Agenda item

Consider report by Acting Chief Financial Officer. (Copy attached.)

There had been circulated copies of a report by the Acting Chief Financial Officer which provided a statement comparing final revenue outturn expenditure and income for 2022/23 with the final approved budget for the year along with explanations for significant variances.  A net, unaudited outturn underspend of £1.532m was achieved in the 2022/23 revenue budget. The £1.532m net underspend (less than 0.5% of final approved budget) was delivered following a number of earmarked balances being carried forward from 2022/23 into 2023/24.  In total, those amounted to £31.142m and related to a number of initiatives across the Council and specifically included £1.187m of carry forward into the Council’s Recovery Fund and £3.589m of carry forward by schools under the Devolved School Management scheme (DSM).  Council services had delivered an underspend position whilst delivering significant financial plan savings totalling £12.027m.  A high level summary of the outturn position in each Service was detailed in the report.  The Council’s finances and operating model had continued to be affected by the COVID-19 recovery period during 2022/23.  Unprecedented market conditions and inflationary pressures, pressures from pay award and staff recruitment and retention challenges had also continued to impact.  Those financial challenges had resulted in a total draw down of £10.591m from the Recovery Fund during the year.  During 2022/23 detailed revenue monitoring reports were reviewed by the Council Management Team (CMT) allowing proactive corporate management action to be taken during the year where required.  In line with Financial Regulations quarterly monitoring reports were approved by the Executive Committee, authorising the necessary adjustments to the budget throughout the year.  Most recent communications from Scottish Government indicated that pay negotiations required Councils to fund 3% pay increases for all staff groups for 2023/24 on a permanent basis.  The Council budgeted for a 2% pay increase which had left a 1% gap.  A 1% increase in pay for all staff groups would require around £1.8m additional funding.  On that basis the £1.532m 2022/23 revenue underspend would be ring-fenced within the Council’s General Fund balance as a contribution towards pay pressures in 2023/24.  As previously reported, there were significantly more savings delivered permanently in 2022/23 when compared to 2021/22.  The level of savings required by the financial plan totalled £12.027m in 2022/23.  An analysis of delivery of savings was provided in Appendix 3 to the report.  The outturn position showed that £8.934m (74%) savings were delivered permanently in line with approved plans with the remaining £3.093m (26%) delivered on a temporary basis through alternative savings. Members welcomed the report, highlighted that the staff had done an excellent job at making savings on a yearly basis and stressed that it was prudent to ring fence financial resources to help meet the impact of pay negotiations.  The importance of building future capacity within the region to avoid sending people, in particular children, on out of area placements as part of social work and practice services was raised.   Regarding the learning disability underspend of £25k, Members highlighted that additional budget had been provided to the service throughout the year and that what had been listed as an underspend in fact represented a smaller overspend.  In response to a question regarding a budget pressure of £505k identified in the Strategic Commissioning & Partnership service as part of increased service charges and mobile telephony costs, Mrs Douglas confirmed that the overspend was an additional cost experienced as part of licensing arrangements.  The costs were incurred on the back of changes made as part of the transformation programme, and needed to be addressed through change. Regarding the likelihood of pay increases going beyond the additional 1% set aside, Mrs Douglas explained that discussions with the Scottish Government had given firm indications that Councils could budget for a 3% rise.  The Director – People, Performance and Change explained that pay negotiations were ongoing, and that whilst there had been a move to balloting union membership on a settlement, agreement was not expected in the near future.  Members expressed their hopes that they would be able to use future financial savings to help deliver better services to the communities of the Scottish Borders. 

DECISION

AGREED:-

(a)     the content of the report and noted the favourable outturn position for 2022/23 prior to Statutory Audit;

(b)     to approve the ring-fencing of £1.532m 2022/23 revenue underspend within the Council’s General Fund balance to provide for 2023/24 pay pressures;

(c)     to note the draft unaudited outturn position would inform the budgetary control process during 2023/24 and inform the financial planning process for future years; and

(d)     to approve the sums earmarked under delegated authority by the Director, Finance and Corporate Governance as well as adjustments to previously approved earmarked balances as shown in Appendix 1 to the report.