Agenda item

Report of the Director of Finance

The Sub-Committee received a report of the Director of Finance on the Council’s revenue and capital monitoring for quarter 1 as at 30 June 2017 which had been considered by Cabinet on 14 September 2017.

An officer introduced the report, drawing particular attention to the following:

·                     at quarter 1 a balanced budget was forecast.  The overspend of £3.6m in Children’s Services had been mitigated by one off income, contributions from other departments, and corporate items;

·                     with regard to the capital programme there was slippage in the first quarter of £11m HRA and £75m general fund.  This slippage would result in savings on capital financing.

Members expressed the view that future budget reports should include the consequences of capital slippage as it was important to understand the impact on the revenue budget at this stage.  Slippage of capital works which were intended to improve the performance of services, for example IT, would impact on services.  A Member stated that the slippage in the purchase of the 100 homes would have revenue implications due to payment for short term accommodation and bed and breakfast.  The officer indicated that some slippage would be offset by saving on capital and undertook that the Quarter 2 budget report would include explanations of the revenue consequences in all budget lines.  Meanwhile Members would be provided with the knock on effect of the 100 homes budget line.  A Member suggested that to do nothing was a misuse of borrowing and that departments should investigate how slippage could be alternatively used, for example LED street lighting.

A Member expressed concern at the high level of overspend in the Children’s Services budget so early in the year and that it was expected to be 10% of the projected budget despite mitigation and enquired whether the budget had been sound when agreed in February.  The officer stated that funding had been put in as part of the budget build and it was hoped that the figure would reduce.  The overspend had mainly been demand led plus some staffing pressures.  In order to mitigate and monitor the spend on children’s placements a schedule of panels had been drawn up to scrutinise and reduce costs.  A Member suggested that areas where Children’s Services was doing well should also be highlighted.

A Member stated that it would be helpful to receive an update of table 1 to enable Members to receive an assurance that moving in right direction as the next meeting of the Sub-Committee was not until December.  The officer informed the Sub-Committee that the intention was to circulate the forecast for  period 5 (figures as at 31 August) to Members by second week in October.

A Member enquired as to why the £200k interest payments to the Department for Communities and Local Government (DCLG) for retained Right to Buy receipts had not been spent on acquiring properties.  Members were informed that there was a limited time to spend the receipts which could not be used for temporary accommodation as that was in the general fund.  The Member also enquired how the £200k quoted in the monitoring report related to the figures quoted in the report on Use of Retained Right to Buy Receipts reported to Cabinet in September.  The officer undertook to circulate the information.

A Member asked how the HRA would be looking to reduce the call on HRA reserves to fund the budget and the officer responded that potential HRA savings were under consideration as part of the HRA budget report to Council.

A Member requested clarification on the cost of the compulsory upgrade of HRA IT systems.  The officer undertook to provide the information.

In response to questions regarding specific items of expenditure, Members were advised as follows:

·                     £475k repair of the Harrow Arts Centre roof would enable the continuation of the current use and safeguard income;

·                     with regard to the budget pressure of £251k in Legal Services, discussions were taking place to identify any areas where work could be undertaken within departments without recourse to solicitors;

·                     loss of parking income had arisen from development in connection with the regeneration programme.  The officer undertook to circulate further information;

·                     the £3039k use of capital receipts related to the capital receipts flexibility strategy whereby £3m of legitimate revenue expenditure could be charged to capital.  Legitimate expenditure would include transformational costs resulting in savings to the Council; 

·                     the statement of use of capital receipts for the last year required by the Department for Communities and Local Government (DCLG) had been submitted to Cabinet as part of the outturn.  A copy would be circulated to the Sub-Committee;

·                     the period 4 position for Children’s Services remained similar to that in the report.  The spending freeze included Children’s Services and was used to reduce budget pressures.  The figures were based on the period 2 forecast and allocations were examined by departments to assist in the process;

·                     A Member requested a breakdown of the items which made up the Corporate Items underspend.  The officer undertook to provide the information.

Having agreed that the next report would include information on the revenue consequences of slippage in all areas and information be circulated on:

The knock on effect of capital slippage on the 100 homes budget line, detail of the loss of parking income, the statement of use of capital receipts required by DCG for previous financial year, it was

RESOLVED:  That the report be noted.