Agenda item

Consider report by Director Finance and Procurement. (Copy attached.)

With reference to paragraph 6 of the Minute of the meeting held on 23 November 2023, there had been circulated copies of a report by the Director - Finance and Procurement which provided an update on financial support required by Live Borders to ensure financial balance in 2023/24.  The report noted that Live Borders had now finalised its financial forecasts and recommended that an allocation of £1 million was provided to the Trust from Council reserves.  Without the financial support the Trust would not be able to meet its projected financial liabilities in the current year.  The Council had been in detailed discussions with Live Borders regarding their financial position in the current year.  The Trust was experiencing significant financial difficulties as it adjusted its service delivery model in a post-COVID operating environment, dealt with a backlog of maintenance, the effects of inflation and the ongoing impact of energy price rises in recent years which had significantly impacted the cost of operating sports facilities, notably swimming pools.  At the Council meeting on 23rd November 2023, Council agreed the independent consultants’ report on the joint strategic review of sport, leisure and cultural services and agreed the resultant consolidated set of recommendations and the report findings.  In implementing the recommendations from the strategic review there would be the requirement for a detailed prioritisation of spend, cost reductions, additional income generation and the potential closure of some facilities in order to keep the Trust financially viable.  The financial implications in the joint strategic review report noted that there were expected to be significant financial implications resulting from both the implementation of the recommendations contained within the report and the short to medium term financial support required by Live Borders to ensure they remained a going concern.  It was also noted that Live Borders were still finalising updated financial forecasts for the current year and that officers would report back to Elected Members for approval of additional funding as required and as the scale of financial implications became clear. Live Borders had finalised financial forecasts for the current year, including a detailed cash flow projection to the 31st March 2024.  That information received after the Council meeting on the 23rd November confirmed, based on the current run rate of expenditure and forecast income, that by the 31st March 2024 the Trust was forecast to require up to £1.5m of additional funding to meet their projected liabilities.  Live Borders was proactively taking a number of management actions to minimise that pressure as far as possible.  As well as addressing financial challenges during the remainder of this financial year, significant emphasis was being placed on assessing the likely financial implications in 2024/25 as part of the ongoing financial planning process.  It was now considered that the additional support recommended for 2023/24 would have to be followed up with an additional package of support as part of the budget process for 2024/25 and future years.  The Director – Finance and Procurement provided a presentation of the proposals and responded to Members questions.  In response to a question regarding whether further additional resources above the £1.5m identified would be required, the Director clarified that the proposed funding was targeted at addressing revenue forecast issues for the current financial year.  Addressing funding issues for future years would require further resources and difficult decisions needed to be made.  Regarding the letter of comfort for LiveBorders, it was explained that the letter was a guarantee by the Council fund LiveBorders for a 12-month period.  The letter would allow Live Borders’ 2022/23 accounts to be signed off.   In response to a question regarding whether the Council would receive regular updates from LiveBorders, the Chief Executive highlighted that at its meeting on 23 November 2023 it had been agreed that Council would be regularly updated on transformational work as part of the change programme.   The first of those updates was expected at the end of Quarter 4 of the current financial year. 

DECISION

AGREED to:-

(a)     note the Live Borders 2023/24 forecast pressures of up to £1.5m;

(b)     approve the allocation of £1m from Council Reserves to provide Live Borders with immediate cash flow support;

(c)      delegate authority to the Director of Finance & Procurement, in consultation with the Elected Members of the Executive Board of the Joint Transformational Change Programme, to allocate further funding, up to a maximum of an additional £0.5m, before the 31st March 2024 if required; and

(d)     delegate authority to the Director of Finance & Procurement to provide a letter of comfort to Live Borders external auditors, confirming the Council’s ongoing financial support for Live Borders to ensure they remain solvent and a going concern.