Bristol City Council has reported a £57.9m service variation for the 2022/23 financial year from the £431.1m general fund budget agreed in 2022.
This comprises of non-delivery of previously agreed savings and new growth and demand pressures driven by the current social and economic conditions, the council said.
The original budget has been increased by £12.8m to £443.9m, due to a net unplanned movement of general and earmarked reserves.
After the realignment of further corporate budgets, such as corporate expenditure surplus and capital financing underspends, the provisional net general fund outturn expenditure is £446.9m – an expected in year overspend of £3.0m (0.7% of the revised budget).
In a written report on the council’s position in the 2022/23 financial year, Jemma Prince, finance business partner – planning and reporting, recommended that the £3.0m residual overspend be funded from a drawdown from the general fund general reserve, which was approved by Bristol City Council’s cabinet.
That brings the balance on the council’s general reserve to £29.3m, as of 31 March 2023.
Additionally, the report showed that £8.2m of the £24.2m savings planned for delivery within the 2022/23 budget were not achieved. Of the shortfall, £0.5m of savings were deemed to not be deliverable and were written off in the 2023/24 budget process. The impact of this has been partially mitigated during the year utilising £4.1m of the savings/optimism bias contingency and/or reserves, the report stated.
Alternative recovery activity/savings of £10.0m (allowing for £0.5m of corporately held savings) were identified, where original plans were predicted to not achieve targeted savings. Of the in-year recovery savings, £8.4m were delivered. “The residuals were mitigated on a one-off basis utilising a further £1.6m of the savings/optimism bias contingency,” the report said. “Within the recovery activity, £0.9m of recurrent savings is not delivered and will be combined with the residual £7.7m from the original savings plan.”
This will result in £8.6m being carried forward to be delivered on a recurrent basis to achieve a balanced budget in 2023/24.
Bristol City Council also reported a net outturn overspend of £2.8m in the Housing Revenue Account (HRA), primarily attributed to increases in energy costs and additional investments for fire safety works. This will be funded from the HRA general reserve.
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There was an outturn overspend of £15.0m in the Dedicated Schools Grant (DSG) budget. “The main financial challenge continues to be the High Needs block, which has an in-year overspend of £16.2m (carry forward deficit of £42.5m) resulting from increases in education, health and care plan assessments and need,” the report said. This is offset by underspends across the other blocks, which are mainly ringfenced, totalling £2.8m. A £39.7m deficit will now be carried forward in 2022/23, in the DSG deficit reserve.
A balanced position was achieved in the public health budget, while an underspend of £28.4m was recorded in the capital programme compared to the revised budget of £227.1 million (an underspend of £110.5m compared to the original budget).
The cabinet also approved the release of £28.3m corporate funds as approved in the 2022/23 budget and second quarter report but not initially allocated to directorate cash limit, as well as the release of unused one-off funds of £3.8m to be released from the balance sheet to the Income & Expenditure account to smooth the debt and other impairment.
Bristol City Council noted a “challenging financial environment” in 2022/23. “The ongoing fallout of the pandemic combined with the global impact of war in Ukraine, worldwide supply issues (such as those for food and gas) and labour shortages led to increased inflation and a cost-of-living crisis,” the report stated. “The impact of these compounded factors has been an increase in demand for the council’s core services, pay-related cost increases and commodity price escalation (for example, the cost of energy and capital investment).”
The report precedes publication of the council’s draft statement of accounts on 31 May 2023, but no significant changes are expected. Detailed quarterly financial reports will be presented to the council’s cabinet in July, October and January, with a provisional outturn report being presented in May 2024 and the statement of accounts presented to the Audit Committee in the same month.
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