Agenda item
Financial Update - Quarter 1 2022/23 (Decision: 110624)
Minutes:
The Interim Director of Finance
introduced the report and stated that it had coincided with the
beginning of the commissioners’ work, so had to be read in
the context of the time. He stated that the team had worked with
commissioners on the release of the report as it helped Members and
residents understand the service pressures currently being
experienced. He stated that services were currently experiencing
approximately £7.4million of pressure and income losses, and
although part of this could be managed with reserves, there was
still a gap in the budget and further work to do. The Interim
Director of Finance highlighted Table 1 on page 42, which set out
service provision and highlighted the pressures within Adults and
Childrens’ Social Care, and Table 2 provided a detailed
breakdown of these pressures. He explained that many other Councils
faced pressures regarding Adults and Childrens Social Care, and
work was continuing to monitor and support these pressures using
reserves and capital receipts. He stated that the Medium-Term
Financial Strategy (MTFS) was constantly evolving and would remain
a challenge due to inflationary pressures and the central
government funding settlement.
The Interim Director of Finance stated that the intervention also
continued to evolve with commissioners, and the Update on Council
Borrowing report scheduled for October’s Cabinet meeting
would consider this in more detail. He mentioned that both this
report and the Council Borrowing report had been considered by the
Corporate Overview and Scrutiny Committee at their previous
meeting, and they had discussed the transition from Local Authority
borrowing to Public Works Loan Board (PWLB) borrowing, which would
be borrowed at a higher interest rate. He explained that previous
PWLB borrowing had had an interest rate of approximately 0.5%-1%,
but interest rates had now reached approximately 4.5%. He stated
that the impact of this would be assessed and reported back to the
Corporate Overview and Scrutiny Committee and Cabinet as part of
the Quarter 2 financial report.
The Interim Director of Finance added that the commissioners were
also evaluating the Minimum Revenue Provision (MRP), which was a
method to pay back debt. He explained that specific issues within
investments could change the MRP approach and wider provisions
across all investments, which could have a range of impacts. He
stated that borrowing could be paid back over the course of 20
years, with interest 1% above the usual PWLB rates. He stated that
the commissioners were currently clarifying positions as the
situation remained fluid and complicated, but felt that the
commissioners remained supportive and provided advice on how to
resolve the situation as quickly as possible.
The Acting Leader thanked the Interim Director of Finance for the
level of detail in the report, and felt that it remained a serious
situation. He stated that the recovery board continued to meet
bi-weekly and received advice from the commissioners. He added that
the administration would also use the scrutiny function to aid in
the recovery plan. Councillor Spillman felt that confidence in the
Council had been shaken. He asked how Councillors and officers
could restore the trust that had been lost. The Interim Director of
Finance stated that the Council would continue to follow the
processes being put in place by the commissioners, who would be
undertaking a detailed review into the governance of Thurrock
Council. He stated that officers and Members would be interviewed
as part of the best value inspection, which would identify what had
gone wrong, and would help to begin rebuilding trust. He stated
that the inspection was only just beginning, and the Council needed
to accept their findings. He urged any officers or Members to raise
concerns with the inspectors to ensure that they had a clear
picture of leadership, governance, and compliance within the
Council. He mentioned that the commissioners had also set-up a
whistleblowing hotline to ensure openness. The Interim Director of
Finance added that the team had so far received positive feedback
from the finance recovery board, and felt that the Council was in a
good starting position. Councillor Spillman welcomed comments from
the Interim Director of Finance and felt that the commissioners
would ensure Members and officers fully understood what had
happened. The Acting Leader felt that the Council could now be more
open, and Cabinet and senior officers could work together for
residents.
Councillor Snell stated that he would work with commissioners to
understand what had happened. He added that he had attended the
Corporate Overview and Scrutiny Committee and had welcomed comments
from opposition Members. He urged opposition Members to voice their
concerns or comments, and stated that they could arrange a meeting
with him if they needed. The Acting Leader echoed these comments
and stated that he would ensure residents continued receiving
services and would be open and transparent with residents.
RESOLVED: That Cabinet:
1. Noted the Department of Levelling Up, Housing and Communities
have put an intervention package in place and nominated Essex
County Council as the Commissioners as set out in section 2.
2. Commented on the forecast revenue and capital outturn positions
for 2022/23.
3. Noted that additional action will be required to identify
further savings to manage the reports General Fund budget
pressures.
Reason for decision: as outlined in the
report
This decision is subject to call-in
Supporting documents: