Agenda item

This report details the final revenue and capital outturn position for the financial year ended 31 March 2024.These figures will form part of the Council’s Statement of Accounts, which will be presented to the Audit Committee following the completion of the External Audit. The report also presents a summary of debts written off during the 2023/24 financial year in line with the constitutional requirement to submit a report to Cabinet on an annual basis setting out details of all debt written off.

Discussion:

The Chief Finance Officer introduced the report, she informed the Committee the end of year financial position which represented an overspend of £6.7m following declassification of £6.8m in earmarked reserves. General reserves stood at £10.65m at the end of the financial year, just above the minimum level of £10m set by the Chief Operating Officer.

The Chief Finance Officer stated that whilst just over £3m had been written off, this represented less than 1% of the amount of debt raised during the year and related to debts which had been accrued over a number of years.

The following issues were discussed:

Final budget position – Members welcomed the lower than expected overspend. The Chief Finance Officer commented that whilst positive, total spend in the last financial year was £11m above income and as a consequence the budget build for the current year had been very difficult. Medway was in a similar position to other small upper tier authorities, and there may be a structural issue with the distribution of funding. Despite this, the Council had a rigorous One Medway Financial Improvement and Transformation Plan and was investing in services including rightsizing adult social care and strategic support service teams.

Use of earmarked reserves – Further information was requested why £2.5m in earmarked reserves had been used for Housing when the final budget position had been underspent by £1.5m in total. The Chief Finance Officer explained that monies used by the Council included ring fenced grants which had to be used for specific purposes, but the budget was reported by department in totality. Consequently, the department could show an underspend in one area due to the use of ring-fenced grant, which enabled the Council to use un-ring fenced income i.e council tax to fund pressures on other services. In Public Health earmarked reserves had also been used as ring fenced funds were used over a number of years to provide ongoing budgetary income for specific projects and the Council had to ensure that those funds were spent in Public Health.

Further information on ring fenced reserves, including a list of reserves was requested. The Chief Finance Officer informed the Committee that further information on ring fenced grants was provided in the Council’s accounts, however, she undertook to provide additional information to the Committee outside of the meeting.

Potholes - a Member asked why there was a reported £2m underspend in relation to potholes out of total budget of £13m when many roads in Medway were in need of repair. The Chief Finance Officer explained that the budget was underspent in some areas of Front Line Services, such as staff vacancies and reduced spending on energy costs, however, monies spent on actual road repairs were from the capital spending budget, so the budget for repairs was fully spent.

A Member expressed the view that the underspend of £39,000 should have been spent on repairing potholes, the Chief Finance Officer explained that the Housing Infrastructure Fund was an external grant and the monies unspent had to be returned.

New Homes Bonus – Information was requested as to what the monies received form the New Homes Bonus had been spent on. The Chief Finance Officer explained that the New Homes Bonus Had been a national scheme to encourage development in an area but had been wound down since 2016. Income from the scheme in 2023-24 had been just under £1m and was unrestricted funding and had been spent by the Council effectively funding all services that are not funded by ringfenced grants.

Debt write off – Members welcomed the low level of debt write off. In response to a question for more detail regarding the criteria for writing off debt, the Chief Finance Officer explained that the criteria for writing off debt was dependent on the type of debt. Some debt which was unenforceable was written off quite quickly, whilst other debt had specific legal criteria which were followed. For all debt written off Council policy and legal processes were followed.

A Member commented that bad HRA debt had increased nationally and asked whether this had been the experience in Medway. The Chief Finance Officer did not have this information available but undertook to provide it outside of the meeting. She commented that debt was more difficult to collect with a greater number of residents being unable, rather than unwilling, to pay due to the rising cost of living in recent years. Collection rates were high, debt write off was less than 1% of Council budget and assumptions for collection of debt were built into the budget.

Decision:

1.     The Committee noted the 2023/24 revenue and capital outturn position as summarised in Section 5 of the report, and the Council’s reserves position as summarised in Section 13 of the report. 

2.     The Committee noted that Cabinet recommended that Council agree to the following additions as set out in Section 12 of the report: 

• £430,000 to the capital programme to fund the overspend reported on the Operational Depot scheme, to be funded by Prudential Borrowing, and 

• £4,655 to the capital programme to fund the overspend on the Mountbatten House Purchase scheme, to be funded from borrowing in advance of the capital receipts expected from the sale of the building to Medway Development Company.

3.     The Committee requested the Chief Finance Officer provide the Committee with briefing notes related to earmarked reserves and HRA debt.