Rutland County Council reports underspend of £442,000 after raising its budget due to Russia’s invasion of Ukraine

A council underspent by £442,000 but only because it upped its budget following Russia's invasion of Ukraine.

Rutland County Council's strategic overview and scrutiny committee met on Thursday (July 13) when director for resources Kirsty Nutton shared the 'revenue and capital outturn' report.

She said there was an underspend of £442,000 against the allocated budget.

The budget originally agreed by the full council in February 2022 was £42,345,000.

"However, within days of that approval, Russia invaded Ukraine leading to global economic turmoil and in the following months significant inflationary pressures emerged across all directorates. This created a considerable challenge for the council in managing its 2022/23 budget, and created a budget shortfall for 2023/24 and future years," said Ms Nutton.

“Therefore, in November 2022, an upwards revised budget from the originally agreed £42,345,000 to £44,012,000 million was approved. This report shows that the net cost of services eventually came in at £43,570,000 and therefore, despite these challenging circumstances, the council’s final revenue outturn position is an underspend of £442,000 against the November 2022 sum, but still represents a higher net spend if compared to the original budget figure.”

Coun Karen Payne (Con) asked: “I’m pleased that we’ve put an innovative reserve fund of £2.5 million to offset future issues, but because this is taxpayers' money how do you propose to ensure that they see a demonstrable return on that money?”

Coun Andrew Johnson (Lib Dem), cabinet portfolio holder for resources, replied: “We’re working on a process, and I have personal experience in making cost-savings schemes work and making sure that people get value for money, so that the programme will yield according to the plan.

“As of now, we couldn’t say that its in a grand enough form to give you it line by line, but we are working on it and we know that we need to make sure that it happens. As we produce quarterly reports some of those things will become more clear, and part of what we need to do is to demonstrate that council taxpayers are getting value for money, but we must remember this is a four-year financial plan.”

Ms Nutton added: “In addition to that, and in order to strengthen our financial management there is a further reserves strategy to come through to the council in September 2023, and the use of tax payers money will be included within that.”

Coun Nick Begy (Ind) asked: “It has been very frustrating making a budget only to have massive surpluses at the end of each quarter, which is in many ways just as difficult to manage as the deficits. Do you feel you are now in a better position to provide a smoother budgeting process where we won’t see these massive variances in the budget each quarter, particularly with surpluses where we are saying we’re going to lose ‘X’, but we end up actually making ‘Y’?”

Ms Nutton replied: “Am I confident? There is a phrase in accountancy: ‘As soon as you set a budget, it will change because of the assumptions based upon it’. I’m confident that we have introduced an enhanced budget-setting process, and it is clear from this report and our use of reserves to underpin everyday expenditure, that we cannot afford to continue to do things the way we’re doing them now.

“So, the process that we will focus upon is ‘cash available’, and the design of services to fit within that funding stream. There are changes afoot: we recognise that transformation is needed, and that some investment is required in order make ourselves sustainable.”

Coun Hannah Edwards (Lib Dem) said: “All of this comes back to us looking good to the people. At the moment the first thing that people are complaining about, whether it’s on social media or on the doorstep, is ‘why am I paying so much council tax?’ What are we doing for their money? We need to show that we’re not wasting their money and make us accountable for it.”

Leader of the council Gale Waller (Lib Dem) said: “I think Cllr Edwards raises a very valid point – many of us who have been councillors for some time know exactly why we charge such a high council tax. What we’ve not been very good at is explaining the budget to residents, because it isn’t easy.

“We try and explain it when we go out and are budget-setting, but I think we need to have a longer-term view of trying to explain the complexities of it, and so as a consequence my next piece in the Rutland and Stamford Mercury (July 21) is all about that very topic.”

Members noted the new report outlining the final 2022/23 ‘revenue and capital outturn’, and looked forward to the new strategy at the next meeting on 21 September 2023.