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Agenda item

Update on the Council's 2020-21 Revenue Budget

Report of the Head of Strategic Finance

 

Supporting documents attached:-

 

Revenue Budget and Capital Programme Monitoring 2020-21

Capital Approvals for Month 2  2020-21

Minutes:

6.1

The Committee received a report of the Head of Strategic Finance containing an update on the Council’s 2020/21 Revenue Budget.  Appended to the report, as supplementary documents, were reports on the Revenue and Capital Budget Monitoring 2020/21, as at 31st May 2020, and a report on the Capital Approvals for Month 02 2020/21.

 

 

6.2

David Phillips (Head of Strategic Finance) introduced the report, indicating that, since the 2020/21 Revenue Budget had been agreed at full Council on 4th March 2020, the City and the Council had been hit by the Covid-19 pandemic, which had had a very significant effect on the Council’s finances and the delivery of its budget, and that the report provided an update on these effects.

 

 

6.3

Also in attendance for this item were Councillor Terry Fox (Cabinet Member for Finance, Resources and Governance) and Ryan Keyworth (Director of Finance and Commercial Services).

 

 

6.4

Members of the Committee raised questions, and the following responses were provided:-

 

 

 

·            There was a considerable amount of planning work being undertaken, including working with the Sheffield City Region and other core cities, in terms of looking at future budget planning.  The Council was also working with the Outbreak Control Board, the Clinical Commissioning Group and other partners in this regard.  Specific work was being undertaken to look at how statutory services could be underpinned and, in the light of an expected second wave of Coronavirus, the Council was taking things very seriously.  The Council was able to use some of its reserves, and currently had sufficient stocks of Personal Protective Equipment (PPE). 

 

 

 

·            The Outbreak Control Board was currently looking at the external risks caused by the Covid-19 pandemic, and the challenge for the Board was to try and predict the impact of a second wave of the pandemic.  The City had no experience of anything like this to work from, and it was very difficult to try and estimate and/or predict the consequences of a second wave, both on the Council and the City as a whole.  The Council was looking initially at controlling the things it was able to and, as part of this work, was monitoring the data on a regular basis.  There was now a significant stock of Personal Protective Equipment (PPE) in the City, and across South Yorkshire, with enough supply to keep all the Council services, including the care service, supplied for around three months.  This would mean that the Council would not be subject to the challenges faced early on in the pandemic.  In terms of internal risks caused by the pandemic, the Council had undertaken considerable work over the last five months, which had included allowing meetings such as this to take place remotely.  In March 2020, there had only been capacity for around 100 members of staff to work from home but now, everyone who wanted to work remotely from home was able to.  The aim was about making the Council as resilient as possible, and to allow staff to continue working from home, whilst planning for a second wave at the same time. 

 

 

 

·            When decisions were taken by the Incident Management Group, all financial implications had been considered, albeit at some speed.  The figures in the report included estimates regarding the implications of such decisions.  The financial position at the end of July 2020 was not, in fact, materially different to the current position.  At the height of the pandemic, the Council had been forced to take significant action to support the organisations that provided care to the most vulnerable in the City, both with regard to care homes and homecare, and it had been agreed to increase the funding to such organisations to ensure they remained financially solvent.  Care home occupancy had actually dropped by around 10%. The Council had now got to work closely with the various services and partner organisations to understand how it would move back to a more ‘business as usual’ footing, and understand the extent to which this was possible, including the understanding of timescales.  The Council had built in estimates to this year’s financial figures, and was now working with the various services and providers in connection with the 2021/22 budget process, in order to understand the implications of this.  There were concerns with regard to the medium term going forward, and managers had been asked to look at all potential risks, including capital costs.  There was an acceptance that the Council could not continue working on the budget process as it had done in the past.

 

 

 

·            The Council was looking at every possible way of making savings, and all managers had been requested to look into this.  Regular meetings were held with the Directors in the Place and People Portfolios, together with the respective Cabinet Members, with the Directors being constantly challenged in terms of savings.  Communications had been sent to Government Ministers regarding the Council’s concerns relating to its finances, and was awaiting a reply.  The Council was looking at a co-ordinated approach in terms of lobbying the Government with other core cities, who were in a similar position. 

 

 

 

·            The Council was monitoring the effects of lost revenue in terms of business rates and Council tax very closely, and updating estimates moving forward.  The Council had also been in contact with the Government regarding this issue, who had allowed the Council to spread the impact of the lost income over a period of a few years.  Work was also being undertaken to assist businesses in connection with their recovery after the pandemic.  Some sectors had been granted exemptions in respect of business rates, such as the retail sector, and the Council always worked with companies regarding the payment of business rates, with enforcement action regarding non-payment always a last resort. 

 

 

 

·            Overspends for 2020/21 not relating to the Covid-19 pandemic were currently forecast to be £5.9 million mainly due to non-Covid additional pressures in physical and learning disabilities (£2 million), unfunded Air Quality scheme costs (£1 million) and staffing pressures within Customer Services and Human Resources (£1 million).  There was more detail regarding this breakdown of the figures in the Month 2 report submitted to the Cabinet in July 2020.  The Council’s agreement with Sheffield City Trust (formerly Sheffield International Venues) was due to end in 2024, and discussions had commenced with regard to where the Council wanted its leisure facilities to be going forward.  The Covid pandemic had brought this timeline forward. 

 

 

 

·            The overspend for 2020/21 was slightly higher, but not markedly out of line with past overspends, therefore the Council was not proposing anything significantly different in terms of dealing with this.  The Council normally expected a somewhat lower overspend than £17 million at this stage of the year, and whilst the non-Covid-related overspend of £5.9 million was not considered too high, the Covid-related overspend pushed the figure up to a higher level.  There was a need to sort things out in the medium term and as part of this work, the Council would continue to lobby the Government in terms of its funding allocation.

 

 

 

·            Approximately £15 million of savings had been approved in this year’s budget, and the ability to deliver them had been severely affected by the Covid-19 pandemic.  The challenge now for the Council was to enable ‘business as usual’ activities to restart again.  The Council was challenging the delivery of savings, hence the regular monthly meetings arranged to monitor the position.  The capacity and resources issues faced by the Council had been major, and thanks should be conveyed to those members of staff who had been deployed or who had, and were currently, working very long hours.  It had been a major achievement  to go from a few hundred members of staff being able to work from home to around 6,000 staff. 

 

 

 

·            The Business Recovery Group, which was separate to the Incident Management Group, was currently looking at the longer-term recovery of the City.

 

 

 

·            There had been a huge drop in income from car parking charges, although this figure was slowly increasing.  The Director of City Growth was monitoring this issue. 

 

 

 

·            The Council was looking at areas where there were underspends, although such underspends were relatively minor.  Work was being undertaken to look at the detail of the budget and identify those areas having underspends.  Work would then take place to ensure that managers were very clear that they did not see this as an opportunity to take advantage of such underspends when the pandemic was over, and work was taking place with Members on this.

 

 

 

·            It was accepted that the Council needed to take the opportunity to change the organisation for the better, following the pandemic, and the Business Recovery Group was already looking at this.  It had been accepted that there would be a big culture change within the organisation following the pandemic, particularly with regard to staff working from home.  It was not likely that, in some areas of the Council, staff would return to working in the office five days a week.  There was also a need to look at the Council’s buildings, and what they could be used for, with any resultant savings needing to be reprioritised. 

 

 

 

·            The Cabinet Member for Finance, Resources and Governance was meeting monthly with the Directors in the People and Place Portfolios and relevant Cabinet colleagues in connection with monitoring the budget position.  The issues highlighted within the People Portfolio included the increase in staff workloads, children’s services and SEN transport costs, and those in the Place Portfolio included issues regarding Council housing, track and trace facilities and the Change Programme.  All Cabinet Members and Directors were being challenged in terms of the budget position.  The Council was looking at a long-term vision, accepting that there would be major changes to working practices after the pandemic. 

 

 

6.5

RESOLVED: That the Committee:-

 

 

 

(a)        notes the contents of the report, together with the supporting documentation - Revenue Budget and Capital Programme Monitoring 2020/21 and Capital Approvals for Month 2 2020/21 - now submitted, together with the responses to the questions raised, in particular (i) the additional pressures caused by the Covid-19 pandemic and (ii) that the Council's current level of reserves provides time for action to be taken strategically in response to the Covid-19 pandemic, and the more general financial position, but that actions will be needed, on current projections, to maintain financial stability in the medium-term, with such actions including further co-operation with other key stakeholders, in particular, the NHS; and

 

 

 

(b)        requests:-

 

 

 

(i)               that the Council continues lobbying the Government in connection with making a case for further funding towards the costs created as a result of the Covid-19 pandemic, with particular emphasis on pressures regarding Adult Social Care; and

 

 

 

(ii)              arrangements be made for a standard item on Budget Monitoring on all agendas for future meetings of this and the four Scrutiny and Policy Development Committees, with the individual Committees deciding on how they wished to deal with this issue.

 

Supporting documents: