Agenda item

To consider the report of the Cabinet Member for Performance and Resources updating Members on financial monitoring information for the third quarter of 2021/22.

109.1  The Cabinet Member for Performance and Resources introduced the report and confirmed that the purpose was to present the current best estimate of the Council’s financial position against the agreed budgets for the 2021/22 financial year. She confirmed that the forecast year-end position was a decrease to the General Fund balance of £109k against a budgeted increase of £129k, and that the year-end forecast position had therefore switched from a net increase of £180k to the General Fund forecast at Quarter 2 to a net decrease of £109k.

109.2  The Cabinet Member for Performance and Resources noted that as per the narrative in section 3 of the report, there was continued uncertainty surrounding the recovery of income streams as a result of the financial implications of Covid-19 and the cyber incident which had impacted the Council since December 2021. She confirmed that the Planning and Performance and Resources portfolio areas were experiencing pressures.

109.3  With regards to parking income, the Cabinet Member for Performance and Resources confirmed that the year-end forecast outcome had decreased by £25k as visitors to the city over the festive period had reduced due to the Covid-19 Omicron variant.  She confirmed that the smallest percentage change could have an impact on benefit payments and Housing Subsidies, however she noted that the cost of providing such payments was out of the Council’s control and mitigated by some extent by benefit overpayments that had reduced the net service spend by £237k. The Cabinet Member for Performance and Resources further confirmed that there were pressures in the Commercial Property and Crematorium service, however with the easing of restrictions, the opportunity to hold additional wakes was offsetting some of this pressure.

109.4  The Chair referred to the narrative at 3.5 in the report regarding the Sales, Fees and Charges (SFC) compensation scheme and asked for clarification on the statement that the settlement of the £400k accrued for Quarter 1 was still outstanding. The Director of Policy and Resources confirmed that the Sales Fees and Charges settlement had been agreed by central Government and that he expected that the Council would receive the money by the end of the financial year.

109.5  In response to a request from the Chair for clarification on what was meant by the SWRDA acronym at 5.2, the Director of Policy and Resources clarified that it referred to the ‘South West Regional Development Agency.’ The Director of Policy and Resources further explained that at the end of the financial year, this money was placed into the Council’s financial reserve and reviewed at year-end to check against the net balance. The Chair asked whether additional narrative on this area could be provided in future reports and the Director of Policy and Resources confirmed that he would be happy to provide a further paragraph explaining the SWDRA position going forward.

109.6  Councillor Wilson referred to the narrative at 4.2 concerning the December cyber incident and commented that the incident had resulted in a swing of £289k. He asked whether the forecast loss would impact the Council’s reserve for the following year. The Director of Policy and Resources confirmed that the Council had received £50k from the Local Government Association and £200k from the Cyber Security Fund to help towards the cost pressures brought about by the cyber incident. He explained that costs were to be managed in-year, and that the £380k cyber reserve would be for future expenditure rather than for the current financial year. He also confirmed that £150k was at a net cost to the council. The Cabinet Member for Performance and Resources explained that at the current stage of recovery from the cyber incident, it was best to create a reserve as a General Fund reserve estimate was needed at the time of the Council’s budget.

109.7  In response to a further query from Councillor Wilson regarding whether external auditors might be concerned about the £380k not being in the Council’s accounts at the end of the financial year, the Director of Policy and Resources noted that the money was not due until 2022/23 and that it was impossible for Councils to place future moneys into a reserve when they had not yet received it. He further explained that the cyber incident had been identified as an additional pressure and it was being managed as such. The Director of Policy and Resources noted that the Council was managing the financial outturn as best it could and that it would manage the pressures in-year to put the Council in a better position for next year.

109.8  The Chair referred to the narrative at 5.14 concerning the pressures in the Planning service as a result of the surge in small scale planning applications. In relation to the statement that the ‘statutory nature of the fees that can be charged prevents the full cost of the service from being recouped’, he requested confirmation that central Government was responsible for setting the fees. The Director of Policy and Resources confirmed that this was the case.

109.9  In response to a further query from the Chair as to whether the Council was lobbying the Government to make changes to the statutory fees in light of this challenge, the Cabinet Member for Performance and Resources confirmed that the Managing Director had brought the matter to the attention of the Member of Parliament. She noted that if changes were made to the statutory fees by Government, then it was her hope that the costs would be aligned accordingly.

109.10          Councillor Hilton referred to the narrative at 5.13 concerning the lost income in the Planning service and asked whether the additional loss of £82k could be directly attributed to the cyber incident, given that applicants were unable to request searches or make new applications online. The Cabinet Member for Performance and Resources explained that at the time the report was written, there was no work-around for the Planning service and therefore the Finance team had calculated the forecast to the best of their ability without having access to the system. She explained that without access to the previous figures, it was difficult to confirm whether the loss could be directly attributed to the cyber incident, however she confirmed that an interim Planning service workaround was now operating. The Director of Policy and Resources further explained that the report was based on the best estimate of the income levels prior to December 2021 and the projected outturn.

109.11          Councillor Hilton expressed the view that the £212k forecast variance in the Planning portfolio was worrying. Referring to the grant aid and £380k reserve, he asked whether the Council was considering making changes to how the Planning service operates as a result of the cyber incident, noting that the current workaround was more time-consuming for officers compared to the previous system. The Director of Policy and Resources noted that Planning was outside of his areas of responsibility but confirmed that the Council was in the recovery stage and that applications were being brought back online. The Director of Policy and Resources also noted that he expected that WiFi would soon be available in the Crematorium and Guildhall., and confirmed that the costs would become more apparent as the recovery progressed.

109.12          Councillor Hilton referred to the narrative concerning payment performance at 7.1 and expressed concern that no invoice figures were available due to the cyber incident. He asked the Cabinet Member whether she had any concerns about Councillors not paying their Council Tax on time. The Cabinet Member for Performance and Resources stated that she hoped that all 39 Councillors within the City Council would hold themselves to the principles of integrity and honesty and that there was a Code of Conduct and sanctions to hold Members to account if they fell short of that standard.

109.13          In response to a follow-up question from Councillor Hilton as to whether the cyber incident had impacted payments to the Council’s creditors and suppliers, the Director of Policy and Resources confirmed that processes had been put in place to ensure the continued payment of the Council’s creditors. He confirmed that he was confident that the relevant controls were in place and that Purchase Orders (POs) were issued to the Senior Management Team and Heads of Service only. The Director of Policy and Resources further noted that the Council’s income was partly managed through Capita Pay, a PCI secure system.

109.14          The Cabinet Member for Performance and Resources paid tribute to officers across the Council, from senior management to junior officers, and commended staff for their hard work in managing the challenges of the cyber incident and for finding creative workarounds to keep services running.

109.15          In response to a follow up question from Councillor Hilton regarding the Council’s statement of accounts, the Director of Policy and Resources confirmed that Councils across the country were experiencing delays and that many other Councils had not started their audits. He noted that the City Council had 90% of audits completed by the July deadline.

109.16          The Chair queried whether the Cabinet Member had any concerns around the £150 Council Tax rebate for residents. The Cabinet Member for Performance and Resources stated that she did not have any particular concerns but encouraged Members to inform residents that the process of accessing the rebate would be much smoother if they paid their Council Tax by direct debit. She explained that without having a direct debit, the rebate process would not be automatic. The Director of Policy and Resources clarified that there would be an application process for non-direct debit holders as there would need to be an additional check for fraud. He explained that it may well take longer for non-direct debit holders to access the rebate as a result.

109.17          In response to a query from Councillor Organ as to whether the support would be available for Council Tax bands A-D only, the Director of Policy and Resources confirmed that this was the case, however additional support would be provided to low income families living in larger properties and it was likely that there would be an application process for residents to access this support. In response to a follow-up query from Councillor Organ, the Director of Policy and Resources confirmed that the rebate did not apply to empty properties.

109.18          Councillor Durdey asked whether the Council was aware of any issues with missed payments. The Director of Policy and Resources noted that there was still an immediate payments system in place, with a mechanism for officers to raise a Purchase Order and pay the invoice as appropriate. Councillor Durdey expressed the view that this was a testament to the hard work of the Finance team.

109.19          Councillor Pullen asked whether the Council would be writing to residents who did not pay their Council Tax by direct debit to advise them that they needed to apply for the £150 Council Tax rebate. The Director of Policy and Resources indicated that this had not yet been defined since guidance had only been received by central Government the previous week. The Director of Policy and Resources reiterated that it was likely that non-direct debit holders would need to apply for the rebate and an option under consideration was a Council Tax information leaflet.

109.20          Councillor Pullen expressed the view that this information needed to be shared as widely as possible so that residents who did not have Council Tax direct debits were aware that they needed to apply for the £150 Council Tax rebate. The Cabinet Member for Performance and Resources confirmed that the Council’s social media accounts would be updated with information about the Council Tax rebate and application process for non-direct debit holders. She also confirmed that advice agencies in Gloucester would be fully briefed.

109.21          Councillor Pullen referred to the forecast shortfall in the Planning service and the statement in the narrative at 5.14 that it was ‘hoped that major development projects planned within the city will boost this income in the next year.’ He asked whether the Committee could receive an update on what major planning applications were in the pipeline, such as the old Debenhams building, HKP warehouses and the Fleece Hotel, and where they were likely to be. It was agreed that follow-up enquiries would be made with Planning officers. The Cabinet Member for Performance and Resources suggested that the Overview and Scrutiny Committee may wish to invite the Cabinet Member for Planning and Housing Strategy and the new Head of Place to the Overview and Scrutiny Committee meeting in June 2022 for the discussion around the year-end Financial and Performance Monitoring reports, so that they could put any Planning service queries to the Cabinet Member directly.

109.22          Referring back to the Council Tax rebate, Councillor Wilson asked whether there was a deadline for residents who did not have direct debit payments to apply. The Director of Policy and Resources reiterated that local authorities had only received guidance from central Government the previous week, however there was no deadline that he was aware of at this stage. He confirmed that the rebate would be available for all residents and there may be steps in place to remind people who do not apply about the rebate and application process, similar to the Covid-19 grant process.

109.23          Councillor Gravells asked for the Cabinet Member’s comments as to how Councillors could best promote awareness of the Council Tax rebate, noting that some residents did not rely on social media for their news. He queried whether there were any plans to target community centres. The Cabinet Member for Performance and Resources confirmed that the Communications team would be developing a detailed plan and Councillors may be approached in due course for advice as to how best raise awareness within their communities.

109.24          In response to an additional question from Councillor Gravells regarding the unavailable data, the Cabinet Member for Performance and Resources confirmed that this was the first Financial Monitoring report presented in this way due to the cyber incident. Councillor Gravells acknowledged the challenges faced by officers, initially during the Covid-19 pandemic and more recently the cyber incident and commended staff for their efforts. He asked the Director of Policy and Resources to pass on his thanks to the Finance team for their hard work.

RESOLVED - That the Overview and Scrutiny Committee NOTE the report.