To consider the report of the Cabinet Member for Performance and Resources updating Members on the Financial Outturn Report 2021-22.
50.1 The Cabinet Member for Performance and Resources introduced the report and explained that the cyber incident of December 2021 continued to have a significant impact on the work of the Finance team. She paid tribute to the Finance Team and thanked officers for their hard work in finding manual work arounds to enable them to provide the detailed reconciliations set out in the report.
50.2 The Cabinet Member for Performance and Resources informed Members that the year-end position for the financial year 2021/22 was a decrease to the General Fund Balance of £252k against a budgeted increase of £129k. She explained that the continued impact of the Covid-19 pandemic and the cyber incident in 2021 had created significant financial challenges for the council. The Cabinet Member for Performance and Resources referred Members to the figures set out at 4.1 in the report and confirmed that areas in a favourable position were the Communities and Neighbourhoods and Environment and Leader portfolios. She advised that there were pressures in the Performance and Resources portfolio, which had seen an £80k overspend in IT and further noted that the Council had seen a release of £6.1m from the Section 31 Grant Repayment Reserve.
50.3 The Chair asked the Cabinet Member for Performance and Resources whether the pressures on the council finances caused by the Covid-19 pandemic had exasperated pressures the council was already facing as a result of the difficult financial climate for local government. The Cabinet Member for Performance and Resources confirmed that throughout 2021, the City Council was still very much facing pressures from Covid-19, through lost income from car parking revenue whilst lockdown restrictions were still in place, lost income from the Arbour whilst there were restrictions on funeral wakes, and a lack of appetite of businesses to take on new commercial leases due to the uncertainty caused by the pandemic. She expressed the view that difficulties in local government finance nationally would not have had a major impact on the council’s budget. The Financial Services Manager further confirmed that Covid-19 restrictions were only relaxed towards the end of the Summer of 2021 which coincided with the end of the financial year.
50.4 The Chair asked whether the Cabinet Member for Performance and Resources expected the income from parking to fully recover to pre-Covid-19 levels. He also asked whether there was still an appetite for car parking levels to recover fully, noting that there needed to be a balance between generating revenue and meeting the council’s net zero aspirations. The Cabinet Member for Performance and Resources confirmed that parking levels were increasing, and that they were now close to pre-Covid-19 levels. This said, she acknowledged that as a society, more needed to be done to encourage environmentally friendly travel into city centres. She expressed the view that a balancing act was needed, and that the council needed to move at the pace of consumers.
50.5 In response to a further question from the Chair regarding whether active travel facilities and infrastructure were being accounted for in the ongoing regeneration taking place in the city, the Cabinet Member for Performance and Resources confirmed that there would be bike racks in the Kingswalk Shopping centre area. She also explained that the construction of the city could adapt to these needs in the future.
50.6 Councillor Wilson referred to paragraph 3.1 in the report and the statement that the financial performance in the months since December 2021 was based on the best analysis that the finance team could achieve using the manual records. He asked how the team planned to share the records with the council auditors when the end of year estimates were due. The Financial Services Manager explained that the council had not yet provided the end of year statement to the auditors but would ensure that when it was due, the figures would be correctly pulled together. In response to a follow-up query from Councillor Wilson, the Financial Services Manager confirmed that the Finance team were still in discussion with Deloitte who needed to sign off the previous end of year statement before receiving the statement for this financial year.
50.7 Councillor Hilton referred to the adverse variance of £381k and raised concerns that the council was at a disadvantage moving into the 2022/23 budget. The Cabinet Member for Performance and Resources commented that she would rather that the council was in surplus than deficit, however she was confident in the council’s Section 151 Officer and the Finance team. She noted that some areas, such as recycle sales, were performing very well compared to previous budget expectations.
50.8 Councillor Hilton referred to paragraph 3.3. in the report and the statement that the council had secured central Government funding to support recovery from the cyber incident totalling £250k. He asked for assurances that the total cost of the cyber incident recovery would not exceed £1m, and whether the Cabinet Member for Performance and Resources was confident that the council would be in a position in the near future where all applications were restored and protected. In response, the Cabinet Member for Performance and Resources referred Councillor Hilton to the answer she provided during the latest full Council meeting on 29th October and confirmed that the council would always ensure that value for residents’ money was a key consideration in any decisions. She also advised that the IT team had put additional protection in place, such as moving many applications onto the cloud and noted that the cyber incident had adjusted the timetable of planned investment, such as the new laptop rollout.
50.9 In response to an additional question from Councillor Hilton as to the reasons behind the £117k overspend in HR and Communications, The Cabinet Member for Performance and Resources referred to 5.11 in the report which highlighted that the overspend was a result of a budget pressure around apprenticeships which had since been alleviated. The Accountancy Manager confirmed that the majority of this pressure was in relation to apprenticeships.
50.10 In response to a query from Councillor Wilson in relation to paragraph 4.4. and the statement concerning delays in 2021/22 income receipts, the Financial Services Manager confirmed that this was to do with the manual processes which the finance team needed to adopt as a result of the cyber incident. He explained that the council generated income from a variety of areas and the council had received the relevant funds.
50.11 Councillor Pullen referred to paragraph 5.9 and noted that it found it difficult to believe that the St Oswalds and Eastgate properties were performing well, referring to the empty units in Eastgate shopping centre. The Cabinet Member commented that the council had taken on the Eastgate shopping centre because of the viable lease opportunities, nearby car park and its key location in the city centre. She also highlighted out that the budget set aside for the Eastgate centre was very moderate and that income was tracking along those moderate levels.
50.12 Councillor Pullen raised concerns regarding the additional £112k cost pressure from the Aspire Leisure Trust. He noted that the council continued to support the Trust and asked for further information about what was causing the cost pressures. The Cabinet Member for Performance and Resources explained that the majority of those cost pressures were down to the council paying the Aspire Trust’s utility costs during the Covid-19 pandemic. She confirmed that conversations between the Cabinet Member for Culture and Leisure and the Head of Culture were ongoing as to how the council would support Aspire going forward.
50.13 In response to concerns raised by Councillor Tracey regarding the council’s agile working policy and whether this was causing officers to duplicate work, the Cabinet Member for Performance and Resources provided an overview of the City Council’s ‘hot desking’ system. She explained that processes were in place to support staff to work efficiently both from home and in the office. In response to further comments from Councillor Tracey regarding office equipment and printing, the Cabinet Member for Performance and Resources explained that DSE (Display Screen Equipment) assessments were standard in office jobs and reminded Members that the council tried to operate as paperless as possible.
50.14 Councillor Tracey asked for clarification as to whether all officers would be expected to return to the office to work in the future. The Cabinet Member for Performance and Resources confirmed that the City Council would continue to offer hybrid working opportunities for staff and noted that many officers found that the option to work from home had helped them achieve a better work life balance. She also noted that hybrid working assisted the council to look for skilled employees outside the local area and further afield.
RESOLVED – That the Overview and Scrutiny Committee NOTE the report.