Narrative Report

Foreword

Dear Reader,

I am pleased to present the statement of accounts for the London Borough of Bexley for the financial year 2020/21, and I hope you will find it of interest.

My narrative report includes the financial statements with an overall explanation of the Council’s financial position during 2020/21 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 2021. 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.

Throughout the financial year, the Council has been responding to the coronavirus (COVID-19) pandemic. In the section below, I will consider the impact of coronavirus on our governance arrangements, provide comments on how our arrangements continue to be fit for purpose and summarise the significant changes this year due to the pandemic.

Performance overview 2020/21

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 in 2025 and our commitments to residents in delivering that vision. The 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 monitor and communicate regularly. 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 elected Members regularly, 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 open.

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 2020/21

In 2020/21 we monitored 86 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 has undoubtedly impacted our performance during 2020/21 and this is clear when we look at our performance outturn for this year. The pandemic brought new challenges to the Council and to Bexley - new services and new ways of serving our residents, as well as reduced income and additional spending. These challenges added to our already existing challenges of reduced funding and increased demand for services. To provide extra governance during a challenging time, we created and monitored an additional 20 performance measures relating to COVID-19 to help inform and guide us.

Our overall performance in 2020/21

Achievements over the last year include:

• a total of 62 rough sleepers was accommodated over the year. 41 people who were sleeping rough or homeless were protected during the pandemic by being brought into safe accommodation under the ‘Everyone In’ programme. A further 21 were accommodated under the severe weather emergency protocol
• digital improvements were made to transition staff to full-time remote working, with required IT upgrades and equipment being made available rapidly. Additionally, the new telephony system 8x8 was rolled out and the new Bexley Council website launched
• whilst libraries have been closed, library staff have assisted with the coronavirus helpline, and with COVID-19 testing
• we created a network of Community Champions to help us engage with local people to ensure that information published is shared as widely as possible and feeding back people's questions and concerns during the pandemic
• the COVID-19 Business Support Programme for businesses across the London Borough of Bexley was launched including a free to access dedicated website for businesses to access information videos and resources, to help them become safer and more resilient in the face of COVID-19
• forty-four of our care leavers have been working as key workers in permanent front-line jobs including working in hospitals, care homes, testing centres, supermarkets, delivery services and waste removal
• as a system, we have been able to support more rapid discharges from hospital and to respond to higher-level needs in the community. We have successfully delivered our well-established Discharge to Assess (D2A) scheme and a nationally recognised approach to care, called ‘Home First’ through which people have mainly been discharged to their own home with support. Since implementing D2A with Home First, 80% of people are returning home from hospital with a package of care avoiding the need for a care home placement in most cases
• intensified work around Enhanced Health in Care Homes to give significant support to providers, which has helped to keep our care homes open for business. The Care Home virtual Multi-Disciplinary Teams, coordinated by Bexley Care, have offered support to care homes from social care, GPs, and community health services, which has helped to avoid admissions to hospital
• the first phase of the vaccination programme has been delivered successfully. Bexley has been one of the best performing boroughs in the region and the level of vaccine uptake has generally been very high
• Bexley’s adult and children’s social care teams have been selected to take part in a Workforce Race Equality Standard (WRES) project, to help reduce inequality in the workplace and to better understand what it is like to be a Black, Asian or Multi-Ethnic employee in social care, through data and personal experience
• Bexley’s Staying Together Team were shortlisted in the ‘Early Intervention' category in the prestigious Children and Young People Now Awards 2020
• the opening of a new fully accessible Changing Places facility in the Broadway Shopping Centre on 25 January 2021, which will make it easier for all disabled residents and visitors to access Bexleyheath town centre
• despite the impacts of coronavirus on education, the percentage of Bexley young people participating in post-16 education was higher in February 2021 than it was in February 2020 before the first lockdown began
• the first phase of Adult Social Care Pathways was implemented in September 2020. The Greenwich and Bexley Community Hospice and a consortium of Bexley-based third sector organisations, called One Bexley, have been contracted to work with adults who have non-complex social care needs. The programme has enabled some work to be redirected to One Bexley, ranging from advice and guidance to Care Act assessments, which has helped the Council to respond appropriately to demand during the pandemic
• we have developed proposals to implement a new operating model for care at home to improve the quality of care and promote greater personalisation for people with Care Act eligible needs. The next step is to procure the new care at home services in line with the model
• Bexley’s green spaces are high performing. In the past year, Lesnes Abbey Woods and Hall Place and Gardens were both awarded Green Flag status
• Bexley was recognised as one of the most improved boroughs in the latest Good Parks for London 2020 report that looks at how well borough parks services are performing and are meeting the challenges of the pandemic
• a coronavirus Memorial Garden was opened at Old Farm Park, Sidcup

Summary of overall performance in 2020/21

When looking at performance across the year, it is clear that the council has reacted quickly and confidently to the new challenges of a pandemic. Vulnerable residents were reached and well supported by the council and partners (with contact made to 18,000 shielded residents), with particularly strong performance in rolling out COVID-19 vaccinations (over 100,000 vaccines were administered in Bexley between December 2020 and March 2021). Day-to-day council operations largely continued where restrictions allowed, and core services were provided.

When considering the council’s performance against its own performance indicators, it is clear that the pandemic has depressed performance across the board and has decreased the pace of progress in some areas.

Looking first to our people services, which have been the services most under pressure - it has been a demanding year for domestic abuse services, as cases have risen in Bexley and also nationally.

Adult Social Care is an important part of how the council supports Bexley residents, and this year has been extraordinary in the demand and complexity of need. For example, we’ve been helping more residents with reablement services. More people came out of hospital this year, and for some, their needs due to coronavirus were more complex than usual. The service has coped with demand, but our performance has been impacted (decreased) as more residents have needed homecare after receiving our reablement services. Last year, we reported improved results from a survey of service users in early 2021 - a greater proportion of residents receiving adult social care surveys felt they had control over their daily life and found it easy to find information about services.

This year has seen unprecedented disruption to children and young people. We have seen increased referrals to our children’s social care services, more children subject to Child Protection Plans and more children and young people in the borough requiring complex support. The pandemic and resulting restrictions have proved challenging especially when engaging with our vulnerable families this year, impacting performance outcomes in our Family Wellbeing Service.

Early years providers and schools (and school support services) have worked incredibly hard to keep essential services going this year. Services have continued to deliver their statutory work in conjunction with the coronavirus response and although the timescales for Education, Health and Care Plan have suffered, this continues to be monitored and will lead to improved performance, similar to outcomes seen before the pandemic.

Rough sleepers and homeless people were supported during the pandemic and it has been a success, as of 31 March 2021, that there are now no families (or pregnant women) in shared accommodation for longer than 6 weeks. Equally pleasing to see is that the number of households in temporary accommodation, which had been increasing, has now reduced below target and is fewer in number than at the start of the year. It is anticipated that the economic impact of the coronavirus, may add pressure on housing services, along with other services.

It’s still really important for Bexley to be healthier and more active, improving obesity, and childhood obesity in particular. The latest figures have seen a higher proportion of residents successfully quitting smoking, and fewer late diagnoses of HIV. However, fewer residents were active (adults active for at least 150 minutes a week).

Thinking now to Bexley as a place and the local environment, the tonnage of residual household waste (not recycled) has risen as many more residents spent a lot more time at home. The percentage of waste recycled has fallen, Bexley has been the top London Borough for the last 15 years for recycling rates. We will have to wait until the annual figures are released to see what impact coronavirus has had on our, and others, recycling rates.

Our latest air quality data (not for the pandemic period) tells us that we haven’t exceeded national air quality limits for pollution.

We’ve seen a huge drop in crime (total offences, burglary, theft from motor vehicle and robbery) during the last year, except for domestic abuse (which has seen an increase in police-reported incidents and repeated incidences - MARAC). In addition to working hard to reduce domestic violence, it will be important to continue our partnership work in driving down the most prevalent local crimes.

The Council is set a three-year target for the delivery of new homes. While we were below target in year 1 and above in year 2, we are below once more in year 3 (this relates to years 2017/18, 2018/19 and 2019/20). There are many more planning approvals in place than are needed to meet the target.

However, developers control the rate of completions. Numbers are also affected by estate renewal which sees net completions affected by initial demolition and a lag before new completions can be counted. The coronavirus pandemic alongside other investment priorities by Registered Providers will impact this indicator in future years as their programmes slow.

Our business rates and council tax collection rates have reduced, as more residents and businesses sought financial support from the council.

The council measures how well it’s performing as an organisation - our planning timescales have continued to perform really well (despite a considerable increase in volume). We’ve been less consistent with our complaint handling and have measures in place to improve this. We’ve been good at paying invoices on time, despite an increase in volume. Our staff sickness rates have reduced by 30%.

2020/21: A Financial Overview

The Budget and Council Tax for 2020/21 was set by Full Council in March 2020 in the context of the Council’s Medium Term Financial Strategy covering the period 2021/22 to 2024/25. 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 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. In particular, the council has been pivotal in supporting residents who require adult social care during the pandemic. There have been additional pressures in shielding our clinically extremely vulnerable residents, children’s social care, waste collection services, homelessness and rough sleeping, domestic abuse and cemeteries and crematorium.

In terms of recovery, the council again has had a key role in supporting residents and businesses to recover in Bexley. Having given unprecedented levels of council tax and business rate relief, the council now is working to rebuild Bexley’s economy and reopen safely.

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

In a number of cases, the savings have been delivered by transforming how we work and improving our efficiency with a clear focus on having no direct impact on residents. The capital programme has focussed on supporting our infrastructure and investments in the borough.

In 2020/21 the Council had a General Fund Budget of £177.256m. The Council Tax requirement for the borough was £116.140m. The remaining income comes from government grants and Non-Domestic Rates. The Council continued to pool its business rate income in 2020/21 with the rest of London. The budget included general fund savings of £6.022m but growth was also required of £5.845m. The final General Fund outturn was £177.256m which is a breakeven position.

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 second 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 £21.900m 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 breakeven position. The final outturn includes a transfer to the General Fund reserve of £3.112m.

The main financial pressures 2020/21 were, unsurprisingly, due to the COVID-19 pandemic. 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.

There were some underlying pressures that existed pre-pandemic. An increasing pressure for the Council is homelessness, which was the main reason for the non-covid overspend in Housing of £2.204m. The Council has provided for additional spending in this area in 2021/22, however, the publishing of the Governments review is overdue and a long-term solution for the country is required.

The pandemic resulted in a significant increase in Children’s Services net expenditure, with major variations identified and reported during the year particularly for looked after children, SEN Transport and loss of income at the Learning and Enterprise College Bexley (LECB).

2020/21 saw major changes to patterns of expenditure and income, within Adult Social Care where there were additional COVID related cost pressures of £12.408m. These were partly offset by additional financial support from the NHS of £8.455m.

The Housing Services incurred additional costs as a result of the pandemic following the need to move people from shared accommodation during the pandemic, together with leaving tenants in temporary accommodation for extended periods whilst being unable to evict. The service also incurred additional costs in relation to emergency accommodation. Work will continue in 2021/22 to review the budget pressures and consider the means by which costs can be reduced.

The pattern of waste changed during the lockdown periods, with an increase in residual (non-recyclable) together with changes in the recycles market. The costs of delivering waste services during the pandemic have resulted in additional expenditure in respect of increased tonnage costs and loss of income.

The Parking Services income remained under pressure during periods of lockdown and restricted trading and movement, with a net reduction in income of £1.659m, after compensation claim from Central Government.

Chargeable Leisure Services were also restricted over the last year, with an overspend of £3.009m. Although a grant from the National Leisure Recovery Fund was received it will be utilised in 2021/22 to aid the recovery of the service as it comes out of lockdown in line with grant conditions.

Highways expenditure increased by £0.856m as a result of a switch to reactive and maintenance works where previously capital works had been planned. A corresponding reduction in capital expenditure was also seen.

Finance and Property were impacted by the pandemic through a loss of income from court enforcements and commercial rent.

Capital outturn

During the year, the Council’s capital outlay was £28.651m against a revised budget of £38.858m, with an aggregate slippage of £10.848m. A robust review will also take place to ensure that all schemes are required in future years. The nature of the variance in 2020/21 relates to the profiling of expenditure and the level of activity on projects, as opposed to schemes being cancelled.

Bexley’s balance sheet

The Council maintained a strong balance sheet, with £897.808m of Long Term Assets as at 31 March 2021 and Current Assets of 227.454m, Current Liabilities of £229.887m, and Long Term Liabilities of £452.333m. Furthermore, the Council has usable reserves of £60.963m.

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 level of reserves fell below my recommended level in 2019/20, however, the position was recovered during 2020/21. 

Borrowing and capital financing

The Council currently has £223.440m of financial liabilities outstanding as at 31 March 2021. During the financial year, the Council reduced its long term external borrowing marginally by £0.031m.

External short term borrowing of £14.000m was repaid earlier in the year and no further short term borrowing was necessary at the end of the financial year.

The Capital Programme for 2020/21 to 2024/25 was agreed by the Council in March 2020. This outlined that of the total capital expenditure planned £64.647m was expected to be funded from borrowing.

Collection Fund Rates for Council Tax and Business Rates

The collection rates for Council Tax and Business Rates were both affected by the pandemic. The total amount of Business Rates collectable was reduced due to the reliefs granted by the Government to aid businesses to weather the economic impact of the pandemic, however, collection rates still fell further. The impact of these reductions will be seen in 2021 onwards where the resulting deficits in the Collection Fund will be recovered over a three year period.

The collection rates are shown below.

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 2020/21 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 2020/21 Code incorporates required accounting standard amendments, although there were no material impacts on the Council as a result.

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.

The financial challenges facing the Council cannot be underestimated. The Council has significant challenges in the year but also across the Medium Term Financial Strategy period. There is also unprecedented uncertainty on future funding given the continued delay of the Fair Funding Review, business rates review and the Adult Social Care Green Paper. The identification of opportunities to reduce the budget gap, to mitigate financial risk and delivery services within the available resource envelope has been, and remains, a prime focus for the Cabinet, Corporate Leadership Team and all managers throughout the Council.

The Medium Term Financial Strategy was last reviewed in February 2021 and reported to Public Cabinet. The estimated budget gap for 2022/23 to 2024/25 is shown below:

Impact of COVID-19

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

To reduce the impact on the Council’s financial reserve position the Cabinet agreed to apply for a capitalisation directive from the Ministry of Housing, Communities and Local Government. The capitalisation request was for £15.000m to be used flexibly over 2020/21 and 2021/22.

Following submission of the capitalisation request, discussions with the Ministry took place and a third party review was undertaken, commissioned through the Local Government Association, to give assurance on the Council’s request. The directive was approved on 10 February 2021 for a total of £3.870m in 2020/21 and the Secretary of State was also minded to approve an amount of £5.125m in 2021/22.

The reduction from the Councils original request is the result of the non-ringfenced grant being provided to the Council in 2021/22 as part of the Local Government Settlement. This funding was not known when the submission was made.

The Council is committed to not use the capitalisation directive unless absolutely required and as a result of the financial controls put in place during the year the Council has not had to use the 2020/21 allocation. Usage of the 2021/22 order, if it is approved following review, will require financing by the Council through the Public Works Loan Board and therefore will accrue interest charges and minimum revenue provision charges. As part of the agreement, a further external review will be undertaken with a particular focus on the Council’s asset base.

The Council has received Government funding towards the additional costs and reduced income. whilst this has largely covered the financial impact for 2020/21 the final impact will depend on how quickly services are able to return to pre-COVID-19 operating levels. The Local Government Secretary has made public assurances that Local Government will have the resources it needs to meet COVID-19 challenges.

Whilst the Council’s un-ringfenced General Fund reserve would have some capacity to absorb some of the financial impact, a robust financial plan will be required to ensure the sustainability of the council’s finances are maintained and this will form a substantial part of the financial resilience recovery work.

Over the next few months, officers will be reviewing the Medium Term Financial Strategy, taking into account the 2020/21 final outturn and the financial impact of COVID-19.

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 and specific grants to deal with COVID-19 have been paid and received. Cash flow is being closely monitored to ensure sufficient funds are available for daily requirements.

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

Date: 9 February 2022