Agenda item

Report of the Cabinet Member Finance

The Cabinet Member Finance, Councillor Rowena Hay, introduced the report. She explained that in December 2015 a possible under-spend of £307, 900 was forecast. This was then transferred to the budget support reserve following Council in February 2016.

The Cabinet Member Finance highlighted that changes to government funding arrangements, together with the current economic climate (particularly in the light of Brexit), presented an ongoing concern for the budget. It was important that the council continued to focus on economic development at the same time as ensuring that it used underspends to support economic growth, the budget strategy reserve and general balances, bearing in mind the Medium Term Financial Strategy. She explained that business rates income had seen a significant short term dip with the Beechwood shopping centre closure and the Brewery redevelopment but despite this, the business rates pool had generated a surplus of £140, 000 in 2015/16 which had been transferred to the business rates equalisation reserve. She reported that a government consultation on the retention of business rates was underway with a deadline for responses by September. This would help shape future reforms and a further technical consultation was expected in the autumn. Parliamentary legislation for the framework was due in 2017 with a pilot scheme being introduced in April next year and full implementation by the end of this parliament.

In terms of the government offer for a fixed 4 year funding settlement, the Cabinet Member Finance believed this should be considered alongside the current business rates consultation. In any case the council was not in a position to submit a response to government with regard to the funding settlement by the October deadline. Cabinet was working with officers to address the MTFS in order to show a balanced budget over the period of the MTFS which must happen before any submission.

The Cabinet Member Finance reported that the Council had contributed £440,000 to the Joint Core Strategy over the last four years. It was uncertain how much more funding for this process was required but discussions were ongoing with the Inspectorate clarifying their estimated costs to completion. A reserve of £68,779 was available for this purpose and any request for additional funding would come forward in the report to be submitted at the October meeting of Council. This was a frustrating position but outside the council’s control.

The Cabinet Member Finance announced an underspend of £239,020 in addition to the £307,900 already incorporated into the revised budget. She paid tribute to the officers who were constantly working to find savings, reduce costs and generate income wherever possible. It was proposed that this saving also be transferred to the budget support reserve.

In section 3 of the report, reference had been made to the 2017 Tour of Britain cycle race and the Cabinet Member informed members that discussions were ongoing with regard to the possibility of Cheltenham hosting the penultimate day. Whilst these were at an early stage she emphasised that this would provide a boost to the local economy and raise Cheltenham’s profile as a festival town and tourist destination in line with the council’s focus on economic and business growth. To host the race the council would be asked to underwrite £100,000 of the cost which would be partly covered by sponsorship by local businesses and other organisations. She believed that the council had to be bold to prosper.

The Cabinet Member Finance referred to the recent currency auction of the council’s deposit in the Glitnir Icelandic bank. She reported that on 4 July the council received £627,856. To date the council had recovered £3,055,456 however the shortfall in the return against the carrying value of the loan must be taken into account which amounted to £167,637 (accrual of interest on the investment balance outstanding). Provision had been made within a reserve to offset any losses and a balance remained of £132,217 which would be used as part of the 2017/18 budget setting process.

She proposed that any revenue savings should be used to strengthen the general fund balance wherever possible and proposed that the budget saving balance of £139,020 be transferred to the Budget Strategy reserve. This would give the council more flexibility to support projects and initiatives which had the potential to deliver future savings and that the £100,000 underwrite for the Tour of Britain be put into the economic development and tourism reserve.

The Cabinet Member Finance proposed that the Keep Cheltenham Tidy reserve be transferred to Cheltenham in Bloom which was an organisation which enhanced the council’s floral displays across the town.

In terms of achievements this year the Cabinet Member highlighted the following:

·         Ubico had delivered £116,700 to shareholders

·         The restoration of the War Memorial was almost complete and community plans were well advanced to mark the 100 year anniversary of WW1

·         The Pittville Park Play Area had been completed within budget and on time

·         Delta Place was proving to be a wise investment

·         Car parking income had exceeded the budgeted target

·         The Housing Revenue Outturn statement showed a net positive variance which boded well for the future given the Government imposed rent reduction in future years

·         The Capital Programme had delivered the boiler scheme ahead of schedule benefitting tenants with more efficient heating systems and reduced energy costs

·         The solar panel installation has generated a feed in tariff of £194,000 which has gone back into the HRA

The following questions were raised by Members and responses given :

·         Had the 2020 situation in terms of the withdrawal of revenues and benefits and customer services from the process and the implications for the transformational grant and the consequential loss of savings in the budget made it impossible for the council to apply for four year government funding. In response the Cabinet Member reiterated that the proposal was to look at the Government’s offer of four year funding alongside the current business rates consultation. She highlighted that work was ongoing as even without the £157k shortfall from 2020 there must be a balanced budget

·         Carry forward requests in Appendix 5- A member expressed concern about the lack of the authority’s compliance with statutory food law requirements and asked if Cabinet could provide regular updates to inform Members how this was being progressed to meet this requirement by 2017. In response the Cabinet Member Finance stated that £20k in carry forward requests had been earmarked to address the issues. The Cabinet Member Development and Safety acknowledged that the Annual Food Safety report had revealed the failure of the service to meet some national targets and explained that this was due to staff long term sickness. A Food Standards Agency audit had considered the council’s plans to address the issues and approved its plan in September 2015.

RESOLVED THAT

1.    the financial outturn performance position for the General Fund, summarised at Appendix 2 be received, and that it be noted that services have been delivered within the revised budget for 2015/16 resulting in a saving (after carry forward requests) of £239,020.

2.    £40,000 of carry forward requests (requiring member approval) at Appendix 5 be approved.

3.    the use of the budget saving of £239,020 as detailed in Section 3 be approved.

4.    the annual treasury management report at Appendix 7 be noted and the actual 2015/16 prudential and treasury indicators be approved.

5.    the capital programme outturn position as detailed in Appendix 8 be noted and the carry forward of unspent budgets into 2015/16 be approved(section 7).

6.    the position in respect of Section 106 agreements and partnership funding agreements at Appendix 9 (section 9) be noted.

7.    the outturn position in respect of collection rates for council tax and non-domestic rates for 2015/16 in Appendix 10 be noted(section 10).

8.    the outturn position in respect of collection rates for sundry debts for 2015/16 in Appendix 11 (section 11)be noted.

9.    the financial outturn performance position for the Housing Revenue Account for 2015/16 in Appendices 12 to 13 be received and the carry forward of unspent budgets into 2016/17 be approved (section 12).

10.  the budget monitoring position to the end of June 2016 (section 13) be noted and the budget virement of £60,000 be approved.