The committee received the report of the Section Head – Financial Planning and Analysis.  The report informed the committee of the revenue and capital outturns for the financial year 2020/21.The committee was asked to review the recommendations for Cabinet and consider any further recommendations it wished to make in respect of these to Cabinet.

The Section Head – Financial Planning and Analysis introduced the report and highlighted the key areas, in particular:

·       Council had approved a revised services net budget of 17.703 million and the outturn showed a net spend of £17.411 million; a favourable variance of £0.292 million.

·       The revised capital programme had a variance of £28 million demonstrating the impact of the pandemic on large schemes like Riverwell. Funds were being rephased into the current year to ensure scheme completion.

·       Council reserves remained healthy. The economic impact reserve had taken the brunt of the losses experienced by the pandemic.

·       There had been a loss of income of £5 million including £2.3 million in commercial rent. The council incurred £1.6 million of additional expenditure but services had identified £1.8 million of compensating savings.

·       Emergency funding of £1.4 million had been received from the Government plus £1.3 million from the Government’s income guarantee scheme which excluded commercial rent.

·       The total overall loss was £2.1 million of which £0.8 million came from the Croxley Park reserve.

·       Reserves had been reviewed during the year and obsolete reserves transferred into the renewal and recovery fund.

The officer concluded noting that the council had undertaken proactive stewardship during the pandemic and was in a relatively strong financial position to react to future challenges.

Discussing the resulting risk of rephasing the capital budget, it was noted that the biggest risk was that prices could increase and there could be issues with supply chains. The council had, however, saved money on borrowing last year. As far as existing projects were concerned, pricing would depend on the contractual agreements. Further updates on costs would be available in the q1 finance digest.

Turning to the levels of savings realised by the Watford 2020 programme, members were advised that the original business case had been made three to four years ago and some of the projections had been over-ambitious. Savings had been made but the pandemic had also changed the nature of the services.  The balance remained healthy and other savings had been made outside the programme.

The Portfolio Holder added that the business case was made before detailed work had been undertaken and £1 million savings would be achieved albeit with some slippage into the current financial year. The project had also enabled the council to better cope with the pandemic.

It was clarified during the discussion that the original business case projected savings of £1.4 million of which £1 million had been achieved.

Following a question around contingencies built into projects, it was confirmed that 5-10% was built into project budgets, depending on their scale.

RESOLVED –

that the Finance Scrutiny Committee supports the recommendations to Cabinet as set out in the report.