Agenda item

This report asks the Panel to note the forecast financial position on revenue and capital for 2015/16 as at the end of Quarter 2 and provide comments on the work being carried out to address the deficit forecast over the next 4 financial years.

The Panel received and considered a report which asked Members to note the forecast financial position on revenue and capital for 2015/16 as at the end of Quarter 2 and to provide comments on the work being carried out to address the deficit forecast over the next 4 financial years.

The Head of Financial Services reported that the Quarter 2 Budget Monitoring report for 2015/16 had been circulated to all councillors last week.  This detailed report provided a summary of the position for both revenue and capital.

The latest forecast position on revenue for 2015/16 was that the Council anticipated to be exceeding budget by £412,000 at year end.  There were four significant adverse variances against the budget.  In particular, those in relation to homeless, parking and planning income were highlighted.

There had been an increase in households in B & B and a rise in the weekly rate of accommodating each household (£504,000).  The rise in the weekly rate was as a result of upgraded facilities being provided and the fact that the Council was required to provide kitchen facilities for those in temporary accommodation for longer than six weeks.  However, this rising cost had previously been identified as a significant risk.  The general contingency had been increased which had gone some way towards mitigating its full impact and work was continuing to bring this cost down further.  It was confirmed that the number of homeless was currently hovering around 58 and the new temporary accommodation in Upper High Street was now fully occupied.  Government financial support towards homelessness formed part of the Revenue Support Grant but no additional Government support was provided. 

There was also an adverse variance in relation to Parking (£156,000) due to a reduction in the number of PCNs being issued for car par parks but predominantly on-street parking violations. Currently car parking was undergoing a number of changes with a short, medium and long term strategy under consideration – notably the introduction of barrier controlled parking in the Hope Lodge and Town Hall car parks.  This was having an impact on parking income but it was anticipated that this would stabilize. In addition, planning fees were down by £104,000 as it was unlikely that the Council would receive as many large planning applications as originally anticipated and budgeted for.

In terms of mitigating action to deal with the deficit, the Leadership Team had been informed of restrictions being put in place for the remainder of this financial year and tasked with identifying further actions to reduce it.  £200k had already been identified by Heads of Service reviewing unspent “discretionary spend” budgets (i.e. budgets which were not deemed as essential spend).  Examples of discretionary spend included attending courses and conferences and non-essential property repairs with no health and safety implications.  The outcome of this review would be incorporated into the Q3 forecasting.  There was also a freeze on recruitment and a freeze on employing further agency staff or consultants although it was recognised that there was a need for some agency staff to keep services running.  It was not possible to give a ball park figure on the savings this freeze on staffing could generate at this time.

The forecast for capital expenditure was that, of the budgeted approved programme of £5,535k, it was expected that £3,502k would be spent by the end of the year.  Of the £2,033k underspend, the most significant elements of the programme which made up the slippage (£1,494k or 73%) were:

·                     Demolition of 1-3 Blenheim Road (£163k):  Officers were currently investigating whether the flats could, in fact, be brought back into operation as temporary accommodation.  Whilst the Council had previously agreed to demolition, temporary accommodation costs had increased to the extent that it now made refurbishment more viable;

·                     Horton Chapel (£490k):  The current position had recently been reported to the Strategy and Resources Committee;

·                     IT (£233k):  This sum was required to complete approved schemes in 2016/17;

·                     Lower Mill Repairs (£100k):  Work needed to be carried out in the summer months so would now be undertaken in 2016/17;

·                     Affordable Housing (£344k):  Some of this funding had originally been earmarked for Hollymoor Lane, any underspend on individual schemes would be carried forward to 2016/17;

·                     Plan E (£164k):  This was the Council’s share of funding for this project which was now expected to be undertaken in 2016/17.

It was confirmed that the Council was potentially still eligible for housing receipt but this was reducing over time and new receipts were unlikely: this was therefore forecast as “nil”.  The recent Government announcements in relation to right-to-buy were unlikely to make a difference.

The Panel was informed that the latest draft budget for 2016/17 expected no use of General Fund reserves as per the Final Plan.  It was still draft – certain assumptions had been made and certain issues needed to be addressed.  The Director of Finance predicted that New Homes Bonus was likely to be withdrawn at some point but it could not be retrospectively removed.  However, there still remained a deficit in future years and work was still required to ensure delivery of targeted savings.

In light of the Council’s financial situation, Members of the Panel had been keen to see the Venues Review originally scheduled for 2016/17 undertaken as soon as possible after the conclusion of the Social Centres Review.  Following discussions with the Chairman and Vice Chairman of Audit and Scrutiny Committee, it was proposed to commence the review in February 2016.  The proposed terms of reference for the review were attached as Annexe 1 to the report.

Accordingly, the Panel:

(1)          Noted the Council’s 2015/16 second Quarter’s forecast financial position for revenue and capital; and

(2)          Noted the Terms of Reference for the Venues Review as set out in Annexe 1 with any subsequent amendments to be authorised by the Director of Finance and Resources

Note: Councillor Omer Kokou-Tchri declared that section 106 of the Local Government Finance Act 1992 currently applied to him and that he would not therefore be voting on any question in relation to this item. No vote was required.