Agenda item

(a)       That the report be noted; and

(b)       That the Head of Finance provide further information to Councillor Marion Bateman on additional superannuation costs. 

The Leader of the Council commented on the projected year end net underspend of £4.313m which was a considerable movement from the £2.334m underspend at Month 11.  He welcomed the budget approach which had been taken for 2013/14 and he recognised the financial challenges but he raised concern about the timing of how the underspend had been reported and how it had increased significantly in Month 12.  He and the other Cabinet Members had requested that action be taken to understand how the level of the underspend had occurred.  He said that it may be as a result of planned reductions or due to the receipt of grant funding and he also queried whether different decisions would have been made if the underspend had been noticed earlier.  The Leader commented on the need to protect frontline services for the future and explained that work would be ongoing on the Medium Term Financial Plan (MTFP).  He spoke of the challenges which faced the Council which included a currently projected funding gap of £8.5m for the financial year 2014/15 which increased to £28.5m for 2018/19.  The Leader also spoke of the need to make provision for the Single Status Agreement and that any policy decisions on the Schools Funding Formula would add to these figures.  He said that some of the challenges were unknown and he commented on the announcement by the Chancellor earlier in the year of the switch from revenue to capital funding for some areas at UK level and the implications it had for local government funding.  Other issues which were of concern included the challenges of homelessness, Welfare Reform and winter maintenance.  He hoped that the utilisation of the underspend would form a large element of the discussions and deliberations of the MTFP.       

The Head of Finance agreed with the comments made and said that a report on the MTFP would be submitted to the next meeting of Cabinet and to the 11 July 2013 meeting of this Committee.  She explained that 80% of Council’s funding was from the Government and therefore there was a significant impact if this was reduced.  The Month 12 Revenue Budget Monitoring Report had highlighted the need for tighter financial controls, forecasting and financial reporting and discussions on this were being undertaken with the Corporate Management Team to make positive improvements.   Work was being undertaken to look at the impact of the underspend in 2012/13 on the 2013/14 budget and what additional choice could be generated for 2013/14 onto the MTFP for 2014/15 and beyond. 

The Corporate Finance Manager introduced the report to provide Members with the detail of the Revenue Budget Monitoring 2012/13 (Month 12) information for the Council Fund and the Housing Revenue Account in 2012/13. 

For Council Fund there was a projected year end underspend of £4.313m, which was an increase of £1.979m on the £2.334m underspend reported at Month 11 and appendix 1 showed a summary of the movements from Month 11.  The table on page 60 showed the analysed the variances by directorate and showed underspends for all directorates except Lifelong Learning, which showed a minor overspend. 

Paragraphs 3.06 to 3.09 provided further detail on the movements and the risks and assumptions associated with the projection were reported in paragraph 3.11. 

Requests for carry forward for ICT and Flintshire Futures were detailed in paragraphs 3.12 and 3.13 and were being recommended to Cabinet. 

The amounts allocated for non-standard inflation were reported and the Corporate Finance Manager advised that the final position would show an unallocated amount of £0.072m. 

Appendix 7 provided details on the movements on unearmarked reserves, which, after taking into account the current projection and previously committed amounts left a projected level of Contingency Reserves at 31 March 2013 of £3.493m. 

The Corporate Finance Manager also advised of a projected underspend of £1.047m on the Housing Revenue Account which was an increase of £0.473m from the net underspend reported at Month 11.  Details of the variances were provided in appendix 8.  A projected closing balance at Month 12 of £1.902m was reported, which at 6.9% of total expenditure satisfied the prudent approach of ensuring a minimum level of 3%.  The Corporate Finance Manager added that £0.329m of the underspend had been committed for specific items in 2013/14.     

Councillor Alex Aldridge accepted the report but commented on the significant financial challenges ahead.  He felt that the underspend could cause comments from Councillors about the aspirations for residents in their wards.  Councillor Patrick Heesom raised concern about the underspend and said that it was not the fault of the Leader but was a consequence of the management system.  He reiterated his earlier concerns that the MTFP should not be the financial structure that the authority was working to.  He added that some departmental service plans duplicated issues and that work should be undertaken to review the plans. 

In response to the comments made, the Leader said that it was important to understand how the underspend had occurred and work was being undertaken on this.  He reiterated his earlier comment about whether the underspend could have been identified and reported sooner.  He welcomed the fact that efficiencies were being made without reducing services and he said that it was a positive position to be in.  The Cabinet Member for Corporate Management echoed the comments of the Leader but added that it was important to learn lessons from the situation. 

Councillor Marion Bateman said that the Head of Finance had agreed to provide further information on additional superannuation costs but the information had not yet been received.  The Head of Finance advised that she would provide the requested information as soon as possible. 

RESOLVED:

(a)       That the report be noted; and

(b)       That the Head of Finance provide further information to Councillor Marion Bateman on additional superannuation costs.