Agenda item

Budget Monitoring Report Month 7 - Report for quarterly scrutiny.


The committee was presented with a report showing significant pressures, with an unprecedented shortfall of just under £4m at this stage – this is a rare situation and challenge for the Council. Children’s Services is by far the biggest pressure to contain, with an increase of looked-after children and very expensive placements, leading to a £2m overspend. Other notable areas are Adult and Social Care, and children with additional learning needs. A recovery plan has been prepared which can be put into effect quickly. The Council’s ability to make in-year savings is getting harder, the £4m overspend already takes into account the savings and cuts made. All expected measures are being taken.




How confident are we that the potential surplus from the Ealing judgement, or some of it, will come back to the Council?


There is a range of possible VAT recovery, we’re forecasting £1.9m in the mid-range. The risks are more around the very old elements of the claim: the older the claim the harder it is to make it. Therefore, there’s always a degree of risk that Customs will accept that position. KPMG has given reassurance that we are in a strong position. If we do go beyond the forecasted £1.9m the money will be used to benefit the end-of-year outturn position, offset against any further pressures that may come to the fore in the remainder of the year.


Given the slippage of £171k for Crick Care Home, if, by the end of the next financial year, we haven’t begun to spend money on the project, would we lose the grant from Welsh Govt?


The slippage of £171k noted in the report has been due to the planning application working its way through and being approved. There’s no real concern, there are risks identified around funding but these are more to do with care home replacement on the site. Conversations are ongoing, with reassurance being given to Welsh Govt.


How is investment in Spytty Park going, how is it balancing against Castle Gate, and what are the implications for Innovation House?


The Spytty Park investment is predicated on robust business cases, and prudence. Spytty Park has a strong occupancy, levels of commercial income come through ahead of baseline projections. Castle Gate is still generating commercial income to offset overall borrowing costs, but a few things have arisen to stop the target being met. Overall though, investment is fine, the portfolio is balanced. There’s a diversification of risk across the portfolio – this is the reason for investment in Spytty Park and Castle Gate. Recovery of income in Castle Gate is offset by recovery in Spytty Park. Castle Gate is running at 88% occupancy, we are working to fill the vacancies, which will then increase the income.


There have been delays in moving staff across to County Hall J Block, one consequence is it has blunted the ability to move Innovation House forward and make money from it. This has had an impact on income, but we will move quickly to fill the gap once staff have moved. Property services are now putting contracts in place to move forward with the car park work at County Hall.


How confident are we that the tenants comprising the 88% at Castle Gate will stay? What is the tipping point for concern if the occupancy were to fall?


We have one core tenant, so there is a risk being carried. There is a break point, a review point, but as things stand we don’t see any real risk there: the company is performing well, and Brexit risk shouldn’t unsettle the company.


Members need to be informed of how an investment is going, the returns from it. It’s important that if the Council is to invest in these projects, Council receives feedback on performance.


Yes, transparency is key, the responsibility falls to the Audit Committee – a report will be presented there, which will provide openness in investments and their performance, and see if adjustments need to be made. There is Welsh Govt guidance, we’ll look to reflect on that going forward.


Chair’s Conclusion:


The Council is in a really challenging position. We have touched on the Ealing judgement, how much the VAT return could potentially be, and whether it can offset future pressures – hopefully it will be in the medium to top end, which would be really helpful. Crick Road was discussed, as it was in the Adult Select Committee, with the same concern over ensuring that the capital spend is not lost. The investment strategy in commercial property is very important, the public is always concerned about money not going directly to front-line services. So we need to ensure that that investment is making good returns, providing us with a strong revenue stream moving forward.


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