Introduction

Dear Reader,

I am pleased to present the statement of accounts for the London Borough of Bexley for the financial year 2021/22.

My narrative report includes the financial statements with an overall explanation of the Council’s financial position during 2021/22 and commentary on the medium-term picture. It also includes information about the operation of the Council and the major influences affecting the accounts. In addition, it includes information on service and financial performance over the financial year ending 31 March 2022. All this information is given with the aim of providing stakeholders and interested parties assurance as to the Council’s financial standing and the care taken to account for public money.

Performance overview 2021/22

Background

Bexley is all about its residents - who make the borough so enterprising, diverse and full of character. Our 250,000 residents are proud of their well-located and green borough, and the council is ambitious for them, working to grow the borough for the benefit of residents today and into the future.

Our Corporate Plan is how we share our vision for Bexley and our commitments to residents in delivering that vision. The Corporate Plan is linked to our Medium-Term Financial Strategy (which explains how we will resource and fund the vision and commitments).

Our five key priorities are:

1. Growth that benefits all

2. Clean and green local places

3. Strong and resilient communities and families

4. Living well

5. Innovation and self-sufficiency

Brilliant Bexley shaping our future together infographic (PDF)

Our approach to performance

To make sure we are on target to deliver our vision and commitments, we have agreed a set of performance indicators that we regularly manage, measure and communicate. The performance indicators show us what our target is and importantly they show us if we are on track to achieve our target.

We share and update our performance with residents regularly at Public Cabinet, as it’s important to be open about how we’re doing. We provide our elected members with numerical data and written explanations of performance to make the information clear and accessible.

It’s important to understand and show the link between our performance, our resources and our financial outturn so that we are open about any risks or challenges in achieving our vision and commitments. We produce an integrated performance report to make sure that our performance indicators help us manage risk, manage our finances, and provide good governance.

Introducing our performance in 2021/22

In 2021/22 we monitored over 90 corporate performance indicators. These indicators are linked to our Corporate Plan and they show us how well we are achieving our aims and commitments. We are a learning organisation and our performance this year helps us plan and adapt for next year, supporting the council to agree evidenced ways to improve performance.

Some of the performance indicators are only the responsibility of the Council, but many of them are shared and achieved in partnership with colleagues across the public sector.

Coronavirus undoubtedly impacted our performance during 2020/21 and to provide extra governance during 2021/22, we continued to monitor the additional 20 coronavirus measures to help inform and guide us. 

Our overall performance in 2021/22

The overall, performance of the council across the year showed strong signs of recovery and overall stability after an unprecedented year in 2020/21, which brought new and more complex demands than ever previously experienced. The 2021/22 did however still see a continued impact from the pandemic.

For example, young people entering the criminal system and youth re-offending is lower than pre-pandemic. Crime levels have also remained lower than pre-pandemic for those crimes monitored by our indicators (total offences, burglary, theft from motor vehicles and robbery).

Air quality has improved; results for 2020/21 (published in 2021/22) show a long-term consistent reduction in Nitrogen Oxide concentrations, as well as reduction in Particulate Matter 10 (PM10). Flu vaccinations delivered to those aged 65+ rose since the pandemic.

We continue to see domestic abuse at the higher levels experienced during the pandemic in 2020/21. Children’s social care referrals and open cases have increased with the main reasons cited as parental mental health, domestic abuse and relationship breakdown. This has led to continued higher numbers of children subject to a child protection plan compared to pre-pandemic however has not led to an increase in children looked after.

This year has also seen the recovery of some performance that was impacted by the pandemic last year. Education, Health & Care Plans delivered in 20 weeks has again resumed to high performance of 90%+ after difficulties of delay last year within the pandemic. Reablement outcomes for adult social care clients worsened last year, due to greater complexity of hospital discharges since the pandemic, but has shown improvement towards the end of 2021/22. Penalty charge notices returned to pre-pandemic levels.

The Council were able to place 129 young people (aged 18 to 24) on universal credit into kickstart placements to gain employment experience. We know that some of these young people have now secured permanent jobs as a result. This has contributed to the success of sustained employment for those helped to find work - 78% of people met their sustained employment criteria. Young people not in education, employment or training fell to 2.3% which is an improvement on last year and the lowest recorded for Bexley.

Challenges however remain. Not only the demand pressures in children’s services noted above but adult social care services have seen increased demand, particularly since the pandemic. Comparing this year to pre-pandemic levels shows an increase in long-term clients. Permanent care home admissions increased compared to last year (there were a lot of interim placements last year due to the pandemic) and those receiving community-based services also increased.

Obesity remains a concern, 2 in 3 adults in Bexley are overweight or obese. Our public health service was fully occupied with ongoing management of the pandemic. The public health team, along with other partners, will be re-launching the Obesity Strategy this year. Additionally, the proportion of inactive residents has also worsened over time; according to the Active Lives survey, 1 in 3 aged 16+ does less than an average of 30 minutes of activity per week.

There has been an increase in volume of household waste since the start of the pandemic, as residents have spent more time at home. The recycling rate has also declined. During a strike this year, residents were asked to use general bins for their food waste. Since then, this has not returned to expected levels of food waste recycling. Therefore, residents are now being asked to take part in a new food waste reduction campaign to reverse this behaviour. There has also been a change of contractor this year for our waste services.

Library usage has not returned to pre-pandemic levels. Due to coronavirus restrictions, libraries were closed for most of quarter one and events were reduced with restrictions on attendance capacity for the remainder of the year. Libraries have also had changes to services which include reduced opening hours.

Whilst Council tax and business rate collections have improved compared to 2020/21, they are still below pre-pandemic levels. It is expected that these may not return to pre-pandemic levels for several years.

When reflecting on the year for all our performance indicators, there have been several successes. Households in Temporary Accommodation (TA) has continued to reduce; now below 1,000 compared to 1,289 in March 2021. This is a significant improvement (of 25%) on the previous year. Some new build homes contributed to an increase in Housing Association lets this year, and private renting offers gave more homes to residents this year than last.

In terms of growth, 93% of planned new homes were delivered by developers for the three financial years 2018/19, 2019/20 and 2020/21 (a total of 1,377). Provisionally, 46% of approvals for new homes (in qualifying housing developments) in 2020/21 were affordable. This is a 27 percentage point increase on the previous year.

There is long-term upward trend in earnings of Bexley residents. Latest data shows a positive annual percentage change of 3.2% in weekly earnings (£) for employed Bexley residents, compared to a positive 2.7% the previous year.

The Council measures how well it’s performing as an organisation. Complaint response times fell below targets last year and despite various efforts, this has not improved significantly this year. Changes in systems and practice has also led to lower performance during the year for debt recovery, however performance had recovered to usual levels by year-end.

Our planning decisions made within timescales fell during this year after a considerable increase in the volume of non-major applications - the surge from October 20 to June 21 was an 18% increase on the same period a year prior. We identified improvements and some time-limited resources have returned this to usual high standards during the final quarter. Although, short-term performance dropped, our performance remained above the longer-term statutory level required. Reporting of non-major and major applications overturned is reported with a long lag. For the 24 months leading up to March 20 (reported September 21) decisions were overturned for 0.9% of non-major and zero of major applications.

2021/22: A Financial Overview

The Budget and Council Tax for 2021/22 was set by Full Council in March 2021 in the context of the Council’s Medium Term Financial Strategy covering the period 2022/23 to 2025/26. The budget set out the detailed financial plans for the Council in its Revenue and Capital budgets for the financial year.

The Council has faced continued financial pressures as a result of the coronavirus pandemic, which was already under pressure following funding formula changes by the Central Government in the mid-2000s, followed by the fiscal changes brought about as a consequence of the financial crisis and the scale of central government borrowing.

The council has been at the forefront of supporting Bexley residents and businesses during the last year, both in terms of public health and economic support. The council has moved quickly and adapted to new challenges and responsibilities.

Councils received a number of new funds and financial measures to compensate for some of the additional financial burdens they have had to take, although not to the same extent as in 2020/21. There have been additional pressures in children’s social care, waste collection services, Parking and Leisure services, domestic abuse and cemeteries and crematorium.

The road to recovery following the pandemic has been further impacted by global inflationary pressures, which has pushed UK inflation to levels not seen in a generation and is expected to rise to above 10% in 2022.

In addition to coronavirus and the global economy, uncertainty surrounding the future of local government funding, reforms to business rates and long-term sustainable funding for adult social care continue to have an effect on our medium-term financial planning. We are lobbying the Government on these matters and make frequent representations to Ministers as we seek to influence future decision-making.

The Council also faces financial pressures from contract inflation and the challenges posed by the changing needs of our residents and growth in some demand-led key frontline services. The Council set its budget in order to respond to these financial challenges while delivering the quality services our residents need and rely upon. The aforementioned global economic situation is only adding to these financial pressures.

The focus of the Council in order to deliver a balanced budget has continued to be on efficiency and transformation opportunities in order to ensure we deliver the services local people need and ensure the safety of our vulnerable residents.

In 2021/22 the Council had a General Fund Budget of £179.963m. The Council Tax requirement for the borough was £121.228m. The remaining income coming from government grants and Non-Domestic Rates. The budget included general fund savings of £12.788m but growth was also required of £9.078m. The final General Fund outturn was £178.859m which is an underspend of £1.104m.

Group accounts 

The Council is required to produce group accounts if the council has a controlling interest over any other company or entity. This is the third year the council has produced group accounts to include Bexley Co Ltd.

BexleyCo has been established with the intention being that it is used as a vehicle to drive development in the borough while generating a profit in the long-term that is planned to be ploughed back into Bexley to keep the quality of services residents deserve. The Council has ambitious plans and each project is evaluated and business cases approved where they meet these plans.

BexleyCo’s ten-year target is to:

• deliver 1,200 new homes for sale, affordable and market rent to local people with the ambition to increase to 2,500;
• support the local economy through jobs, training opportunities and both direct and indirect investment;
• stimulate good growth and regeneration through an exemplar approach to the design, marketing, sale and management of our new homes; and
• generate significant financial returns for our Shareholders thereby helping to alleviate growing budgetary pressures

Revenue outturn

The Statement of Accounts sets out the Council’s spending and financing in line with accounting and statutory requirements.

The table below provides a summary of the outturn position by Directorate. This leaves a net outturn position for service budgets of a £6.396m overspend. Once corporate budgets and funding, including one-off funding provided to support our response to the pandemic, have been taken into account, there is a resulting  underspend of £1.104m. The underspend will be added to the General Fund reserve.

The main financial pressures the 2021/22 were, unsurprisingly, continued impacts due to the Covid-19 pandemic with the Government provided funding both specific and general to allow the Council to continue providing services and support to businesses and individuals in the borough and the emerging economic situation adding new pressures.

The impacts of the pandemic continued to have an effect on Children’s services with major variations reported throughout the year for looked after children, SEN transport and a loss of income at the Learning and Enterprise College Bexley.  Pre-pandemic and emerging economic pressures have compounded the COVID impacts in these areas resulting in significant overspends.

The 2021/22 year continued to see changing patterns of expenditure and income within Adult Social Care.  Additional expenditure on community-based and older people care home services being offset by additional financial support from the NHS to support hospital discharge arrangements.

The Parking service income continued to be impacted by the pandemic with only slow signs of recovery in certain areas. Income from on and off-Street parking was well below pre-pandemic levels and whilst too early to define may well be a sign of permanently changing patterns of behaviour.

Chargeable Leisure services have been recovering throughout the year however whilst the outlook is positive the recovery only took effect in the final quarter of the year generating significant overspends prior to that.

Waste Services have had a challenging year, changing patterns as a result of an increase in working from home have impacted residual waste levels, compounded by the impacts from the strike by Serco workers in the first half of the year.

Finance and Property saw a loss of income from court enforcements and commercial rent directly related to the pandemic.

Capital outturn

During the year, the Council’s capital outlay was £26.990m against a revised budget of £44.874m, with an aggregate slippage of £17.785m. A robust review will also take place to ensure that all schemes are required in future years.

The variances from budget relate to the profiling of expenditure as opposed to the cancelling of projects. The most significant of which were the Erith regeneration and BexleyCo housing projects.

Bexley’s balance sheet

The Council maintained a strong balance sheet, with £907.408m of Long Term Assets as at 31 March 2022 and Current Assets of £140.572m, Current Liabilities of £107.842m, and Long Term Liabilities of £365.643m. Furthermore, the Council has usable reserves of £81.580m.

Reserve levels

As the Section 151 officer, I have also taken account of the reserve levels and I have advised that a prudent level of General Fund reserves is at least £12m. This level is required to ensure there are sufficient resources for both working capital and to cover emergency expenditure. The General Fund reserves has been increased above the minimum level to manage the risks generated as we emerge from the pandemic, the general global economic situation and the specific factors effecting the UK economy.

Borrowing and capital financing

The Council currently has £223.440m of borrowing outstanding as at 31 March 2022.

There has been no external short term borrowing necessary for this financial year.

The Capital Programme for 2021/22 to 2025/26 was agreed by the Council in March 2022. This outlined the capital expenditure planned requires £52.587m of borrowing for 2022/23.

Collection Fund Rates for Council Tax and Business Rates

The collection rates for Council Tax and Business Rates were both affected by the pandemic, whilst the total amount of Business Rates collectible was reduced due to the reliefs granted by the Government to aid businesses to whether the economic impact of the pandemic.

The net collection for Council Tax at the end of March 2022/period 12 was 95.38% of the £154.173m collectable, leaving £7.122m to be recovered.

The net collection for Business Rates at the end of March 2022/period 12 is 95.13% of the £70.482m collectable, leaving £3.435m of debt to be recovered.

Council Tax funds services from both the London Borough of Bexley and the Greater London Authority (GLA), the split of the Council Tax income and Debt is 80:20. Whilst income from Business Rates are shared between the London Borough of Bexley, GLA and the Department of Levelling Up, Homes and Communities in a ratio of 30:37:33.

Non-Current Asset Revaluation

The Council appointed Wilkes Head & Eve to carry out a rolling valuation programme of a proportion of the Council’s assets in 2020/21. The impact of these valuations is reported within the notes to the accounts.

Significant Changes in Accounting Policies

The accounts for 2021/22 are presented in accordance with the Code of Practice on Local Authority Accounting in the United Kingdom (the Code) which specifies the principles and practices of accounting required to give a ‘true and fair’ view of the financial position and transactions of the local authority.

The Code sets out the proper accounting practices required by Section 21(2) of the Local Government Act 2003. These proper practices apply to the Statement of Accounts prepared in accordance with the statutory framework established for England by the Accounts and Audit Regulations 2015.

The 2021/22 Code incorporates required accounting standard amendments, although there were no material impacts on the Council as a result of the amendments.

Bexley’s Medium-Term Financial Plan

The medium term financial planning process is an essential part of the Council’s strategic planning framework. The Medium Term Financial Strategy integrates strategic and financial planning over a four-year period. It translates the Corporate Plan priorities into a financial framework which enables the Cabinet and officers to ensure policy initiatives can be delivered within available resources and can be aligned to priority outcomes.

In February 2022, the Budget Gap was £29.101m, with the biggest pressure on 2025/26 as shown below.

Economic Climate and Impact of COVID-19

The COVID-19 pandemic has had a major impact on the Council. The most significant impacts have been loss of car parking income, commercial rent deferrals, loss of income from leisure facilities and other fees and charges. The Council has incurred additional expenditure to ensure that key services such as adult social care and children social care are maintained. The level of uncertainty created by the pandemic cannot be understated.

The Council has received some Government funding towards the additional costs and reduced income. The final financial impact will depend on how quickly services are able to return to pre COVID-19 operating levels in light of the wider impacts of the current economic situation.

The economic impact as the country and the world emerge from the Covid-19 pandemic can not be underestimated. This is compounded by domestic economic factors, issues with the supply chain and the ongoing war in the Ukraine, all fuelling inflation. Even if we do not have a consequential recession this is likely to increase our costs, reduce the income from our chargeable services and increase the need for all of our non-chargeable services.

Whilst the Council’s un-ringfenced General Fund reserve would have some capacity to absorb some of the financial impact, a robust financial plan is required to ensure the sustainability of the council’s finances are maintained.

The next few months, officers will be reviewing the Medium Term Financial Strategy, taking into account the 2021/22 final outturn and the financial impact of the UK and global economic situation. The Council has always used cashflow forecasting to assist with treasury management decisions, however, it has gained greater significance as unplanned expenditure has been required to deal with the emerging situation. Cashflow is being closely monitored to ensure sufficient funds are available for daily requirements, to this end the Council is using the resources of The London Borough of Westminster Treasury Team who have a wealth of experience managing cash and investments.

Paul Thorogood ACCA CPFA 
Director of Finance and Corporate Services London Borough of Bexley

Date: 8 September 2023