Agenda item

This report sets out the Council’s provisional budget outturn for the year ended 31 March 2019.

Jon Warlow, Director of Finance, introduced the report which set out the Council’s provisional budget outturn for the last financial year of 2018/19. It was noted that there were some service overspends, which totalled about £9 million. The Director of Finance highlighted that the reserves position of the authority had improved slightly, as evident in the reserve statement section of Appendix 1 of the report.

The following was noted in response to questions from the Committee:

a.    Regarding a query around capital underspend and whether there was a missed opportunity to get going earlier on some issues, the Director of Finance mentioned that while everybody wanted the capital spend to be higher, there were positive results from this, namely in 2017/18 the outturn represented 37% of the capital budget and in 2018/19 it was 53%, which meant a 16% improvement in the year. It was noted that there was a continual focus to improve upon the 53% outturn. It was added that in relation to individual capital schemes, in many instances reasonable and explicable reasons were provided as to why there was not a full delivery. The Director of Finance highlighted that there were no resources lost in trying to minimise some slippage.

b.    The Director of Finance confirmed that road maintenance and infrastructure came under the capital budget. The Director of Finance noted that the degree of underspend on capital projects was variable depending on which project was viewed. The Director of Finance then referred to the Borough Roads scheme - scheme reference number 302 at page 80 of the report - which had a capital programme of £4,164 million and an outturn of £4,172 million. In terms of addressing road pothole issues speedily, Cllr Chandwani -the Cabinet Member for Neighbourhoods – clarified that there were two types of maintenance, planned and reactive maintenance, and noted that the type of maintenance referred by Cllr Jogee was reactive maintenance. The Cabinet Member further mentioned that an email that was sent to all Councillors about problems with the LOHAC contract that was managed by TFL. Regarding the LOHAC contract, the Cabinet Member acknowledged concerns with this contract and advised that a report to Cabinet had gone up in July around its retender.

c.    Regarding a query as to whether priority areas could be moved around within the capital budget, the Director of Finance explained that the budget was set based on the expectations at that point. During the course of the year there were some circumstances in which money was transferred through virement, but that was done through a proper decision-making process.  The Director of Finance noted that in relation to the scheme headings shown on the Capital Programme, those resources had been allocated for the stated purposes, and the schemes would continue to be delivered in the next year for their stated purposes when the schemes were carried forward.

d.    Regarding a query as to whether the remaining amount of the Dedicated Schools Grant (DSG) would be carried over as the Early Years block was underspent, the Director of Finance highlighted that the DSG section of the report, set out at section 7 of Appendix 1 of the report, showed the demand problems faced by the High Needs block. It was noted that there was an underspend on the Early Years block by £0.71 million. The Director of Finance referred to Table 2 on the DSG Reserve at section 7.6 of Appendix 1 of the report, which showed an agreed transfer during the course of the year between the Schools block and Early Years to the High Needs block. The transfer was made with agreement of the Schools Forum in recognition of the need to help improve the High Needs block. Despite this, the High Needs block was struggling and had put the DSG in negative position at £2,2 million at the end of the financial year. The Director of Finance agreed that what was happening with the DSG was not sustainable and confirmed that there were limitations on how much could be moved around.  A recovery plan had been started as a degree of negative reserve in excess of the threshold had been forecasted by the end of the year. 

e.    In terms of savings, the Director of Finance noted that the aim for 2019/20 was to deliver savings of £13 million. The delivery of the savings agenda for 2019/20 was stronger than last year due to several reasons which were set out as part of the MTFS. Firstly, a lot of difficult savings were taken out of the budget; and secondly, both Adult and Children Services had additional budget provisions made. A £7 million resilience factor had been built into the budget to help deal with problems that arose. In terms of the reserves position, at the close of 2018/19, some work had been done that made it as strong as it could be, which included a review of the grants. The upshot of the review was that three things were done with the reserves: firstly, more money was put into the transformation agenda; secondly, more money was put into the ICT reserve; and thirdly, £2 million more was put into a resilience reserve to deal with the negative £2 million balance with DSG at the close of last year.

f.     The Director of Finance stressed that as an organisation it was important to focus on delivering the £13 million savings because there would be a legacy problem if the savings target were not delivered. The Director of Finance confirmed that reserves could only be used once. Regarding the limited opportunities that had been utilised in 2018/19 to improve the reserves position, it was noted that the business rates improvement was used to offset the service overspend during the course of the year.

g.    The Chair requested clarification on the Business Rates section of the report at section 8.3 of Appendix 1. In response, the Director of Finance explained that performance on Business Rates were not at the point where the authority wanted it to be. The target of 98% was in the ballpark of what was expected to be collected year on year. However, it was noted that the money was still collectable, and the department had worked to catch up with that money from last year to ensure a better performance for this year. The department were aware that the shortfall needed to be collected from last year because the business risk was that if the money was outstanding for longer, then there would be an increased likelihood of difficulty in collection and bad debt costs.

h.    In relation to section 9.7 of the report at Appendix 1 regarding Broadwater Farm, the Director of Finance clarified that the information provided was in respect of the level of spend on the existing scheme, and underspend on the level of spend on the existing scheme.

RESOLVED

                     I.        That the Committee noted the contents of the report and considered how it could be used to inform future scrutiny work and overview of the financial monitoring and planning process during 2019/20.