£7 million budget underspend as council balances pile up

by DOUG COLLIE

Supply issues and delays meant Scottish Borders Council's plans to devote £66 million to capital projects last year fell £7 million short of target while councillors will be told this week that total 'usable' balances in the authority's coffers increased by an impressive £16 million during 2021/22.

A series of reports dealing with SBC's finances and performance over the 12 months to March 31st will be presented to leading elected members. The array of statistics includes confirmation that revenue spending on services resulted in a net, unaudited outturn underspend of £1.427m. The underspend (less than 0.5% of final approved budget) was delivered following a number of earmarked balances being carried forward from 2021/22.

The document covering capital expenditure on bricks and mortar projects has this to say: "The final capital outturn statement for 2021/22 includes the reasons identified by the Project Managers and Budget Holders for the variances to the final approved budget. 

"This identifies an outturn expenditure of £59.634 million which is £7.134 million below the final revised budget of £66.766 million including timing movement in the final quarter of £7.474 million. A number of macro-economic factors affected the Capital Plan during 2021/22. Construction materials supply chain has been subject to unprecedented disruption in recent months. A surge in demand coupled with constraints on supply has led to price increases, shortages and longer lead times."

Officials also explain that unplanned delays due to restricted access to care homes as a result of Covid-19 has impacted all care home related capital projects. Unspent budget resulting from these delays will be carried forward into 2022/23 when all care home works are to be re-prioritised and accelerated. 

Meanwhile the report adds: "Slower than anticipated progress in the development of plans for care homes /care villages in Hawick and Tweedbank has resulted in a timing delay. Unspent budget to be carried forward into 2022/23."

So far as revenue spending is concerned a number of council departments have underspent in 2021/22. The report says: "Council services have delivered an underspend position whilst delivering significant financial plan savings totalling £9.301 million".

That £9.30l million figure is the exact amount of savings required by the council's financial plan.

According to the report: "The level of savings required by the financial plan, totalled £9.301m, in 2021/22. The outturn position shows that £3.489m (37%) savings were delivered permanently in line with approved plans, £1.932m (21%) were delivered in 21/22 with no requirement for the savings to be delivered from 2022/23, with the remaining £3.880m (42%) delivered on a temporary basis through alternative savings."

A range of other topics are covered. 

The Executive members are told: "Unprecedented market conditions and inflationary pressures have impacted both the Council and its key contractors during 2021/22. Associated pressures have been funded in the overall 2021/22 outturn position. These pressures are continuing into 2022/23 with support from the Council being requested by contractors in these challenging market conditions.

"An agreement for pay award for all staffing groups was reached for 2021/22, this has been fully funded in year and has been provided for permanently in the base budget from 2022/23. Pay award negotiations for 2022/23 continue and therefore continue to present a risk to the revenue budget in the next financial year. An assumed 2% pay award across all staff groups was budgeted for, any deviation from this level of increase will result in financial implications which will require to be addressed through the in-year monitoring process."

The department with the largest budget over-run was Infrastructure & Environment - An overspend of £484k is being reported. 

"Within this position £174,000 is being returned to the Covid-19 reserve primarily as a result of increased Planning Fee Income. After returning this to the Covid reserve the service have a remaining net adverse position of £502,000. 

"During 2021/22 the service responded to emergency flood and storm events with costs in excess of £400,000, the milder than average winter experienced has allowed the service to manage some of these costs within existing budgets. In addition there have been costs of £302,000 for leachate disposal from the landfill site (at Easter Langlee, Galashiels). The service is impacted by inflationary increases particularly within the construction and utility markets."

Figures demonstrate how revenue balances in every category have increased markedly since March 2021. The so-called General Fund Balance now stands at £51.991 million compared to £36.440 million the previous year.

Meanwhile the General Fund Reserve increased in the same period from £8.831 million to £9.848 million. General Fund (Earmarked) balances rose from £24.362 million to £35.590 million.

The report explains: "The total of all usable balances, excluding developer contributions at March 31st 2022 is £64.481 million compared to £48.264 million at March 31st 2021".