Council forecasts £13m overspend

Herefordshire Council is forecast to have overspent by more than £13m during the current financial year, the latest figures show.

More than £10m of this is due to the impact the response to the coronavirus pandemic has had on the council´s accounts.

However, despite this overspend, finance officers say the situation has improved since the first and second quarters of the year.

As of December 2020, the projected revenue outturn position forecasts a £13.265m overspend, £10.2m of this relates directly to the impact the Covid-19 pandemic has had on both expenditure and income.

This is an improvement since the first quarter of £1.128m and £1.525m since the second quarter.

The adults and communities directorate continues to show an overspend due to Covid-19 pressures, but this has reduced to £1.207m.

A reduction in income relating to Covid-19 across services in the Economy and Place directorate has contributed to its £4.319m overspend.

And the childrens and families directorate is forecast to have overspent £4.225m. This reflects extra placement costs.

Central government has awarded grants to local authorities to manage the Covid 19 pressures and this is expected to cover around 70% of the pressure although there are ongoing discussions between government and Herefordshire Council.

Officers say the remaining financial pressures will be funded by the change in activity of the council in reducing costs as a result of Covid-19 and by using reserves if needed.

The council´s capital budget for 2020/21 has been revised to £92.136m which consists of a £51.712m underspend from 2019/20 carried forward.

Additional grants of £16.261m led to a reduction of borrowing requirement for the Hereford city centre improvements project of £2.5m and a reduction in the use of the capital receipts reserve of £1.053m due to an external grant.

There has been further borrowing to fund the flooding works of £4.027m and noninsurable works at the leisure pool £0.505m.

The forecast spend has reduced from £72.056m in September to £68.171m in December, which is an underspend of £23.965m of the £92.136m 20/21 budget, or 74% of the capital budget spent.

A significant number of underspending schemes are a result of delays due to the pandemic.

The council´s forecast capital underspend consists of projects that are anticipated to deliver below the project budget, may no longer be required or where there have been further delays in progress.