Agenda item

[Report of the Director of Finance. To be introduced by the Cabinet Member for Finance and Strategic Regeneration]

This report sets out the revenue and capital outturn for 2018/19 together with proposed transfers to/from reserves and revenue and capital carry forward requests.

The Cabinet Member for Finance and Strategic Regeneration introduced the report, which set out the Council’s provisional budget outturn for the year ended 31 March 2019. The report further contained the draft revenue outturn for the General Fund (GF), the Housing Revenue Accounts (HRA) the Dedicated Schools Grant (DSG) and Capital Programme compared to budget. Cabinet considered the explanations of significant under/overspends and proposed movements in reserves.

The Cabinet Member was pleased to report a balanced position with the overspend against service budgets of £9.1m offset by corporate interventions as previously forecast in the quarter 3 budget report in March. Whilst the 2019/20 budget and 2019/20-2023/24 MTFS sought to rebalance some of the budget pressures in Children’s and Adults, and unachievable savings had been written out, the overall budget gap remaining for 2020/21 and beyond was a challenging one. There were presentation sessions open to all Members on context of the budget before the detailed review began, in the autumn, in preparation for the budget.

In response to questions from Cllr Brabazon and Cllr Cawley- Harrison, the following information was noted:

• The capital budget variances of £34m relating to developer contribution was set out at the foot of table 5, paragraph 8.13 of the attached report. This contained the information on the variation between the budgeted use for funding and the actual use of the funds. Within that, there was an explanation about developer contributions being under budget. Essentially, this information related to delivery of certain schemes and provided a list of explanations regarding delays and other changes to the authority’s intended plans.

• In response to a query regarding the PFI lifecycle reserve, it was normal practice for any organisation, that have been subject to PFI, to receive an ongoing stream of revenue grants from government that actually in early years exceeds PFI payments .The excess received was placed into a reserve to meet the contractor payments once the grant funding stops.

• With regards to decommissioning the community infrastructure reserve, it was good practice to complete an annual review of reserve holdings to ascertain if still required and to understand the purpose for which it has been put aside is still applicable. It was noted that this particular reserve allocation had no back-story that could be located. Rather than leave this reserve standing unused, it was proposed to re -purpose this fund to part finance the change agenda of the authority, allowing increased funding for transformation ICT spend and to manage the delivery risk associated with the DSG overspend.

• Responding to the question on Local Implementation Plan funding from TFL, it was noted that the authority was facing significant financial challenges and the Council understood from previous experience, tackling this requires investment in change to enable required transformation to meet future financial conditions. This reserve had been run down and was previously at a higher level. The change in funding of the LIP highways funded works presented an opportunity to create some more financial capacity to go into the transformation reserve. This did consequently require it to be funded in different way so instead of using the LIP grant, it would be funded from borrowing and this would increase the borrowing costs for the local authority. This was not a solution proposed every year but was one proposed for this year in order to create the capacity for change in the coming year.

·         There was no loss of resources expected because of slippage in capital funding. This use of capital in years 2018/19, in comparison to previous years, was set out at paragraph 8.1. The Council would want to see a higher level of spend on capital than have seen previously, although spend in 18/19 had increased from 46 % to 53%. The narrative around the 53% spend set out why a higher amount spend was not achieved. The revenue implications were that, as a consequence of this lower capital spend, the Council has lower interest costs, and this had provided one of the means for the corporate offset of some of the unachieved savings in 2018/19.

·         With regards to the housing delivery underspend and loss of revenue income, the Section 151 officer outlined that certain schemes would have a revenue detriment and the local authority was endeavouring to process these now  and the acquisitions for those schemes were being agreed. This was being factored in the temporary accommodation revenue planning and was a current priority.

RESOLVED

1. To note the provisional revenue and capital outturn for 2018/19 as detailed in the report;
2. To approve the capital carry forwards at Appendix 3;
3. To approve the appropriations to/from reserves at Appendix 4;
4. To approve the budget virements as set out in Appendix 5

Reasons for decision

A strong financial management framework, including oversight by Members and senior management, is an essential part of delivering the Council’s objectives.

Alternative Option considered

The report of the Council’s outturn and management of the financial resources is a key part of the role of the Director of Finance (Section 151 Officer) and no other options have therefore been considered.