To consider Report CFO/045/22 of the Director of Finance, concerning the revenue, capital, and reserves financial position for the Authority for 2022/23.  The Authority receives regular comprehensive financial reviews during the year which provide a full health check on the Authority’s finances. This report covers the period April to June 2022.

Ian Cummins (Director of Finance) then took the committee through the financial review for 2022/23. (Appendix 2)

Cllr Makinson brought the members attention to the current rise of interest rates and questioned how confident the authority is that the inflations are going to be significant for the rest of the year with pay awards, electricity contracts and the devaluation of the pound currently ongoing. Ian Cummins stated that things are moving day by day. The original inflation provision is 2-8% and a price inflation is expected to be the out sought contract (PFI, Telent etc.). He then stated that the authority have negotiated with those providers to try and contain the increase. Ian Cummins assured members that the authority is expecting some money to be left at the end of the year but the big if is pay awards. Ian told members that 2 million will be required to cover these pay increases and £600,000 for energy. This should leave around 1 million left if the authority should need to dip into this for any inflation increases.

Cllr Makinson then queried what effect the interest rates and general inflation would have on the capital programme and new training centre. Ian Cummins stated that the authority won’t need to borrow until the middle of next year at the latest however the authority have had conversations with treasury colleagues and they are meeting with their consultants in November. He then stated that the authority do model the MRP interest budget of 4% is robust but we do need to keep a high watch on it. Therefore, it is difficult to decide when to borrow as interest rates may change. Therefore this situation need to be monitored closely. Cllr Makinson then queried if the government price caps apply to the public sector. Ian Cummins confirmed that this does apply.

Cllr Hanratty followed this by stating that we need to ensure our budget is tight and must be monitored to protect the service. He then questioned if there was an update on the two letter the Chief sent out to the home office about the cost of living crisis.

Ian Cummins stated that two letters were written to the home office to query about the current inflation. Ian told the committee that the home office are working with the NFCC on this and the NFCC are hopeful the home office may find some money. However, at the moment there is no further detail on more funding and the government aren't going to open up a spending review. Ian also stated that there is a lot of uncertainty around pay rewards in further years and provisional settlement.

Resolved –

a.      The contents of the report was noted by members, and

Resolved – that members approved

b.     The proposed revenue and capital budget alignments,

c.      The use of the £3m inflation reserve to cover 2022/23 pay awards above 2.5% MTFP assumption and higher energy costs, and

d.     Instruced the Director of Finance and Procurement to continue to work with budget managers to maximise savings in 2022/23