Council and democracy

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: