The new Lib Dem leadership of Gloucester City Council said its commercial property portfolio needs to work harder to pull its finances out of the woods.

The collection of real estate was predicted to generate £3.49million in 2023/24 but only made £2.35m.

Cllr Jeremy Hilton, leader of the council, said the £1.14million gap was a "concern".

The new cabinet met for the first time on Wednesday (July 17) and were presented with the Financial Outturn Report 2023/24.

It shows under the previous Conservative rule the General Fund, the council's main revenue account, decreased by £288k against a budgeted decrease of £104k.

It means the pot of money dropped from £849,000 to £561,000 during the last financial year.

Earmarked reserves also decreased by £0.32m from £4.26m to £3.94m.

"This is what the finances were like when they were handed over to our administration,"said Cllr Hilton.

"We're starting off this year not in such a bad position as we first thought.

"There's still one area that is of concern - commercial property.

"One of the areas in which we can strengthen the financial health of this council in its balance sheet is to generate more commercial income," he added.

"It's not so easy to do that with the council tax because we need to make sure the council tax is affordable for the public in the city, and we can't push that up too high when we're not allowed to without a referendum anyway.

"So the way we can generate more income for the authority is to look at our commercial income."

The report said the gap in commercial property income was due to "the reconciliation of the annual service charges and additional void unit costs being charged".

Much of the portfolio is retail and it said like much of the country Gloucester has suffered "significant downward trends in centre-based retail".

It hopes this will improve now the regeneration of Kings Walk Shopping Centre has been completed and as The Forum and University of Gloucestershire developments approach completion in 2024/25.

The capital programme saw £52.9m spent against a budget of £62.3m. A huge £52m chunk of this was earmarked for The Forum and £41.4m utilised during the year.

The new administration praised officers for reducing the 2023/24 deficit from a predicted £1.5m to £288,000 under the previous Conservatives rule.

"The officers have done a really good job in making sure that we brought the budget back in line," said Cllr Hilton.

"We're starting off this year not in such a bad position as we first thought."

However, Cllr Declan Wilson, deputy leader and cabinet member for resources, told the new cabinet they must not get complacent.

He described the finances as a "mixed bag".

"The good news is that things have improved from the last quarter," he said.

"The reports for quarter and three were concerning to put it mildly and that was due to key pressures.

"The decrease in the General Fund was better than what we were predicting in quarter three, and it's better than what we actually voted for on the five year money plan at the beginning of the year.

"We were assuming it would be £500,000 is actually going to be £561,000 so that is actually a good outcome.

"But I have to say we're not out of the woods yet. We'll need to be keeping a careful eye on these finances as we go through the year.

"The key pressures are still there."

They are:

• Temporary accommodation costs for the homeless. The costs of this statutory provision increased significantly during the year leading to an overall overspend of £500k for this service area. An improvement of £116k on the forecast position at Quarter 3 as a result of the actions taken by officers during the year to address the situation, and the receipt of an additional £117k of rough sleeping grants from the Government.
• The spike in energy costs and the cost-of-living crisis have led to the leisure provision becoming increasingly expensive to operate creating an overspend of £640k against the budget by the year end. The appointment of an interim operator working to a fixed budget has meant that this is similar to the position reported at Quarter 3.
• Similarly, increased energy costs have impacted on the outturn position for the Bereavement Services area of the Council with the higher gas costs at the crematorium leading to a net deficit of £477k in the year. This has been addressed for 2024-25 with pricing increases approved at the Budget Council.
• A decline in planning income received as development costs increased, and the boost of small planning applications caused by Covid home-working fell away. The actual income achieved during the year was only 71% of that budgeted causing a budget pressure of £161k at the year end.
• Asset repairs and maintenance works leading to the closure of Longsmith Car Park with lost income from the second half of the year of circa £130k; and additional asset survey costs and repairs of £80k.
• Increased interest costs in relation to ongoing and future projects have led to a £300k pressure on the Council's budget.