members note that at the time this report was prepared the Country had just entered a period of new national restrictions. Due to the wide ranging and rapidly changing implications arising from the COVID-19 Pandemic, the overall financial impact of COVID-19 over the remainder of the 2020/21 financial year and into the medium term remains very uncertain and maintaining headroom within the Revised COVID-19 Deficit Recovery Strategy is vital in order to ensure that the financial resilience of the Council is not compromised and the council continues to remain financially resilient into the medium term.

(vii) Directors, in consultation with the appropriate Cabinet Member, consider options that seek to minimise any forecast non COVID-19 overspend presently being reported and prepare strategies outlining how any consequent reduction to the 2021/22 Portfolio cash limit will be managed to avoid further overspending during 2021/22.