Public report
Cabinet
Cabinet 29
th
August 2023
Council 5
th
September 2023
Audit and Procurement Committee 2
nd
October 2023
Name of Cabinet Member:
Cabinet Member for Strategic Finance and Resources - Councillor R Brown
Director Approving Submission of the report:
Chief Operating Officer (Section 151 Officer)
Ward(s) affected:
City wide
Title:
2023/24 First Quarter Financial Monitoring Report (to June 2023)
Is this a key decision?
No
Executive Summary:
The purpose of this report is to advise Cabinet of the forecast outturn position for revenue and
capital expenditure and the Council’s treasury management activity as at the end of June 2023.
The net revenue forecast position after management action is for spend in 2023/24 of £12.1m over
budget. At the same point in 2022/23 there was a projected overspend of £9.5m.
The Council continues to face budget pressures within both Adults and Children’s social care which
together account for £11m of the underlying overspend. The overwhelming majority of this is caused
by the continuing high level of inflation within the economy and difficult conditions within social care
markets. Other smaller but still significant overspends are also being reported in Business
Investment and Culture, Transportation and Highways, and Streetscene and Regulatory Services.
Recent weeks have seen a number of councils with social care responsibilities report large in-year
budgetary difficulties and it is clear that there are systemic problems for the whole sector which
represent a serious threat to its financial sustainability. The Council’s position above reflects a
number of largely one-off actions that have already been taken to reduce the overspend. As the
underlying position is significantly higher than has been experienced in recent years, further
urgent action is proposed to address the pressure in order to prevent the 2024/25 position
increasing to unmanageable levels.
The Council’s capital spending is projected to be £163.6m and includes major schemes progressing
across the city. The size of the programme and the nature of the projects within it continue to be
fundamental to the Council’s role within the city. Inflationary pressures are also affecting capital
projects. The assumption is that stand-alone projects that are already in-progress will be delivered
as planned but that future projects that have not yet started may need to be re-evaluated to
determine their deliverability within previously defined financial budgets.
The materiality of the emerging financial pressures, both revenue and capital, has renewed the
imperative to maintain strict financial discipline and re-evaluate the Council’s medium-term financial
position. This will be a priority across all services as the Council develops its future budget plans in
the coming months.
Recommendations:
Cabinet is requested to:
1) Approve the Council’s first quarter revenue monitoring position and endorse the proposal
for officers to seek to identify further ongoing service options to mitigate the position in
conjunction with Cabinet Members as appropriate.
2) Approve the revised forecast capital outturn position for the year of £163.6m incorporating:
£14.0m rescheduling from 2022/23 outturn, £29.7m net increase in spending relating to
approved/technical changes, £0.4m underspend and £38.9m of net rescheduling of
expenditure into future years.
Cabinet is requested to recommend that Council:
1) Receive and note the decisions of Cabinet as outlined in recommendations 1) and 2) above.
Council is recommended to:
1) Receive and note the decisions of Cabinet as outlined in recommendations 1) and 2)
above.
The Audit and Procurement Committee is requested to:
1) Note the proposals in the report and forward any comments they wish to raise with the
Cabinet Member for Strategic Finance and Resources.
List of Appendices included:
Appendix 1 - Revenue Position: Detailed Directorate breakdown of forecast outturn position
Appendix 2 - Capital Programme: Analysis of Budget/Technical Changes
Appendix 3 - Capital Programme: Analysis of Rescheduling
Appendix 4 - Capital Programme: Analysis of Over / Under Spend
Appendix 5 - Prudential Indicators
Background papers:
None
Other useful documents
None
Has it been or will it be considered by Scrutiny?
No
Has it been or will it be considered by any other Council Committee, Advisory Panel, or
other body?
Yes - Audit and Procurement Committee, 2
nd
October 2023
Will this report go to Council?
Yes – 5
th
September 2023
Report title: 2023/24 First Quarter Financial Monitoring Report (to June 2023)
1. Context (or background)
1.1 Cabinet approved the City Council's revenue budget of £260.5m on 21st February 2023 and
a Capital Programme of £159.2m. This is the first quarterly monitoring report for 2023/24.
The purpose is to advise Cabinet of the forecast outturn position for revenue and capital
expenditure, recommending any action required, and also to report on the Council’s treasury
management activity.
1.2 The current 2023/24 revenue forecast is for net expenditure to be £12.1m over budget (after
management action). The reported forecast at the same point in 2022/23 was an overspend
of £9.5m. Capital spend is projected to be £163.6m.
1.3 It is not unusual for the revenue position to reflect a forecast overspend at this stage which
then improves over the course of the year. However, as significant management action has
already been factored in, the underlying position is significantly higher than the £12.1m
forecast. This is a significantly high figure by historical standards, and represents a serious
enough cause for concern for the Council, such that emergency in year actions should be
considered.
1.4 The overspend is caused largely by factors external to the Council and which can be expected
to be ongoing (affecting future years MTFS) if action is not taken urgently.
1.5 Following on from the £6.7m reported at the end of 2022/23 this indicates a serious financial
trend for the Council which is not sustainable over the long-term. Section 2 of the report
provides further detail on the revenue position and Section 5 sets out the Council’s proposed
approach to managing the position.
1.6 As a final backstop it should be noted that the Council maintains a strong balance sheet in-
part to protect itself from circumstances such as this, although it should be re-iterated that
reserves are a finite resource and should only be applied sparingly to mitigate ongoing
revenue overspends, and once a medium-term solution is in place.
2. Options considered and recommended proposal.
2.1 This is a budget monitoring report and as such there are no options.
Table1 Revenue Position - The revenue forecast position is analysed by service area below.
Service Area
Revised Net
Budget
Forecast
Spend
Total Over/
(Under)
Spend
£m
£m
£m
Adult Services & Housing
113.8
120.4
6.6
Business Investment & Culture
8.1
9.1
1.1
Children & Young People's Services
93.3
97.5
4.2
Contingency & Central Budgets
(28.1)
(28.7)
(0.6)
Education and Skills
19.4
19.2
(0.2)
Finance & Corporate Services
9.3
9.2
(0.1)
Human Resources
0.7
1.2
0.5
Legal & Governance Services
7.5
7.7
0.2
People Directorate Management
1.0
1.0
0.0
Project Management & Property Services
(8.3)
(8.5)
(0.2)
Public Health
0.9
(0.6)
(1.6)
Streetscene & Regulatory Services
32.6
33.7
1.1
Transportation & Highways
10.3
11.5
1.2
Total
260.5
272.6
12.1
2.2 An explanation of the major forecast variances is provided below, the vast majority of which
are of an ongoing nature if urgent action is not taken. Further details are provided in Appendix
1 to the report.
Directorate
Adult Services & Housing £6.6m
Within Adult Services & Housing the largest element of overspend is on Adult Social Care of
£4.5m, which is due to increased activity & complexity of placements and increased package
costs (inflation). The other notable variance is a £2.0m overspend on Housing &
Homelessness due to significantly more people seeking assistance and placed in temporary
accommodation plus a 15% increase in temporary accommodation fees which is required to
ensure temporary accommodation continues to be available and mitigate the use of more
expensive Bed and Breakfast accommodation.
Children’s and Young People £4.2m
Within Children & Young People’s Services £3.2m of the total overspend relates to the cost
of looked after children’s placements. The overspend is caused by a lack of sufficiency in the
market to meet the needs of young people in care which has significantly increased the
average unit cost of those placements. There is a further overspend of £1.3m against staffing
in Help and Protection due to high levels of cases requiring additional workers and agency
staff. There are short term one-off savings that are offsetting these budget pressures across
the directorate from additional grants, and the use of earmarked reserves.
Business Investment & Culture £1.1m
Of the total Business Investment and Culture overspend, £0.8m relates to the one-off holding
costs of the Cultural Gateway building and the remainder relates to sponsorship income
shortfalls and Godiva festival costs.
Streetscene & Regulatory Services £1.1m
The Streetscene & Regulatory Services overspend includes a c£0.6m reduction in Planning
income due to delayed major applications, however planning fees will increase in October
2023 to partially mitigate this. The majority of the remaining balance relates to agency and
overtime costs relating to vacancies (Streetpride and Parks and Street Team Enforcement),
income shortfalls (Car Parks and Pest Control) and higher waste collection costs than
budgeted.
Transport & Highways £1.2m.
There are income pressures of £0.5m in Bus Lane and Parking Enforcement attributed to
temporary bus gates closures and lower than expected enforcement activity due to the impact
of sickness and not recruiting to vacancies. This is offset by higher car park usage/income.
The remaining overspend relates to the current planned cost of addressing the backlog in
highways defects at £0.35m and an under-recovery within Highways Operations as a result
of vacancies and sickness of £0.4m.
2.3 Capital
The quarter 1 2023/24 capital outturn forecast is £163.6m compared with the original
programme reported to Cabinet in February 2022 of £159.2m. Table 3 below updates the
budget at quarter 1 to take account of a £14.0m increase in the base programme (net
rescheduling from 2022/23), £29.7m of new approved/technical changes, a £0.4m
underspend and £38.9m of rescheduling now planned to be carried forward into future years.
The resources available section of Table 3 explains how the Capital Programme will be
funded in 2023/24. It shows 79.6% of the programme is funded by external grant monies,
whilst 11.6% is funded from borrowing. The programme also includes funding from capital
receipts of £12.9m.
Table 3 – Movement in the Capital Budget
The inflationary pressures affecting the Council’s revenue budget are also present within
capital schemes although the pattern with which this takes affect can be different due to the
way in which expenditure is incurred. It is likely that most stand-alone projects that are already
in-progress will be delivered within existing agreed contractual sums. However, some future
projects that have not yet started may need to be re-evaluated to determine their deliverability
within previously defined financial budgets. In addition, where budgets have established to
deliver programmes of expenditure, it is likely that these programmes will need to be reduced
in size over time reflecting higher prices.
2.4 Treasury Management
Interest Rates
From the start of the quarter until May it looked like peak global monetary policy rates were
in sight as inflation continued to ease. However, a few weeks later, stronger and more
persistent inflation data, particularly in the UK, changed the picture. Inflation fell from its peak
of 11.1% reached in October 2022, but annual headline CPI in May 2023 was higher than the
consensus forecast at 8.7%.
CAPITAL BUDGET 2023/24 MOVEMENT
Qtr 1 Reporting
£m
February 2022 Approved Programme
159.2
Net rescheduling of expenditure from 2022/23
14.0
Revised Programme
173.2
Approved / Technical Changes (see Appendix 2)
29.7
“Net” Rescheduling into future years (See Appendix 3)
Underspend (see Appendix 4)
(38.9)
(0.4)
Revised Estimated Outturn 2023-24
163.6
RESOURCES AVAILABLE:
Qtr 1 Reporting
£m
Prudential Borrowing (Specific & Gap Funding)
19.0
Grants and Contributions
130.2
Capital Receipts
12.9
Revenue Contributions and Capital Reserve
1.5
Total Resources Available
163.6
After a sharp rise in interest rate expectations, with serious implications for mortgage markets
due to higher inflation and wage data, the Bank of England’s Monetary Policy Committee
reaccelerated monetary policy tightening over the period with a 0.25% rise in May to a 0.5%
rise in June, taking Bank Rate to 5.0%. Interest rate expectations priced in further hikes in
policy rates. Arlingclose, the authority’s treasury adviser, revised its forecast to expect a
further 0.5% of monetary tightening to take Bank Rate to 5.5%. The risks, however, are that
rates could be higher; financial markets are forecasting interest rates to rise to 6.5%. Better
than expected inflation figures released on 19
th
July 2023 may now, however, dampen down
those forecasts.
Long Term (Capital) Borrowing
The net long-term borrowing requirement for the 2023/24 Capital Programme is £4.1m, taking
into account borrowing set out in Section 2.3 above (total £19.0m), less amounts to be set
aside to repay debt, including non PFI related Minimum Revenue Provision (£14.9m). In the
current interest rate climate, the Council has no immediate plans to take any further new long-
term borrowing although this will continue to be kept under review.
The Public Works Loan Board (PWLB) remains the main source of loan finance for funding
local authority capital investment. In August 2021 HM Treasury significantly revised guidance
for the PWLB lending facility with more details and 12 examples of permitted and prohibited
use of PWLB loans. Authorities that are purchasing or intending to purchase investment
assets primarily for yield will not be able to access the PWLB except to refinance existing
loans or externalise internal borrowing. Under the Treasury Management Strategy 2022/23
approved by Cabinet on 22 February 2022 it was agreed the Council will not purchase
investment assets primarily for yield.
Interest rates for local authority borrowing from the Public Works Loans Board (PWLB)
between 1
st
April and 30 June 2023 have varied within the following ranges:
PWLB Loan
Duration
(maturity loan)
Minimum
2023/24 to
Q1
Maximum
2023/24 to
Q1
As at the
End of Q1
5 year
4.34%
5.91%
5.91%
50 year
4.47%
5.43%
5.15%
The PWLB allows qualifying authorities, including the City Council, to borrow at 0.2% below
the standard rates set out above. This “certainty rate” initiative provides a small reduction in
the cost of future borrowing.
Regular monitoring continues to ensure identification of any opportunities to reschedule debt
by early repayment of more expensive existing loans replaced with less expensive new loans.
The premiums payable on early redemption usually outweigh any potential savings.
Short Term (Temporary) Borrowing and Investments
The Council’s Treasury Management Team acts daily to manage the City Council’s day-to-
day cash-flow, by borrowing or investing for short periods. By holding short term investments,
such as money in call accounts, authorities help ensure that they have an adequate source
of liquid funds. The City Council borrowed £10m in February 2023 to cover a forecasted cash
flow shortage. This was repaid in April 2023.
Returns provided by the Council’s short-term investments yielded an average interest rate of
4.87% over the last quarter. This rate of return reflects low risk investments for short to
medium durations with UK banks, Money Market Funds, Certificates of Deposits, other Local
Authorities, Registered Providers, and companies in the form of corporate bonds.
Although the level of investments varies from day to day with movements in the Council’s
cash-flow, investments held by the City Council identified as a snapshot at the reporting
stages were: -
As at 31st
March 2023
As at 30
th
June 2023
£m
£m
Banks and Building Societies
0.0
0.0
Local Authorities
0.0
41.0
Money Market Funds
42.96
36.96
Corporate Bonds
0.0
0.0
HM Treasury
0.0
0.0
Total
42.96
77.96
External Investments
In addition to the above in-house investments, a mix of Collective Investment Schemes or
“pooled funds” is used, where investment is in the form of sterling fund units and not specific
individual investments with financial institutions or organisations. The pooled funds are
generally AAA rated; are highly liquid, as cash can be withdrawn within two to four days; and
have a short average duration. These investments include Certificates of Deposit,
Commercial Paper, Corporate Bonds, Floating Rate Notes, Call Account Deposits, Property
and Equities. However, they are designed to be held for longer durations allowing any short-
term fluctuations in return due to volatility to be smoothed out. In order to manage risk these
investments are spread across several funds (CCLA, Schroders, Ninety-One Investec,
Columbia Threadneedle and M&G Investments).
Returns provided by the Council’s pooled funds yielded an average interest rate of 4.4% over
the last 12 months. At 30
June 2023 the pooled funds were valued at £26.8m (£27.4m at 31
March 2023), against an original investment of £30m (a deficit of £3.2m). All seven pooled
funds show a deficit mainly as a consequence of dropping property prices and rising interest
rates. Some of the funds are showing encouraging signs of recovery to their original capital
value. There remains an expectation that the full value for each pooled fund will be recovered
over the medium term - the period over which this type of investment should always be
managed. Current accounting rules allow any ‘losses’ to be held on the Council’s balance
sheet and not counted as a revenue loss. This override was due to change in April 2023 but
a further extension to 31
st
March 2025 has been granted by the government. These
investments will continue to be monitored closely and are likely to be redeemed when they
reach par value.
Prudential Indicators and the Prudential Code
Under the CIPFA Prudential Code for Capital Finance authorities are free to borrow, subject
to them being able to afford the revenue costs. The framework requires that authorities set
and monitor against Prudential Indicators relating to capital, treasury management and
revenue issues. These indicators are designed to ensure that borrowing for capital purposes
is affordable, sustainable and prudent. The purpose of the indicators is to support decision
making and financial management, rather than illustrate comparative performance.
The indicators, together with the relevant figures as at 30 June 2023 are included in Appendix
4 to the report. This highlights that the City Council's activities are within the amounts set as
Performance Indicators for 2023/24. Specific points to note on the ratios are:
The Upper Limit on Variable Interest Rate Exposures (indicator 9) sets a maximum
amount of net borrowing (borrowing less investments) that can be at variable interest
rates. At 30 June 2023 the value is -£66.7m (minus) compared to +£96.2m within the
Treasury Management Strategy, reflecting the fact that the Council has more variable rate
investments than variable rate borrowings at the current time.
The Upper Limit on Fixed Interest Rate Exposures (indicator 9) sets a maximum amount
of net borrowing (borrowing less investments) that can be at fixed interest rates. At 30
June 2023 the value is £204.0m compared to £480.9m within the Treasury Management
Strategy, reflecting both the level of actual borrowing and that a significant proportion of
the Council’s investment balance is at a fixed interest rate.
2.5 Commercial Investment Strategy – Loans and Shares
The Council’s Commercial Investment strategy is designed to ensure there are strong risk
management arrangements and that the level of commercial investments held in the form of
shares, commercial property and loans to external organisations, is proportionate to the size
of the Council. In doing this the strategy includes specific limits for the total cumulative
investment through loans and shares. The total combined limit for 2023/24 is £146m, against
which there are £131.2m of existing commitments: -
Limit
Actual 31st
March 2023
2023/24
Committed
and Planned
Total
Headroom
£m
£m
£m
£m
£m
Shares
55.0
52.1
0.0
52.1
2.9
Loans
91.0
52.5
26.6
79.1
11.9
146.0
104.6
26.6
131.2
14.8
The committed or planned total of £26.6m includes a number of loan facilities to lend which
may not necessarily be taken up, although the Council is committed to provide the funds if
requested.
3. Results of consultation undertaken
3.1 None
4. Timetable for implementing this decision.
4.1 There is no implementation timetable as this is a financial monitoring report.
5. Comments from the Chief Operating Officer (Section 151 Officer) and the Chief Legal
Officer
5.1 Financial implications
Revenue
The net quarter 1 forecast reflects an extremely serious and concerning position for the
Council. The net forecast, after significant management action is a £12.1m revenue
overspend, and incorporates a range of intractable ongoing issues and the continuation of
inflationary pressures which will have an impact beyond the current financial year. Actions
taken, and set out below, are of a largely one-off nature, meaning the underlying position
is significantly higher.
At this stage of the monitoring cycle there is a real and significant threat that the Council will
not be able to balance its revenue position by year-end without the use of reserve
contributions, and without further urgent and ongoing action, will increase the initial 2024/25
MTFS gap approved by Council in February 2023.
These circumstances are common to councils across the country with instances of financial
stress being widely reported. Alongside councils that have already been in difficult financial
circumstances due to a variety of largely local reasons, 2023 has seen an increasing number
of councils, including noticeably those with social care responsibilities, give dire warnings
about their ability to balance their 2023/24 budgetary positions and beyond. The failure of the
local government finance system to tackle issues around social care funding plus the
continued impact of inflation in excess of that anticipated in the 2023/24 budgets, have put
many councils in a perilous financial position.
The trend for cost of service delivery has generally over time reflected an upwards trajectory
reflecting prevailing inflation and market conditions. However, the unprecedented levels of
inflation in the last 2 calendar years have affected all service delivery costs such that 2022/23,
2023/24 and beyond, will reflect a very steep relative upward trend for the Council’s key
service costs.
Although the Council had budgeted for above historic levels of inflation, the pay award budget
of £6m (4%) falls short of the current employer offer, which has not yet been accepted by the
trades unions and which it is estimated would cost in the region of £9m, a minimum pressure
of £3m.
Difficulties in the external markets for both children and adults are well documented but issues
including the cost of highly complex cases and higher than planned levels of inflationary
increases in placement costs have exceeded the additional budgetary provision included
within the Council’s budget. It is difficult to accurately predict whether current forecast outturn
figures reflect a robust forecast for the year or whether further budgetary shocks will continue
in these areas.
Management Action
This difficult position carries on from that faced in 2022/23 when the Council needed to
balance its financial outturn position using £6.7m of reserves. Such a solution would be the
Council’s backstop position for 2023/24 but is one that the Council should be anxious to avoid.
The Council holds limited reserve balances and recognises that such an approach is not
sustainable in the medium term. It is therefore imperative to identify and adopt approaches
that help the Council to manage its short-term pressures, whilst at the same time supporting
the outlook for 2024/25 and medium-term financial problems.
The Council’s Leadership Team instigated a range of immediate responses and is in the
process of taking forward other actions. The following actions used to mitigate the underlying
pressures have been taken so far:
- Urgent spend restrictions have already been put in place to cease non-essential spend.
- Control the filling of vacant posts.
- Control the drawdown of reserves.
- Challenge robustly any proposals for additional spend this year.
- Budget holders reminded of their responsibility to manage services within budget.
- Areas that require more regular forecasts identified
As these are primarily one-off solutions, the Leadership Team have also requested that
Financial Management support and challenge Directors and budget managers to:
- identify options and service impact of reducing ongoing spend levels to within budget for
political decision.
- undertake a comprehensive review of service reserves.
- identify technical options to resource switch.
- undertake a comprehensive review of service and policy options.
These ‘policy’ options may require political consideration of cost reduction initiatives which
have previously been viewed as unfavourable. Directors have been asked to liaise with
relevant cabinet member portfolio holders to identify these, such that members can
collectively discuss, and ultimately decide whether they wish to implement in order to mitigate
the pressures in 2023/24, but importantly for 2024/25 and beyond.
The above gives sufficient assurance that the Chief Operating Officer does not need to take
any extra-ordinary action at this stage to respond to the financial position such as issuing a
Section 114 Notice (a self-imposed limit on making any non-statutory expenditure as result
of financial distress). However, Cabinet should be in no doubt that the underlying position for
2023/24 is incredibly challenging and that the Council will face some difficult choices in
2023/24 and to an even greater degree in 2024/25. Without further in-year support from
Government or as part of the 2024/25 Local Government Finance Settlement, the Council
faces the prospect of making some very hard in-year decisions including cutting or charging
for some valued services in order to balance its budget.
Capital
The Council’s Capital Programme continues to include a range of strategically important
schemes across the city. This continues to be a large mostly grant funded programme
continuing the trend of recent years. The programme includes major scheme expenditure on
secondary schools’ expansion, Very Light Rail, the Air Quality programme, disabled facilities
grant (DfG), the A45 Overbridge Eastern Green, City Centre South and support to the
Friargate Hotel development.
Legal implications
None
6. Other implications
6.1 How will this contribute to the One Coventry Plan
(https://www.coventry.gov.uk/strategies-plans-policies/one-coventry-plan)
The Council monitors the quality and level of service provided to the citizens of Coventry and
the key objectives of the One Coventry Plan. As far as possible it will try to deliver better value
for money and maintain services in line with its corporate priorities balanced against the need
to manage with fewer resources.
6.2 How is risk being managed?
The need to deliver a stable and balanced financial position in the short and medium term is
a key corporate risk for the local authority and is reflected in the corporate risk register. A
recent reassessment indicates that the Council now faces a greatly increased level of risk in
this area, described in section 5. Good financial discipline through budgetary monitoring
continues to be paramount in managing this risk and this report is a key part of the process.
A range of urgent actions has been set out in response to the Council’s financial position. It
is vital that Council officers and members are aware of the current financial challenge and
activity across the second quarter of the year including the measures outlined will provide
some indication of the direction of travel for the remainder of the year. This in turn will dictate
the extent to which the bottom line can be moved significantly closer to a balanced position.
6.3 What is the impact on the organisation?
It remains important for the Council to ensure that strict budget management continues to the
year-end. The Council may be forced to make some difficult policy choices over the coming
months especially in areas that do not have a strict statutory basis, and which involve material
levels of discretionary and flexible expenditure.
6.4 Equalities / EIA
No current policy changes have been proposed but the possibility remains that the Council
may need to consider changes to existing services through the year. If this is the case, the
Council’s equality impact process will be used to evaluate the potential equalities impact of
any proposed changes.
6.5 Implications for (or impact on) Climate Change and the environment
No impact at this stage although climate change and the environmental impact of the
Council’s decisions are likely to feature more strongly in the future.
6.6 Implications for partner organisations?
No impact.
Report author:
Name and job title:
Tina Pinks
Finance Manager Corporate Finance
Service Area:
Finance
Tel and email contact:
02476 972312
tina.pinks@coventry.gov.uk
Enquiries should be directed to the above person.
Contributor/approver
name
Title
Service Area
Date doc
sent out
Date response
received or
approved
Contributors:
Michelle Salmon
Governance
Services Officer
Law and
Governance
27/7/23
28/7/23
Sunny Singh Heer
Lead Accountant
Capital
Finance
13/7/23
21/07/23
Michael Rennie
Lead Accountant
Finance
13/7/23
21/07/23
Claire Maddocks
Lead Accountant
Finance
13/7/23
13/7/23
Names of approvers for
submission:
(officers and members)
Barry Hastie
Chief Operating
Officer (Section 151
Officer)
Finance
2/8/23
5/8/23
Sarah Harriott
Corporate
Governance Lawyer
Law and
Governance
31/7/23
2/8/23
Councillor R Brown
Cabinet Member for
Strategic Finance
and Resources
-
This report is published on the council's website: www.coventry.gov.uk/councilmeetings
Appendix 1
Revenue Position: Detailed Directorate Breakdown of Forecasted Outturn Position
Budget variations have been analysed between those that are subject to a centralised forecast and
those that are managed at service level (termed “Budget Holder Forecasts” for the purposes of this
report). The Centralised budget areas relate to salary costs – the Council applies strict control over
recruitment such that managers are not able to recruit to vacant posts without first going through
rigorous processes. In this sense managers have to work within the existing establishment structure
and salary budgets are not controlled at this local level. The Centralised salaries and Overheads
under-spend shown below is principally the effect of unfilled vacancies.
Service Area
Revised
Net
Budget
Forecast
Spend
Centralised
Variance
Budget
Holder
Variance
Total
Variance
£m
£m
£m
£m
£m
Adult Services & Housing
113.8
120.4
(1.6)
8.2
6.6
Business Investment & Culture
8.1
9.1
0.1
1.0
1.1
Children & Young People's
Services
93.3
97.5
(1.2)
5.4
4.2
Contingency & Central Budgets
(28.1)
(28.7)
0.0
(0.6)
(0.6)
Education and Skills
19.4
19.2
(0.6)
0.4
(0.2)
Finance & Corporate Services
9.3
9.2
(0.5)
0.4
(0.1)
Human Resources
0.7
1.2
0.1
0.4
0.5
Legal & Governance Services
7.5
7.7
(0.3)
0.5
0.2
People Directorate Management
1.0
1.0
(0.1)
0.1
0.0
Project Management & Property
Services
(8.3)
(8.5)
(0.3)
0.1
(0.2)
Public Health
0.9
(0.6)
(0.1)
(1.4)
(1.6)
Streetscene & Regulatory Services
32.6
33.7
(0.8)
1.9
1.1
Transportation & Highways
10.3
11.5
(0.3)
1.5
1.2
Total
260.5
272.6
(5.6)
17.7
12.1
Budget Holder Forecasts
Service Area
Reporting
Area
Explanation
Budget
Holder
Variance
£m
Adult Social Care
Strategic
Commissioning
(Adults)
£0.4m underspend relates to New Homes for Old
PFI due to additional client fee income. A further
underspend relates to lower than anticipated
transport costs to day opportunities.
(0.5)
Adult Social Care
Housing and
Homelessness
There are a number of reasons why the service is
currently forecasting a significant overspend. The
number of people seeking assistance with housing
issues and subsequently the number being placed
in Temporary Accommodation has increased
significantly during 2023. Alongside this the cost of
TA with private providers has increased by 15%
from the 1st April (the first increase since the rates
were set in 2019). A number of mitigations
including purchasing additional TA, working with a
Registered provider to provide us with an additional
50 flats for TA and new contracts with private
providers are being progressed. The increases in
TA is a national issue with the highest number of
2.1
households in TA in England being reported in
December 2022.
Adult Social Care
Adult Social Care
Director
Overspends relate to an increase in bad debt
provision of £0.4m and additional spend on joint
health initiatives to improve the provision across
Health and Social Care.
0.6
Adult Social Care
Enablement &
Therapy
Services
Overspends on equipment purchases due to high
inflation which have been offset by centralised
underspends in salaries due to vacancies.
0.2
Adult Social Care
Internally
Provided
Services
Overspends on other pay and overtime which have
been partly offset by centralised underspends in
salaries due to vacancies.
0.4
Adult Social Care
Community
Purchasing
Mental Health
Demand for mental health services continues to
increase, this impacts on provision of statutory
services to meet essential need.
1.3
Adult Social Care
Partnerships and
Social Care
Operational
Overspends relating to additional agency costs
which have been offset by centralised underspends
due to staff vacancies.
0.3
Adult Social Care
Localities and
Social Care
Operational
Overspends relating to additional agency costs
which have been offset by centralised underspends
due to staff vacancies.
0.3
Adult Social Care
Community
Purchasing
Other
see above - Community purchasing spend is
managed at an overall level and increased
complexity of demand is being seen across all
areas alongside increases to package costs driven
by high levels of inflation. Activity throughout the
year has also increased.
2.5
Adult Social Care
Mental Health
Operational
There remains significant pressures in Deprivation
of Liberty Assessment demand leading to
additional assessment costs (£0.3m). Additional
agency costs have been partly offset by
underspends on centralised salaries due to
vacancies.
0.7
Adult Social Care
Other Variances
Less than 100K
0.3
Adult Social Care
8.2
Business
Investment and
Culture
Sports, Culture,
Destination &
Bus
Relationships
Overspend mainly relates to Ikea collection
centre/City Centre Cultural Gateway (CCCG)
project with no revenue budget this year but still
incurs costs for rates, electricity, security costs,
BIDs. Final rate charge to be confirmed once VOA
completed evaluation. (For information- other
service areas: Sports and St Mary's forecast at Q1
shows a breakeven position. Godiva final position
is normally clearer two weeks after the event when
all relevant costs are confirmed, general ticket
sales is significantly higher than last year although
premium places generated a loss as ticket sales for
premium is much lower than target.)
0.6
Business
Investment and
Culture
Employment &
Adult Education
BH variance £481k mainly due to overspend in
Employment because of reduced grant income
offset underspend in Centralised variance from
vacancies, overall employment skills variation is
close to nil.
0.4
Business Investment and Culture
1.0
Children and
Young People's
Services
Children's
Services
Management
Team
Financial strategy planned underspend.
(1.2)
Children and
Young People's
Services
Commissioning,
QA and
Performance
"Safeguarding training income is £100k below the
budgeted target and the Professional Support
Service saving target of £39k has not been met.
There are also overspends due to agency spend
for Independent Reviewing Officers', Child
Protection Chairs and Local Authority Designated
Officers, due to pressures caused by vacancies
and increasing caseloads.
The position is offset partly by underspends in
CAMHS and the Coventry Safeguarding Children &
Adults Multi-Agency Boards."
0.2
Children and
Young People's
Services
Help &
Protection
"There is an overall budgetary pressure in Help and
Protection, which includes the following:
£1.3m pressure in the Area Teams linked to staff
costs, with high levels of cases requiring additional
workers and agency staff.
£0.3m pressure in Section 17 spend linked to a
high number of households being housed in
temporary accommodation. There is an additional
£0.1m pressure in NRPF (No recourse to public
funds). This is unavoidable due to statutory
responsibilities to financially support children and
families who reside in Coventry without legal status
to access benefits.
There are short-term one-off savings which are
currently offsetting the budget pressures from
additional grants and the use of earmarked
reserves. "
2.8
Children and
Young People's
Services
LAC & Care
Leavers
"There is a £3.2m overspend on looked after
children’s (LAC) placements. This figure takes into
account our expected increase in income from
central government for unaccompanied asylum-
seeking children which ensures these children do
not contribute to the budgetary pressure. All of the
overspend relates to external residential and is
linked to unit cost. This is mainly linked to
increasing unit costs for placements due to a lack
of sufficiency in the market to meet the needs of
young people in care. This is despite a decrease in
number of looked after children and placement mix
being in line with targets.
There is a further budget pressure of £400k due to
staffing challenges within LAC permanency service
and the need for agency staff to ensure that care
proceedings continue to be progressed. This is an
improving position as measures taken are now
starting to have a positive impact. The project team
is being phased out in line with paper approved at
CSLT-Business and will end fully in October. There
are some continued pressures in LAC permanency
around unbudgeted costs around therapy and
assessments.
3.6
There is an overspend of £312k in internal fostering
due to high number of staff on maternity leave and
agency cover being provided.
LAC transport has an overspend of £190k and this
is as a result of placement arrangements where
transport needs to be provided for child to continue
in current education provision. Work is on-going to
improve sufficiency of local placements which will
start to address this pressure.
There is an overspend of £193k on Adoption
Central England that relates to an increase in
Interagency fees and pay increases. Work is being
undertaken to address this and finance sit on
working group to explore budgetary needs of ACE
moving forwards.
There is a further budgetary pressure of £240k
within the Children’s disability service. This
overspend relates to increased costs for short
breaks & direct payments, DFG shortfalls and
intensive support for some children to enable them
to remain living at home, as an alternative to living
in residential care. We are currently in the process
of retendering our short breaks contracts to ensure
‘best value’ and reduce high cost support spend.
These pressures are offset in part by underspends
across the service."
Children and Young People's Services
5.4
Corporate &
Contingency
Corporate
Finance
There is a forecast overspend for pay inflation
contingencies (£2.6m) reflecting the latest local
government employers’ pay offer. This is more
than offset by favourable variances for other
contingency budgets (£1.4m), anticipated controls
to reduce discretionary expenditure (£1m), a
delayed need to replace DSG funded education
expenditure (£0.6m) and other minor underspends.
Corporate & Contingency
(0.6)
Education and
Skills
Customer and
Business
Services
A budget holder underspend of £185k mainly as a
result of the release of funding previously held in
reserve.
(0.2)
Education and
Skills
Transformation
Programme
Office
A budget holder underspend of £143k as a result of
the release of funding previously held in reserve.
(0.2)
Education and
Skills
SEND &
Specialist
Services
SEN Transport is forecasting an overspend of
£0.3M. Demand for all SEN services has sharply
increased this academic year, because of an
unanticipated rise in the population, need and
complexity; especially in the early years at the point
of admission to reception and transfer to secondary
phase. In response the LA has commissioned and
delivered an additional 65 specialist placements
0.6
within and outside of the city. Contract costs
following e-auctions has increased and in-house
salary costs reflect inflationary increase. The
remainder of the budget holder over spend relates
to staffing in Educational Psychology, but this is
offset by an equivalent under spend against
centralised staffing costs.
Education and
Skills
Libraries, Advice,
Health &
Information
Services
The forecast Budget Holder overspend of £157K
comprises a £64K net under-recovery of income on
the Schools’ Library Service, an under-recovery of
£75K on other income targets, unfunded salary
pressure of £126K, an overspend on casual posts
and overtime of £17K offset by a £75K spending
reduction on the media fund and several other
smaller spending reductions. The under-recovery
of income across the service is an on-going
pressure that has steadily worsened over the last
few years (particularly around buy in from schools).
The Service is currently investigating opportunities
for new and alternative income streams. This may
reduce the pressure but will not remove it
completely, and impact in the current year will be
reduced due to timing. Salary pressure is due to
regrading of staff (£44K higher in the current year
due to backdating). There are currently a large
volume of vacant posts within the service which is
resulting in the use of over-time and casual staff in
order to keep libraries open
0.2
Education and Skills
0.4
Finance &
Corporate
Services
Revenues and
Benefits
The pressure is primarily attributable to the cost of
temporary staffing as a result of increased levels of
work being received, cover for a higher than normal
level of staff absence and increased underlying
work levels in council tax.
0.5
Finance &
Corporate
Services
Other Variances
Less than 100K
(0.1)
Finance & Corporate Services
0.4
Human
Resources
HR - People &
Culture
The People and Culture service is forecasting a
£118K overspend. This mainly relates to pressures
within the Resourcing Team including an un-met
savings target, agency covering sickness,
increased costs for subscriptions and DBS costs. In
addition, there are growing pressures on training
and development budgets
0.1
Human
Resources
Employment
Services
Employment Services has a forecast over-spend of
£112K. This relates to a reduction in income from
external organisations. It has not been possible to
reduce costs further as a range of legislation and
regulatory changes has created an increase in
overall workload
0.1
Human
Resources
ICT & Digital
Digital Services is forecasting a Budget Holder
overspend of £183K. This relates to a shortfall on
schools’ income of £433K due to reduced buy in as
schools convert to academies and academies join
larger MATs offset by a one off release of £250K
reserves. A range of spending reductions are
expected to offset the significant pressures of
£188K email filtering costs. Spending reductions
0.2
include a short-term lower level of Microsoft
Enterprise licence consumption charges, short-
term reduction in “out of hours” service costs and
other changes which are in the process of being
worked on.
Human Resources
0.4
Legal &
Governance
Services
Legal Services
"Recruitment of staff (particularly lawyers) into
vacant positions remains a challenging situation
within the service despite numerous attempts made
to advertise vacancies. As a consequence, there is
a significant amount of expenditure (circa £600k)
on agency staff which is offset in part by vacancies
within the Legal Services team. The service is also
managing additional workload in the children’s
social care sector which has made it difficult to end
locum contracts.
An action plan is in place to address the
recruitment and retention issues within the team
with the expectation that this will show reductions
in subsequent quarters."
0.7
Legal &
Governance
Services
Other Variances
Less than 100K
(0.2)
Legal & Governance Services
0.5
People
Directorate
Management
People Directorate Management
0.1
Project
Management and
Property Services
Commercial
Property and
Development
£1.3m BH variance mainly due to £546k from CPM
rental operation and £767k from CCS (City Centre
South) project relates to red line area and new
acquisitions due to a mix of income reduction and
cost increase for void properties/sites. (Detailed
breakdown for CPM rental operation £546k: 1.
£370k: 4 Agency costs including a service charge
accountant, backfill for legal expert post and
covering two vacant posts (although there's
underspend in centralised variance £121k, it's
offset by saving target of £80k). 2. (£45k) extra
income generated by the service charge
accountant; 3.£104k Contributions to service
charges and sinking funds for void units 4. £146k
Public lighting, feeder pillars and voids 5. (£74k)
Binley Crt/240 Jardine/Riley Sq Binley Crt/240
Jardine/Riley Sq - recharge to tenants of utility
costs 6. £45k Professional fees costs to help
service achieve income target). Note that £1m
further saving target isn't in the ledger yet, so
corresponding A60 saving position will be updated
once the £1m saving target is actioned, potentially
underachieving by £300k, but could be offset by
more income generated from R&M service.
1.3
Project
Management and
Property Services
Facilities &
Property
Services
(£521k) BH variance due to 1. R&M (£123k)
income overachieved based on the current order
book for the profit to be generated from margin on
jobs (for labour, materials and subcontractors) and
additional income from project work expected. 2.
(0.5)
(£407k) Corporate property building potential
underspend due to forecasted drop in utilities costs
after offsetting a pressure on Fairfax around £175k.
Note that the position may still change due to
volatility in the market.
Project
Management and
Property Services
PMPS
Management &
Support
BH Variance (£700k) due to PMPS Property
service draw down merit funding £750k, offset
saving target of £50k.
(0.7)
Project Management and Property Services
0.1
Public Health
Public Health
Staffing &
Overheads
A budget holder underspend of £330k, mainly as a
result of the release of funding previously held in
reserve.
(0.3)
Public Health
Public Health -
Migration
A budget holder underspend of £900k as a result of
additional grant flexibility and the release of funding
previously held in reserve.
(0.9)
Public Health
Other Variances
Less than 100K
(0.2)
Public Health
(1.4)
Streetscene &
Regulatory
Services
Planning
Services
There has been an overall reduction in planning
applications since COVID which reflects the
national trend. (Affecting Majors in particular.) This
is partly mitigated by an increase in fees which is
expected to be implemented around the start of
September 2023.
0.2
Streetscene &
Regulatory
Services
Streetpride &
Parks
The net variation across Streetpride and Parks is
c£259k overspend and primarily relates to a)
service reviews (Streetpride & Parks) with
vacancies(part offset by u/spends on centralised
variance) being covered by agency/overtime whilst
new structures are being implemented, along with
some shortfalls in income (i.e. car parks), b) set up
costs and non-achievement of savings targets
relating to Coventry Funeral Services c) Pressures
in Urban Forestry relating to Tree Surveys,
associated remedial works and inflationary
increases and cd Traveller Incursion Costs. Some
s106 (c£100k) will also be applied.
1.1
Streetscene &
Regulatory
Services
Waste & Fleet
Services
Commercial Waste is currently under review and is
forecasting a deficit in excess of £0.5m. A decision
has been made for a third party to provide
resources to deliver the Waste Collection service
alongside CCC staff at a cost of c£522k (partly
offset by centralised salary savings on Waste
Admin), the WTS no longer has any external
customers and although disposal costs have been
reduced there is still a deficit of c£156k. Partly
offsetting this is an underspend on Waste Disposal
costs of (c£314k) due to lower than expected
tonnages, anticipated savings of (c£272k) relating
to SRL going live in Sept/October and additional
income/savings on capital finance costs of c£270k
from the EV programme.
0.4
Streetscene &
Regulatory
Services
Environmental
Services
There are vacancies in Street Team Enforcement
which are being covered by Agency/Overtime
0.1
payments c£95k and a shortfall in Pest Control
income c£37k.
Streetscene &
Regulatory
Services
Other Variances
Less than 100K
0.1
Streetscene & Regulatory Services
1.9
Transportation &
Highways
Parking
There are income pressures in Bus Lane and
Parking Enforcement due to temporary bus gates
closures, activity levels remaining lower than
expected due to the impact of staff vacancies and
sickness. These are offset by higher-than-expected
car park usage and income.
0.6
Transportation &
Highways
Highways
Pressure is largely due to the anticipated costs to
be incurred to address highways defects (£350k)
and under-recovery within Highways Operations as
a result of vacancies and sickness (£400k).
0.8
Transportation &
Highways
TH Management
& Support
Variance is largely due to unachieved historic
MTFS targets
0.1
Transportation & Highways
1.5
Ringfenced
Funding
SEND &
Specialist
Services
Dedicated Schools Grant Variance: The LA makes
provision for children with high needs in the early
years and new to City through a funded support
plan, September activity saw an 85% increase
against forecast demand. 50% of the forecast
demand for external placements has been realised,
with the average cost increasing during the year by
£6k. In response to the system pressures across
Coventry's special schools, top-up values have
been inflated to secure sustainability and provision
for specialist SEMH has been reviewed in
response to increasing needs.
0.4
Ringfenced
Funding
Schools
Dedicated Schools Grant Variance: The majority of
this under spend relates to the Council's High
Needs holding pot. This is budget that has been
earmarked to support the Council's overall SEND
Strategy and fund known provision cost pressures
that will arise in future years.
(2.5)
Ringfenced
Funding
Financial
Strategy
Technical adjustment to remove total Dedicated
Schools Grant Variance from the General Fund
position.
2.1
Ringfenced Funding
0.0
Total Non-Controllable Variances
17.7
Appendix 2
Capital Programme Approved / Technical Changes
SCHEME
EXPLANATION
£m
Highways
Investment
Budget 2023 announced £200 million for highways maintenance for the
financial year 2023-2024. Based on the West Midlands Local Authority
apportionment this is a further £0.6m funding for Coventry's Highway
Investment programme.
0.6
Eastern Green -
A45 Overbridge
The awarded £15.6m from Homes England for the delivery of the A45
Overbridge at Eastern Green has now been fully drawn down and passported
over to the developer. As Coventry City Council are the accountable body for
the delivery of the scheme, there is a legal agreement that the process moving
forward will entail the developer re-imbursing CCC all invoiced amounts prior to
CCC paying these funds over to the contractor. This ensures no financial risk
to CCC.
8.0
On street
Residential
ChargePoints
Phase 8
Report taken to Cabinet 14th February 2023 - Electric Vehicle Charging
Infrastructure. Bids were submitted to Office for Zero Emissions Vehicles,
which resulted in successful securing £2.8 for On street Residential charge
points phase 8.
2.8
Routes to Stations
Successful bid in securing £1.6m from Sustrans to deliver the National Cycling
Network across England, through a series of schemes to make the Network
safer and more accessible to everyone, to encourage active travel. The
awarded funding will deliver cycling network for Warwick University to Charter
Avenue and Kenilworth Road to Spencer Park.
1.6
Public Realm -
Palmer Lane De-
culverting
Report taken to Cabinet 11th July 2023 - Palmer Lane Regeneration. Approval
of additional funding of £318k for the delivery of the Palmer Lane project taking
the total budget for the delivery of the scheme to £2.4m. Along with noting the
grant acceptance of £534k received from Historic Coventry Trust in March
2023 under delegated authority contained in paragraph 2.3.2 (c) of Part 3F
(Financial Procedure Rules) of the Council Constitution.
0.9
New Union Street
Car Park
Report taken to Cabinet Member for Jobs, Regeneration and Climate Change
on 15th June 2023. The Proposed Demolition of New Union St Multi Storey Car
Park and Construction of a Surface Car Park on the Site.
1.0
Social Housing
Decarbonisation
Fund Wave 2
Coventry City Council have been successful in a consortium bid with Citizen
Housing to improve the energy efficiency of over 2,000 homes in Coventry over
the next two and half years. This Government grant funding (c. £23.8 million)
together with Citizen’s own investment will total circa £60m and deliver energy
efficiency measures to just over 2,000 social housing properties in and around
the Coventry area. The housing association worked with Coventry City Council
to submit the bid to the Department of Energy Security and Net Zero (formally
known as the Department for Business Energy and Industrial Strategy – BEIS).
The £23.8m grant will see energy efficient works carried out on properties in
the city to improve the Energy Performance to an EPC rating of a C. Works on
the homes will predominately improve the fabric and ventilation of a property
including, cavity / external wall insulation, increased loft insulation and
improving ventilation to reduce the potential for mould growth. This funding is
part of the second wave of Social Housing Decarbonisation Funding, which
was submitted following joint success with Coventry City Council in the first
wave of the bid where funding was secured to improve 95 homes across the
city last year.
9.4
Coventry UK
Shared Prosperity
Fund (UKSPF)
Approval at Cabinet on 14th February 2023, capital allocation for the
refurbishment works for the job shop relocation plus grant to business and
preparing residents for workspaces
1.2
City Centre South
15th November 2022 Cabinet Approved £5.250m additional resources
4.1
Miscellaneous
Schemes below £250k threshold
0.1
TOTAL APPROVED / TECHNICAL CHANGES
29.7
Appendix 3
Capital Programme: Analysis of Rescheduling
SCHEME
EXPLANATION
£m
Very Light Rail
Spend has slowed down because we are still working with DfT to
understand and agree the process for drawing down the phase 2 to 4
allocation. As yet, Coventry only secured phase 1 spend in 2023 (£6.4m
was confirmed in Feb 23 and the remaining phase 1 balance of £2.5m
was confirmed in July 23). Consequently, CCC took a decision to limit
the amount of spend at risk and the programme was slowed down.
CCC are confident we will spend the reprofiled forecast within the
current predicted timescales.
(6.2)
Foleshill
Transport
Package
Delays in the consultation on Foleshill along with a more detailed
approval process than anticipated at WMCA in achieving business case
sign off has resulted in the programme slipping.
(2.8)
Coventry South
Package
The previous forecast was based on a programme to deliver extensive
improvements at Asda roundabout as an early phase within the
programme. Further transport modelling assessments have
demonstrated that a further round of option appraisal is needed to
identify the best scheme to achieve all identified objectives at this
junction, and the outcome of this will be reported back in due course.
The current spend profile reflects the revised programme for design
development of the Asda Roundabout scheme, with the Abbey Road
junction improvement being the first element of the package to be
delivered during 2023/24.
(3.3)
Schools Basic
Need
Forecasts for 23/24 have been realigned to reflect the 22/23
rescheduling. There was £3m more spent in 22/23 which has reduced
the forecasts accordingly
1.4
Woodlands
School
Project delayed due to planning pre-commencement conditions issues
and change of requirement by SSMAT in relation to the temporary
accommodation to rehouse pupils out of building scheduled for
demolition
(10.3)
Schools
Condition
Additional funding received in 20/21 of £1m was carried forward to
21/22, we then received a further £1m grant from DFE, taking into
account these additional funds being carried forward into 22/23 and not
all funds being spent, this has increased the 23/24 available funds to be
able to fund additional works on schools this year.
0.9
Disabled
Facilities Grants
When the budget was set for 23/24 it included funds for a new home for
children with disabilities, this should have reduced the main DFG
forecast line but was put in as an additional line so overstated the base
budget for the main DFG programme by £1m, this has now been
adjusted at Qtr1 to reflect the correct 23/24 forecast
(0.9)
City Centre South
It was previously assumed that the demolition would complete during
2023/24. This date has moved as a result of changes to the
development programme whilst waiting for the CPO to be confirmed
and the relevant legal agreements with the developer to be finalised.
The developer is now anticipating they will begin demolition in April
2024. The demolition is currently forecast to be in one phase and take
up to 12 months.
(17.4)
Miscellaneous
Schemes below £250k rescheduling
(0.3)
TOTAL RESCHEDULING
(38.9)
Appendix 4
Capital Programme: Analysis of Over / Under Spend
SCHEME
EXPLANATION
£m
Sustainable
Warmth
Competition
The underspend is a result of low uptake from residents for
the off-gas section of the Sustainable warmth competition. The
remaining element of the grant has been returned to Midland
Net Zero Hub (MNZH).
(0.2)
Miscellaneous
Schemes below £250k threshold
(0.2)
TOTAL
UNDERSPEND
(0.4)
Appendix 5
Prudential Indicators
Indicator
per Treasury
Management
Strategy
2023/24
As at 30 June
2023
Ratio of Financing Costs to Net Revenue Stream (Indicator 1), This is an
indicator of affordability and highlights the revenue implications of existing and
proposed capital expenditure by identifying the proportion of the revenue
budget required to meet borrowing costs.
14.98%
14.73%
Gross Borrowing should not, except in the short term, exceed the total of the
Capital Financing Requirement (CFR) at 31
st
March 2023 plus the estimates of
any additional CFR in the next 3 years (Indicator 2), illustrating that, over the
medium term, net borrowing (borrowing less investments) will only be for
capital purposes. The CFR is defined as the Council's underlying need to borrow,
after taking account of other resources available to fund the capital programme
and is the amount of capital expenditure that has not yet been financed by
capital receipts, capital grants or contributions from revenue.
Estimate /
limit of
£546.2m
£317.0m
Gross
borrowing
within the
limit.
Authorised Limit for External Debt (Indicator 5), This statutory limit sets the
maximum level of external borrowing on a gross basis (i.e. excluding
investments) for the Council. Borrowing at this level could be afforded in the
short term but is not sustainable. The Authorised limit has been set on the
estimated debt with sufficient headroom over and above this to allow for
unexpected cash movements.
£534.8m
£317.0m
is less than
the
authorised
limit.
Operational Boundary for External Debt (Indicator 6), This indicator refers to
the means by which the Council manages its external debt to ensure it remains
within the statutory Authorised Limit. It differs from the authorised limit as it is
based on the most likely scenario in terms of capital spend and financing during
the year. It is not a limit and actual borrowing could vary around this boundary
for short times during the year.
£514.8m
£317.0m
is less than
the
operational
boundary.
Upper Limit on Fixed Rate Interest Rate Exposures (Indicator 9), These
indicators allow the Council to manage the extent to which it is exposed to
changes in interest rates.
The Upper Limit for variable rate exposure has been set to ensure that the
Council is not exposed to interest rate rises which could impact negatively on
the overall financial position.
£480.9m
£204.0m
Upper Limit on Variable Rate Interest Rate Exposures (Indicator 9), as above
highlighting interest rate exposure risk.
£96.2m
-£66.7m
Maturity Structure Limits (Indicator 10), This indicator highlights the existence
of any large concentrations of fixed rate debt needing to be replaced at times of
uncertainty over interest rates and is designed to protect against excessive
exposures to interest rate changes in any one period, thereby managing the
effects of refinancing risks.
The maturity of borrowing is determined by reference to the earliest date on
which the lender can require payment.
< 12 months
0% to 50%
8%
12 months – 24 months
0% to 20%
12%
24 months – 5 years
0% to 30%
7%
5 years – 10 years
0% to 30%
12%
10 years +
40% to 100%
61%
Investments Longer than 364 Days (Indicator 11), This indicator sets an upper
limit for the level of investment that may be fixed for a period greater than 364
days. This limit is set to contain exposure to credit and liquidity risk.
£30m
£0.0m
