Cabinet – 5 February 2025

Financial Monitoring Report (based on Performance April to December 2024 inclusive)

Purpose	For Decision
Classification	Public
Executive Summary	This report provides the latest budget forecasts for the General Fund, Housing Revenue Account (HRA) and capital programme for the 2024/25 financial year, based on the performance from April 2024 to December 2024 inclusive. It confirms that: 1) despite further variations to the quarter 2 position a balanced budget is forecast in the General Fund overall. 2) the HRA has improved by £407,000 and now forecasts a £207,000 surplus. 3) the capital programme for 2024/25 has a net increase in this update of £225,000 and now totals £52.725m.
Recommendation(s)	It is recommended that Cabinet: 1) note the latest budget forecasts of the General Fund, HRA, and Capital; and 2) Recommend that Council approve the reallocation of the net residual 2024/25 Pay Award contingency (£496,000) to create a new £150,000 Devolution and Local Government Reorganisation (LGR) reserve, with the remaining £346,000 being applied to the Council’s existing Corporate Priority Reserve.
Reasons for recommendation(s)	To comply with accounting codes of practice and best practice which requires councils to regularly monitor the annual budget position and take any action to support the sustainability of the council’s financial position ensuring we are being financially responsible. To comply with the council’s financial regulations regarding budget virements and supplementary budget requests.
Ward(s)	All
Portfolio Holder(s)	Councillor Jeremy Heron – Finance and Corporate
Strategic Director(s)	Alan Bethune – Strategic Director Corporate Resources and Transformation (Section 151 Officer)
Officer Contact	Paul Whittles Assistant Director - Finance 02380 285766 paul.whittles@nfdc.gov.uk

1. Following the approval of the Original Budget for 2024/25 in February 2024 and updates after the first quarter and half year positions, this report provides a further update on the General Fund, Housing Revenue Account and Capital budgets, adjusting for any budget changes now required and recommended as at the quarter three position.

2. Financial Monitoring is an important feature in the management of the council’s finances as it gives an opportunity to reflect on variations as against the latest set budget and reflect on the impact that these variations may have over the period covered by the council’s Medium Term Financial Plan (MTFP).

Pay award implications

3. As previously reported the 2024/25 pay award for all employees has now been agreed.

4. Following a detailed review of the impact across all Council pay budgets this has collectively added an additional £235,000 of salary costs above the original service level budgets in the General Fund and £66,000 in the HRA.

5. In the General Fund the £235,000 will be funded by reallocating the centrally held £800,000 pay award contingency to each service. £69,000 of the residual £565,000 balance is being applied first to ensure a balanced budget is achieved in 2024/25. It is then recommended to use the remaining £496,000 to create a new £150,000 Devolution and Local Government Reorganisation (LGR) reserve and to top up the existing Corporate Priorities Reserve by £346,000 with an intention for the latter to support the costs of the Waste Strategy Rollout.

6. In the HRA the £66,000 will be funded from its £300,000 contingency, leaving £234,000 to contribute towards the current positive outturn position.

General Fund revised projection

7. A General Fund budget of £24.513 million for 2024/25 was agreed by council in February 2024 (£24.898 million at Portfolio analysis level, with other budget elements reducing this to this lower General Fund budget figure).

8. The quarter one monitoring report to September Cabinet identified net reduced budget requirements of £4,000. Overall, no additional net budget adjustments in quarter two were reported to Cabinet in November.

9. This report again identifies a number of new budget variances but there is no overall change from the quarter 2 position, that being a £4,000 reduction from the original budget approved in February to £24.509 million.

10. The latest budget variations include additional net favourable expenditure variations of £40,000 and additional net income decreases of £40,000.

11. New major variations are detailed below and can be found in (Appendix 1), with full variations listed in (Appendix 2).

Environment and Sustainability (Place, Operations and Sustainability

12. Waste transition costs £27,000 – Various adjustments in year to storage, advice, communication, and project support costs as detailed in the December MTFP Update presented to Cabinet has increased the 2024/25 waste transition costs by a total of £39,000, of which £12,000 falls within the Finance and Corporate portfolio (paragraph 17).

13. Garden waste (£8,000) – Additional licencing costs associated with the Bartec management system supporting the garden waste service totalling £32,000 are being covered by a further £40,000 increase in income from the garden waste service.

14. Public lighting (£50,000) – Electricity costs are lower than expected leading to a forecast saving of £50,000 for the year across our public lighting infrastructure network.

Finance and Corporate (Corporate Resources and Transformation)

15. There are variations that impact directly on the reported Finance and Corporate Portfolio summary and other variations under the control of the Portfolio holder which impact all Portfolios or other General Fund budgets:

16. Eling Toll bridge (£40,000) – This was originally approved and included as part of the Asset Maintenance and Replacement budget 2024/25 to support the essential repairs required at Eling Tide Mill toll bridge and quayside. Due to the classification of works being undertaken this has been transferred to capital (paragraph 44) and will supplement an additional request which shall be subject to formal approval as part of the Asset Maintenance and Replacement Programme and General Fund Capital Programme 2025/26 report.

17. Waste transition costs £12,000 – Additional storage related budget resulting from increased NNDR and loss of rental income (paragraph 12).

18. Commercial Investment Properties £248,000– Platinum Jubilee Business Park has incurred £60,000 of additional Business Rate costs and generated £100,000 less income than budgeted due to extended void periods. The Queensway site has also experienced additional Business Rate costs totalling £27,000 and due to site dilapidations being required following the surrender of the lease by the previous tenant, no third-party income will be received during the 2024/25 financial year. This site will be used to support the delivery of the new waste service during 2025/26 with that income loss recognised in the latest waste transition costings.

Planning and Economy (Place, Operations and Sustainability)

19. Planning Development Management (£30,000)– Ongoing vacancies within the Development Management service has resulted in an additional £30,000 on top of the of £80,000 salary underspends declared as part of the quarter 2 report. Vacancies will continue to be managed throughout the remainder of the year to provide further mitigation to the £150,000 budgeted income shortfall presented as part of the quarter 2 report.

20. Community Infrastructure Levy (CIL) (£90,000)- An additional £90,000 income relating to the administration of CIL compared to budget is providing this favourable surplus supporting the costs incurred.

21. The revised General Fund Budget for 2024/25 can be seen at (Appendix 1), with further details on the variations being reported included within (Appendix 2).

Other Financial Matters to Note

22. The following matters do not affect the council’s net revenue position but is included for information and transparency.

23. Cemeteries – Safety maintenance - Within the Environment and Sustainability portfolio £41,000 has been allocated from the Asset Maintenance and Replacement contingency to enable safety works to be completed at Sway cemetery.

24. Coastal maintenance - Additional costs relating to coastal maintenance previously anticipated to be capital in nature are creating a £100,000 adverse variance against the revenue budget. An adjustment to the Revenue Contribution to Capital Outlay (RCCO) has been made to reflect this and mitigate the impact.

25. Fleet and Infrastructure – In 2024/25 £80,000 was provided to support the strategic approach of moving the Council’s fleet to zero carbon. The service is forecasting expenditure of £10,000 in 2024/25 consequently the remaining £70,000 will be rephased to 2025/26.

26. Local Plan - In 2024/25 £350,000 was provided to support the development of the Local Plan within the Planning and Economy portfolio. The service is forecasting expenditure of £100,000 in 2024/25, consequently the remaining £250,000 will be rephased to 2025/26.

Housing Revenue Account Revised Projection

27. A break-even HRA budget for 2024/25 was agreed in February 2024, with a Revenue Account contribution of £9.700 million supporting the financing of the £32.380 million HRA Capital Programme.

28. The quarter one monitoring report to September Cabinet identified additional budget requirements of £122,000 and the quarter two report to November Cabinet identified further additional budget requirements of £78,000.

29. This report identifies net budget reductions of £407,000 (£207,000 reduction in year to date). New variations are detailed in the following paragraphs and summarised in Appendix 3.

30. Dwelling Rents (£400,000) – Rental income is exceeding the budget by £400,000. This reflects additional properties arising from the Development Programme Strategy but could be mitigated if additional Right to Buy sales result before year end following the recently announced discount rates.

31. Non-Dwelling Rents £40,000 – A reduction in garage income reflects the impact of reduced lettings, largely linked to the ongoing project to provide a full options appraisal of all sites.

32. Contributions Towards Expenditure (£18,000) – The Council has received Government Grant of £17,760 towards the costs of implementing Tenant Satisfaction Measures requirements.

33. Repairs and Maintenance £230,000 – This reflects ongoing supplies and services cost requirements of £152,000, largely on void properties, £35,000 for equipment purchase and training for high level working, £25,000 impact of the pay award allocation and an £18,000 additional requirement for a technical gas audit.

34. General Management (£277,000) – This reflects additional pay award cost implications of £23,000 less the removal of the £300,000 pay award contingency detailed in paragraph 6.

35. Other Expenditure £18,000 – Pay award allocation implications on Grounds Maintenance and Housing Schemes and Temporary Accommodation are £18,000.

36. The updated HRA budget can be seen at (Appendix 3).

Capital Expenditure (General Fund and Housing Revenue Account)

37. A Capital Programme budget of £48.959 million for 2024/25 was agreed by council in February 2024.

38. Principally due to rephasing from 2023/24, the budget was increased by £3.454 million to £52.413 million in the September Cabinet report.

39. The November Cabinet report identified gross programme variations in year totalling £300,000 and rephasing into 2025/26 of £213,000 which resulted in an updated 2024/25 Capital Programme Budget of £52.500 million.

40. The latest forecast confirms additional gross programme changes in year totalling £275,000 and rephasing into 2025/26 of £50,000 which results in an updated 2024/25 Capital Programme Budget of £52.725 million (Appendix 4).

41. Details of the changes and rephasing are provided below:

42. Environment and Sustainability – Expenditure regarding various coastal schemes has been reviewed. This has resulted in £50,000 for the Milford Cliff and Beach Study scheme rephased and rolled forward into 2025/26. Additionally, there is a £75,000 reduction of in year expenditure relating to the Barton Horizontal Directional Drilling Trails and Hurst Spit Shingle Source Study schemes. Furthermore, £100,000 of Sea Wall Construction Works at Milford which were originally expected to be capitalizable are now being expensed to the revenue account as stated earlier at paragraph 12.

43. Finance and Corporate – In November 2023 the Property Investment Panel agreed a provisional sum of £750,000 to cover the dilapidation repairs at Queensway. Following a tender process the amount required is now determined as £610,000 and was agreed via delegated approval in July 2024. It is the Council’s expectation that all costs shall be recovered from the former tenant in full.

44. Eling Tide Mill now has £40,000 following the reclassification and transfer from revenue to capital resources to support the essential repairs required at Eling Tide Mill toll bridge and quayside (paragraph 16).

45. HRA - Housing Decarbonisation – Budget provision of £200,000 for works on Parsonage Barn Lane have been covered within the overall major void refurbishment works project and therefore the specific decarbonisation works budget can be reduced.

Corporate plan priorities

46. Regular monitoring and reporting of our financial activity including adjusting budgets whilst maintaining a balanced medium term financial plan (MTFP), ensures we are being financially responsible and supports our Future New Forest transformation programme which underpins the delivery of all our priorities.

Options appraisal

47. In relation to the dilapidation costs regarding Queensway, options were considered as part of the delegated July 2024 decision, including do nothing, selling the freehold, leasing the property in its current condition, repairing and reletting the site, and redeveloping the site.

48. The decision to forward fund the dilapidation repairs was considered the best course of action to return the property to an income generating asset without further delay and to support our claim to recover the full costs incurred.

Consultation undertaken

49. Internal consultation between finance officers, service managers and budget holders has determined the forecast data presented in the report.

Financial and resource implications

50. This is a financial report with budget implications already detailed and considered in the main body of the report.

Legal implications

51. There are no legal implications arising directly from this report.

Risk assessment

52. The projected forecast is prepared based on estimates and assumptions in consultation with services. There are key risks in the projections across all service areas and both revenue and capital activity.

Environmental / Climate and nature implications

53. There are no environmental implications arising directly from this report.

Equalities implications

54. There are no equality implications arising directly from this report.

Crime and disorder implications

55. There are no crime and disorder implications arising directly from this report.

Data protection / Information governance / ICT implications

56. There are no data protection, information governance or ICT implications arising directly from this report.

Appendices:

Background Papers:

Appendix 1 – Revised General Fund Budget 2024/25

Appendix 2 – Variation Analysis General Fund 2024/25