Agenda item

Compliance with the Governance Requirements Associated with Setting an Emergency Budget and Issuing a Section 114 Report

To consider a report by the Chief Finance Officer which details what the arrangements are in respect of the submission of an emergency budget to Full Council should there be the requirement for one and also provide assurance to this committee that  the Council would comply with these  arrangements. 


The report also provides assurance to Members that the Council remains a financial going concern and provides value for money services.



(Report attached)



At the request of the last meeting of the Committee, the Chief Finance Officer submitted a report confirming that appropriate procedures are in place for the agreement of an emergency budget should there be the requirement for one; and to provide assurance to the Committee that the Council remains a financial going concern.


Members were reminded of the background of financial challenge facing the authority and the reported funding gap for 2020/21.  The report details the arrangements for setting an emergency budget or for issuing a section 114 report should that be necessary.  Members received assurance that should action be necessary the Committee would be updated in respect of this in order to ensure that such action had been taken in accordance with the processes described, complying with the council’s governance arrangements and statutory requirements.


The Head of Finance provided explanation of the ‘going concern’ and financial health of the council. The medium term financial strategy is now over a five year period with the direction of travel being to achieve financial sustainability. 


The report references and appends a letter from the external auditors confirming that they are supportive of the measures being taken by the council to bring its finances back into balance.


In offering comment Members welcomed the report and the accompanying letter from the external auditors, Grant Thornton, noting that it was a clear assurance document setting out the relevant processes and role of Members  should the need arise.


Referring to the second page of the external auditor’s letter and the reference to service reviews to help inform the debate around where saving could be identified and achieved, Members questioned the reference by which it was determined that the council was an ‘outlier’


In responding the Chief Finance Officer reported that benchmarking exercise  was undertaken last year and that this is helping to inform the Council’s updated Medium Term Financial Strategy which is to be  to Executive Board in  September.  The term ‘outlier’ is based on a comparison against our statistical neighbours and core cities to note areas where the council appears to have high cost, or high demand for services and gives a key line of inquiry to start looking at.


Members asked whether progress had been made in relation to the assessment of expenditure related to the pandemic.


The Chief Finance Officer confirmed that the work is ongoing and being reported to MHCLG and to Executive Board, so that we understand where the pressures are, the areas that can be mitigated and managed, and those where the government are being asked for further support.


Members queried if new areas of income generation were being explored.


The Chief Finance Officer said that the Council was always looking at new areas to generate income, for example receiving funding to undertake track and trace functions for the government.  Members were advised that the Council’s Civic Enterprise Leeds is a private Trading Company to provide mechanisms to trade with other Local Authorities and external companies where opportunities arise.


Gareth Mills representing Grant Thornton said all other Local Authorities were in a similar position, he suggested the NHS were undertaking similar reviews and bringing services back in house was being given consideration.


In terms of the corona virus Members queried the mechanism for discussions were taking place with the government, and whether MPs are involved.


The Chief Finance Officer said a number of meetings had taken place involving the Ministry of Housing, Communities and Local Government (MHCLG), these included regular meetings between the CFO and MHCLG, and wider meetings including representatives of Core Cities and MHCLG.  The Chief Finance Officer agreed to check whether the MPs were included in the discussions.


RESOLVED – To note that there are appropriate procedures and processes in place should there be a requirement for Full Council to have to agree an emergency budget in 2020/21.


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