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INFORMATION REPORT - 2016/17 Revenue and Capital Monitoring for Quarter 3 as at 31 December 2016

Report of the Director of Finance.

Minutes:

The Sub-Committee received a report of the Director of Finance on the Council’s revenue and capital monitoring position for Quarter 3 as at 31 December 2016 which had been considered by Cabinet on 16 February 2017.  It was noted that the movement between quarter 2 and quarter 3 was £1.285k.

 

A Member expressed the view that financial information was received too late for meaningful comment and enquired what form the monthly financial information that had been previously agreed with effect from the next financial year would take. In terms of timeliness of the information, the Director of Finance pointed out that the Quarter 3 information was reported to Cabinet six weeks after the period end which was timely. The Director of Finance  advised that the monthly reporting would comprise a brief update, on an exception basis after period 1.

 

A Member enquired whether the capacity to achieve targets had been considered in the initial budget considerations and was it realistic to find resources elsewhere to balance variances as the Leader of the Council had suggested.  The Sub-Committee was informed that each saving was tracked quarterly and, as part of a budget refresh, unachievable savings had been removed and alternatives substituted.  Checks would take place to ensure that ‘red savings’ were actioned in future years.  Due to the size of the budget and number of savings required it was inevitable that substitution would be required.

 

A Member requested clarification on the position regarding capital receipts and reference was made to the scrutiny review which recommended better understanding of capital.  The Director of Finance advised on the current position. A report had been taken to Cabinet in November 2017 which detailed the proposals for asset disposals, the capital receipts from which would be applied under the new flexibility arrangements. The 2017/18 budget report showed that capital receipt flexibilities of £3.039m were being applied to the 2017/18 budget and the balance, if required, would be applied in 2016/17.  There was no prescribed limit in the regulations, allowing flexibility where legitimate revenue costs could be demonstrated.  The Council could not borrow capital to fund revenue overspend and, at the time of the Sub-Committee, the Council was not planning on drawing down from reserves other than that detailed in the Quarter 3 monitoring report, with the exception of redundancy costs.

 

A Member drew attention to the overspend arising from the negotiation on the IT contract with Capita and requested information on the final settlement, for example the outstanding invoice amount. The Director of Finance undertook to provide further information.

 

A Member stated that the outturn indicated about £9.8m excess spending, and asked what the bottom line was for earmarked reserves and contingencies compared to the previous year.  The officer advised that reserves were included in the report that there was an on going revenue contingency of £1.329m built into the budget. There were no plans currently to draw down further from contingencies and earmarked reserves, with the exception of redundancy costs.

 

In response to questions regarding specific items of expenditure, responses from the Director of Finance were as follows:

 

·                     an invoice for £75,162.97, regarding works to make a dangerous structure safe due to health and safety concerns, had been written off subsequent to legal advice.  Write-offs took place for a variety of reasons and it was not considered to be a control issue;

 

·                     the SEND transport pressure had arisen due to increased demand, particularly the extension of eligibility to 25 years of age, savings that had proved difficult to achieve and the challenges of route planning;

 

·                     should the settlement reached with Keepmoat on the School Expansion Programme be in excess of the available funding in the current year, a review of current provision in the capital programme would be undertaken in preference to additional funding in the budget;

 

·                     the People’s Directorate were under further financial pressure and, as with all directorates,  were reviewing all non-essential spend.  The budget pressures on Children’s Services continue to increase and initiatives included tight control over placements, actions to stem demand, Stepdowns and early interventions.  Support had been received from the Local Government Association and a review by People Too indicated that costs were lower than the statistical average.  Information was awaited on how the additional funding for adult social care would be spent and on government monitoring;

 

·                     work had been undertaken to ensure that capitalised regeneration expenditure was in accordance with financial regulations.  There was a revenue effect of £1/2m of expenditure that could not be charged to  capital;

 

·                     slippage in the regeneration budget was easier to predict on Council owned land.  Reasons for slippage elsewhere included withdrawal from a large assembly deal due to due diligence, renegotiation of a site taking longer than anticipated particularly due to sub tenants, and planning delays on Haslam House which had not been predicted but were now resolved;

 

·                     the reduction in public health expenditure was balanced by expenditure on wider determinates of health.

 

Having agreed that the reasons for slippage would be included in future text, and that information be circulated on: the number of properties purchased to date under the Housing Property Purchase Initiative, the financial settlement with Capita on the IT contract, and how much IT finance would be drawn down, it was

 

RESOLVED:  That the report be noted.

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