Agenda item

Revenue Budget Monitoring 2014/15 (Month 10)

Decision:

(a) That the report be received; and

(b) That the following issues be brought to the attention of Cabinet:-

(i) the levels of spending on overtime and agency staff within Streetscene resulting in a projected overspend of £0.086m

(ii) cost implications of the decision not to proceed with the John Summers High School project

(iii) Areas where it would appear that projected income had been over-stated

(iv) Areas where potential losses have been over-stated

(v) Recycling income potential under-achievement due to market volatility and the requirement for assurance that the most beneficial contracts are being sought and secured

(vi) That the successful work undertaken to secure Welsh Government support for the Council’s expenditure on the former Euticals site be supported and that it be noted that all efforts were being made to recover the costs from the parent company.

Minutes:

The Finance Manager introduced a report to provide Members with the Revenue Budget Monitoring 2014/15 (Month 10) information for the Council Fund and Housing Revenue Account (HRA) which was being submitted to Cabinet on 21 April 2015.

For the Council Fund, the projected net in-year expenditure was forecast to be £1.716m lower than budget which was a decreased underspend from Month 9. Appendix 1 detailed the reasons for the changes from Month 9 and this was mainly as a result of adjustments relating to the John Summers High School no longer being progressed within the 21^st Century Schools Programme as agreed by Cabinet on 17 February 2015. Section 3.07 detailed the efficiencies and it was currently projected that £7.688 of the £8.840m (87%) would be achieved. Details of the efficiencies currently projected to not be achieved in full were shown in appendix 3. The overall net underachievement on all workforce related efficiencies was £0.211m; an increase of £0.091m.

Section 4 detailed the carry forward requests to 2015/16 and section 5 detailed amounts included for inflation and underspends on the amounts for non-standard inflation were detailed in paragraph 5.02. Emerging and existing risks were detailed in the report and section 7 and appendix 4 provided details of the unearmarked reserves and contingency reserve which, at Month 10, was projected to be £4.657m at 31 March 2015.

The HRA was projected to have an overall underspend of £0.354m and a projected closing balance at month 10 of £1.519m which at 5.06% of total expenditure satisfied the prudent approach of ensuring a minimum level of 3%.

Councillor Carolyn Thomas queried the decrease in overall revenue underspend of £0.250m as a result of the John Summers High School programme not progressing and sought clarification on whether prudential borrowing to match fund the amount had been used and whether there were any implications from this. The Corporate Finance Manager advised that some costs that had previously been from the capital fund but now had to be reflected in the revenue account; it was expected that the amount of funding would reduce. The Chief Executive provided an explanation of what the funding may be required for but explained that it was mainly for internal costs that would be reflected from one account to another. He confirmed that this would not have an impact on the service and that it would be netted off against the outturn level at the end of the year.

Councillor Richard Jones referred to the emerging risk for recycling and queried how this would affect future years and asked for further clarification on the costs associated with the Former Euticals site and the non-progression of the John Summers High School within the 21^st Century Schools Programme. He also asked about the loss of income for Deeside Leisure Centre and income from garages and how these overstated incomes would affect the 2015/16 budget.

In response, the Corporate Finance Manager explained that in relation to John Summers High School, the initial estimate had been £0.250m which consisted of £0.150m potential penalty costs, £0.050m fees on capital which now needed to be funded from the revenue account and the additional £0.050m was an estimated amount for other costs. He added that these costs were expected to reduce. The Chief Executive spoke of the need to accelerate the process to prevent further costs being incurred and as a result of this, there may be a penalty clause claim. Councillor Jones asked for further information on the costs implications associated with the programme not proceeding.

Councillor Tim Newhouse queried whether any underspend in the Council Fund, which was £1.716m at Month 10, would be used to reduce the budget gap. The Corporate Finance Manager advised that any underspend would be added to the reserves as the budget for 2015/16 had already been agreed. Councillor Newhouse also queried whether there were any proposals from Welsh Government to produce a report on running education centrally from Cardiff rather than through the 22 local authorities. He spoke of the education system in Australia which he felt worked well. The Leader of the Council commented on the importance of localism for issues such as education and said that he was not aware of any such proposals; he added that he disagreed with centralisation.

On the recycling risk, the Corporate Finance Manager explained that the 2015/16 budget had been set based on the best information available and therefore the situation would be monitored throughout the year. It was hoped that the reduction in shortfall in income for Leisure Services was a one-off and this would also be monitored. The Chief Executive referred to the risk for the former Euticals site and said that a one-off grant of £0.700m had been secured from WG as a result of the unique situation. The current costs of running the site had already been incurred and the grant would provide funding for the remaining expected costs. The Leader of the Council welcomed the grant received from WG but expressed significant concern that the public purse had been required to pay the costs because the Council had a duty of care to make the site safe and to clear the site. The Chief Executive added that all efforts had been made to recover the costs from the parent company of Euticals.

In response to a query from Councillor Marion Bateman about fixed price contracts for recycling, the Chief Executive said that he would provide further details for the Committee.

Councillor Carolyn Thomas felt that the use of agency staff for Refuse Collections needed to be addressed and asked whether any overspends could be monitored by the Environment Overview & Scrutiny Committee. She also raised concern about the amount of money that had been identified in relation to the John Summers High School and indicated that this had not been raised at the Lifelong Learning Overview & Scrutiny Committee.

Following a query from Councillor Jones about reporting back to corporate finance about issues of concern relating to over or underspends, the Corporate Finance Manager provided assurance that this was undertaken.

RESOLVED: