Agenda item

Context:

The purpose of this report is to provide Members with information on the revenue and capital outturn positions based on activity data at month 7.

This report will also be considered by Select Committees as part of their responsibility to,

• assess whether effective budget monitoring is taking place,

• monitor the extent to which budgets are spent in accordance with agreed budget and policy framework,

• challenge the reasonableness of projected over or underspends, and

• monitor the achievement of predicted efficiency gains or progress in relation to savings proposals.

Key Issues:

Members consider the forecast net revenue outturn overspend of £62,000.

That Cabinet requires Chief Officers to continue to work to reduce the £1.333m over spend on services, using measures such as a moratorium on non-essential spend and the freezing of vacant posts other than where recruitment is considered essential.

Members consider the forecast capital outturn spend, the levels of capital slippage proposed and the levels of capital receipts to assist with capital programme funding, primarily the Future Schools Tranche A considerations.

Members note that the low level of earmarked reserves, which will severely reduce the flexibility the Council has in meeting the financial challenges of reducing settlements and consequent need to redesign services.

Members note the significant and continued forecast reduction in the overall school balance at the end of 2017/18 and supports the continuing work with schools to ensure that the Council’s Fairer Funding scheme requirements are met and that the overall schools balance reverts to a positive position at the earliest opportunity.

Members note the significant over spend on services and consider recurrent and new pressures that need to feature in the draft revenue budget proposals currently out on consultation.

Member Scrutiny:

A Member that the TLC line within Enterprise box does not add up. We were told that the variance is offset by the same amount in Business Growth & Enterprise so the bottom line figures are not affected. 

In clarification we were told the following;

The monitoring information and a draft report have been provided earlier than is common, given that the Assistant Head of Finance was on extended leave. Given that, there was always a likelihood the figures would change subsequently, reflecting senior colleague’s deliberations. 

Finance Officers suspected there would be further adjustments between Business Growth and Enterprise and TLC, given a heightened sensitivity in the reporting of TLC, due to a variety of moving parts and Member consideration of for instance Alternate Delivery Model. 

 Immediately prior to month 7 preparations finance officers accommodated a request to reflect a future movement in responsibility for the Events function, which also had the effect of transferring the large deficit on Events it incurred this year to Business Growth and Enterprise. 

The revised narrative in the report was updated and reflective of the intent to charge part of that adverse Events position to Caldicot Castle.  It will have the potential to muddy the water in any evaluation of Events.

Officers are intent to procure an external review into the validity of running an Events service to supplement the views proffered internally from the likes of Finance Officers or Chief Internal Auditor.  It will come back to Members to consider again.

A Member rasied a query in regard to reserves and we were told the following;

We do not hold our reserves either Council Fund, earmarked reserves or capital receipts reserves as Cash or as ring fenced investments. We hold all our cash, including reserves, cash from external borrowing and surpluses from the Authority’s cash flows from payments and receipts etc. as a combined pot. In fact this pot can be lower than the level of our reserves if we chose not to externally borrow where capital schemes are borrowing funded in order to save on the cost of carry (the cost of borrowing less the returns on investments).

Any surplus cash held including on a daily basis is invested with high quality counterparties such as Barclays, Lloyds, with the Debt management office and in money market funds. The returns on these investments varies with economic factors such as confidence in Sterling, exchange rates and the bank base rate. Global Equity markets will also be affected by these same factors but not necessarily in the same way and there is not a direct link between the two. So in the event of a fall in equity market values, as in the last week or two, I would not perceive there to be a material increase in risk to the principals we invest. In fact interest returns are increasing due to the increase in bank rate and projected increase in bank rate following the last Bank of England Statement.

It was asked that the relevant Officers come to the Committee to answer Member’s questions in regard to the Solar Farm.