|
Title |
Q2 Revenue Monitoring Report as at 30 September 2024 |
|
Purpose of the report |
To note |
|
Report Author |
Mahmud Rogers, Joint Financial Services Manager |
|
Ward(s) Affected |
All Wards
|
|
Exempt |
No |
|
Corporate Priority |
Community Addressing Housing Need Resilience Environment Services
|
|
Recommendations
|
Committee is asked to: Note the forecast overspend of £896,000 for 2024-25 as at 30th September 2024 |
|
Reason for Recommendation |
Councils have a statutory duty to balance their budget each year, and a robust budget monitoring and review process helps to ensure resources are managed with economy, efficiency and effectiveness. |
1. Summary of the report
|
What is the situation |
Why we want to do something |
|
• Spelthorne Borough Council is expected to overspend its Revenue budget position by £896,000 |
• Ensuring the financial stability of the Council |
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This is what we want to do about it |
These are the next steps |
|
• Monitoring & review the forecast variances by service and area of expenditure |
• Note the report |
1.1 This report seeks to summarise the financial situation of Spelthorne Borough Council at the end of September 2024. Please see the detail in Appendix 1.
2. Key issues
A summary of the main variances at 30th September is in Table 1 below:
Table 1 – Summary of Variances to Budget
|
Variance to budget |
Area |
Reasons for the variance to budget |
|
(948) |
Corporate Policy & Resources |
Lower pension contributions to Surrey Pension Fund due to vacancies across Council, underachievement of building control income (offset by vacancies), and Best Value Inspection costs. Vacant posts across a number of departments within this committee. |
|
(621) |
Community Wellbeing & Housing |
Additional Grant for Homelessness Prevention and Home Office Supported Asylum Seeker accommodation, plus savings from vacancies. |
|
712 |
Business Infrastructure & Growth |
Largely relating to ongoing running costs of development properties, offset by lower forecasts in Asset Management for use of external consultants. |
|
266 |
Environment & Sustainability |
Expected planning income forecast to come in under budget, overspends forecasted in planning relating to public enquiries for Running Horse, Hazlewood, & Sheep Walk. Local Plan design code works are causing forecasted overspends in Planning Policy. Car Parking fees expected to come in under budget due to a delays in the implementation of the Parking Order amendment. Cemetery income is forecasted above budget. Underspends in Environmental Health due to staffing changes. |
|
2,925 |
Investment & Regen Property Income |
The rent top up income of £4m for Charter Building was received earlier than planned in FY 2023/24, whilst the budget remains in 2024/25. There was an increase in rent income following the rent reviews for 2 offices at the Charter Building - Uxbridge Charter Place Centre Ltd t/a Spaces and at Elmsleigh Centre from C&J Clark. For further breakdowns by property, see Appendix G & H. |
|
(553) |
Landlord Costs (Investment & Regeneration) |
The forecast includes rent free periods
amortising costs. In addition, there is an increase in service
charge costs of £306k at Stockley Park which resulted from
increased estate external charge that is managed by the site
freeholder. |
|
626 |
Treasury (Interest Payable/Receivable) |
£470k over due to Local Authority Housing Fund (LAHF) additional borrowing that has been done through short term borrowing. The temporary accommodation acquired with the assistance of this funding will ease pressure on the Temporary Accommodation budget. Forecasting reduced interest that can be capitalised (£218k) as the Leisure Centre is completed this FY and other projects being suspended, meaning interest is unable to be capitalised. This is partially offset by stronger interest earnings. |
|
(740) |
Interest receivable from KGE |
Knowle Green Estates (KGE) £1.5m - estimate for interest uplift for LAHF properties when loan agreement between KGE & SBC is complete. |
|
(726) |
National Non-Domestic Rates |
Forecast updated following advice we commissioned from LG Futures, following the positive outturn for 2023/24. This is expected to have a continued positive outcome into 2025/26. Correction from previous quarter where income was overstated by £2.1m due to misinterpretation of advice. |
|
(46) |
Reserve Movements |
£22k from Green Initiatives Fund for
canvassing hardware (£9k) and consultants (£13k) for
Spelthorne Climate change SPD, (Climate Literacy) Accreditation
Bronze and to Joju Solar Hubeleon (EV charging) back-office
switch. |
|
896 |
Overspend / (Underspend) |
|
2.1 The rent top up income of £4m for Charter Building was received earlier than planned in FY 2023/24, whilst the budget remains in 2024/25, creating the budget variance shown on Investment & Regen Property Income.
2.2 The costs paid to date for the Best Value Inspection are £83.2k, and we estimate the full costs to the end of the inspection will come to approximately £140k.
2.3 The NNDR forecast has changed from Q1 by £2.1m due to a correction of a previous misinterpretation of advice from LG Futures. The Finance team has learned from the error and will work to avoid any further errors of this nature.
2.4 We have proposed a £1.2m transfer from the Business rates equalisation reserve. This is in respect of an brought forward NNDR deficit from 23/24 and would partially offset the above error. This proposed reserve movement is included in the 2025/26 Reserve Strategy for Revenue and Capital. If approved, the projected revenue outturn will change as per Table 1b below.
Table 1b - Total variances to Budget with adjustment to NNDR equalisation reserve
|
(1,200) |
Proposed Reserve Movement |
Proposed Usage of reserves for £1.2m Business rates equalisation reserve saved from gains in 21/22 and 22/23 to cover the brought forward loss from 23/24 |
|
(304) |
Overspend / (Underspend) |
|
Table 2 – Commercial Assets Variance to budget
|
Commercial Assets |
Revised Budget £’000 |
Forecast Outturn £’000 |
Variance £’000 |
|
Rental Income (as per signed lease) |
(46,533) |
(43,556) |
2,977 |
|
less: Landlord costs |
5,454 |
4,981 |
(473) |
|
Net Rental Income receivable |
(41,079) |
(38,575) |
2,505 |
|
Loan Interest Payable |
22,092 |
22,092 |
0 |
|
Minimum Revenue Provision |
11,118 |
11,118 |
0 |
|
Sinking Funds - contributions to |
725 |
725 |
0 |
|
Sinking Funds - release from |
(2,500) |
(2,500) |
0 |
|
Set Asides for specific revenue purposes |
400 |
400 |
0 |
|
Net Income (to fund Revenue budget) |
(9,244) |
(6,740) |
2,505 |
Table 3 – Regeneration Assets Variance to budget
|
Regeneration Assets |
Revised Budget £’000 |
Forecast Outturn £’000 |
Variance £’000 |
|
Rental Income (as per signed lease) |
(4,414) |
(4,466) |
(52) |
|
less: Landlord costs |
1,374 |
1,294 |
(80) |
|
Net Rental Income receivable |
(3,040) |
(3,171) |
(132) |
|
Loan Interest Payable |
1,036 |
1,036 |
0 |
|
Minimum Revenue Provision |
898 |
898 |
0 |
|
Sinking Funds - contributions to |
109 |
109 |
0 |
|
Sinking Funds - release from |
(350) |
(350) |
0 |
|
Set Asides for specific revenue purposes |
250 |
250 |
0 |
|
Net Costs |
(1,096) |
(1,228) |
(132) |
2.5 Progress to date on corporate efficiency savings are summarised in Appendix G with specific focus on this years (2024/25) savings targets and shows the total expected savings to be achieved in 2024/25 is £240.5k.
2.6 Estimates at this stage in relation to Planning Policy do not take into account resources needed for updating the Local Plan. Updates for this will be made later in the year.
3. Committee commentary and variance analysis
The net underspend at Committees Service Level of (£486,000) as at 30th
September 2024 by Committee is shown in Table 4 below:
Table 4 – Service Level Variance to Budget
|
|
2024/25 Budget Revised £ |
2024/25 Forecast Outturn £ |
2024/25 Variance of forecast from revised budget £ |
|
Corporate Policy & Resources |
11,024,900 |
10,076,900 |
(948,000) |
|
Community Wellbeing & Housing |
5,799,700 |
5,179,000 |
(620,700) |
|
Business Infrastructure & Growth |
2,531,800 |
3,243,600 |
711,800 |
|
Environment & Sustainability |
6,902,700 |
7,169,000 |
266,300 |
|
NET EXPENDITURE AT SERVICE LEVEL |
26,259,100 |
25,668,500 |
(590,600) |
|
Interest, grants & reserve movements |
(17,631,500) |
(17,344,900) |
286,600 |
|
Net Position - Over/ (Under) budget |
8,627,600 |
8,323,600 |
(304,000) |
4. Legal comments
4.1 Comments please
5. Other considerations
5.1 There are no further considerations.
6. Equality and Diversity
6.1 There are no specific areas to highlight. However, equality, diversity and inclusion (EDI) are central to everything that Council does and are woven throughout Council’s Corporate Plans.
7. Sustainability/Climate Change Implications
There are no significant implications arising from the report.
8. Timetable for implementation
8.1 Not applicable
9. Contact
9.1 Mahmud Rogers m.rogers@spelthorne.gov.uk
Background papers: There are none.
Appendices:
Appendix A – Net Revenue Budget Monitoring 2024-25 30 September 2024
Appendix B – Net Revenue Budget Monitoring by Committee 2024-25 30 September 2024
Appendix C – Net Revenue Budget Monitoring Corporate Policy & Resources Committee 2024-25 30 September 2024
Appendix D – Net Revenue Budget Monitoring Community Wellbeing & Housing Committee 2024-25 30 September 2024
Appendix E – Net Revenue Budget Monitoring Business Infrastructure & Growth Committee 2024-25 30 September 2024
Appendix F – Net Revenue Budget Monitoring Environment & Sustainability Committee 2024-25 30 September 2024
Appendix G – Corporate Savings 2425
Appendix H – Net Revenue Budget Monitoring Investment Properties
Appendix I – Net Revenue Budget Monitoring Regeneration Properties