Agenda item

Report of the Director of Finance / Section 151 Officer attached.

The Cabinet Member (Finance, Property and Assets) and the Director of Finance presented a monitoring report which outlined the position of the Council’s corporate revenue budget and reserves during Quarter 2 of 2022/23 (1 July – 30 September 2022).

In summarising the report, Members heard that the recent pay award announcement of £1,925 for all council staff members had a significant impact on the budget with a 7% increase of the salary budget - the figure budgeted for was 2%. This equated to a £447,000 increase in salary budget. Consequently, by the end of the year it was predicted that there would be an overspend of around £234,000. A significant proportion of that figure (£174,000) was increases in utility bills across the Council’s estate.

Furthermore, it was noted that information regarding any increases in utility bills or staffing from the Leisure Company was yet to be included - this figure was anticipated to be around £500,000.

It was acknowledged that the cost of living crisis was impacting significantly on council finances, notably around inflation in wages and utility bills - with an announcement from government later this week it was not anticipated that additional funding would be available for local authorities.

When asked of any implications of the general reserve being below the recommended minimum of £4m it was noted that compared with other authorities in Lancashire this was a healthy sum given the Council’s annual turnover. Given the current pressures reserves were being reviewed but £4m remained the target reserve level.

Members were reassured that budgeting had been well managed for many years but there was always a need to be flexible and able to react to events as they arose. It was noted that whilst potential risks are identified when the budget is set - the general reserve acts as a cushion for any unexpected events or circumstances that transpire - the pay award and pressures due to inflation would fall into appropriate use of the reserve budget.

Issues with staffing were highlighted with questions raised about the use of agency staff. Members heard that recruitment issues were a problem nationwide and on occasions it had proved difficult to get the right personnel in order to be able to deliver the Council’s ambitions. There was specific reference made to commercial services directorate and it was noted that recruitment and retention of staff in this area had been an issue before the pandemic. It was hoped that the next phase of Shared Services which included this directorate would provide more capacity, resilience and would result in a more attractive offer to potential employees.

In response to a query over whether increases in pay within the waste service were budgeted for, it was confirmed that due to the salary increase staff moving over where on a higher salary than had been budgeted for. In future years, the savings from bringing the service in house would mitigate for the increase in budget.

The review of earmarked reserves was scheduled later in the year to consider where any changes would be appropriate given the financial challenges the Council is facing.

It was subsequently;

Resolved: (Unanimously)

That the Scrutiny Budget Performance Panel:

1.    Thanks the Cabinet Member and Director for attending and answering questions.

2.    Welcomes the offer to provide more information on what the Council is doing to recruit and retain employees.

3.    Looks forward to receiving the outcome of the review of earmarked reserves.