Agenda item

Report of the Cabinet Member Finance

The Cabinet Member Finance introduced the report which highlighted the Council’s financial performance for the previous year which set out the General Fund and Housing Revenue Account (HRA) revenue and capital outturn position for 2016/17. She highlighted that it had been another challenging year.

The Cabinet Member reported that in December 2016 a possible under-spend of £110,737 had been forecast. In February 2017 Cabinet made recommendations to Council that this be transferred to the Budget support reserve which was approved and therefore formed part of the revised budget for 2016/17.

She explained that continued government funding arrangements and changes, together with the economic climate, presented ongoing concern for this council’s budgets, particularly in light of the Business Rates retention bill having been dropped from the legislative plan and the uncertainty surrounding the next steps. It was important that this council looked to grow its economy at the same time as ensuring that it used under-spends to support economic growth, the budget strategy reserve and general balances, bearing in mind the Medium Term Financial Strategy.

The Cabinet Member was pleased to report that the year ended with an under-spend of £571,443 achieved through a great deal of hard work and sound financial management, by CBC officers and its partner organisations. This saving had been transferred into the Budget reserve pending decisions for its use in 2017/18 and future years.

The Cabinet Member highlighted the following :

·         car parking and Cemetery & Crematorium income had increased which can now be built into the base budget with some certainty

·         the business rate pool had delivered a positive variance of nearly £300K which has been transferred to the Business rates retention equalization reserve

·         the housing revenue outturn statement showed a net positive variance of £691k

·         additional income generated through planning amounts to £77k

·         an increase on investment income from properties of £140k

The Cabinet Member informed Members that the Local Government Association undertook a peer review in April this year of the council’s financial strategy and overall  the results were extremely positive with the main challenges around the use of revenue to part fund the capital programme and the use of voluntary debt repayments.

She explained that with current interest rates being low, the challenge was to model extended lending periods on major capital schemes such as the crematoria project. She went on to explain that when the Council purchased Delta Place, the Section 151 Officer determined to pay additional voluntary debt repayments of £400k per annum from the current rental stream. Whilst this was a prudent decision at the time, the short-term challenges that the Council now faced suggest that this rental stream would be better placed to support the revenue budget, which was the reason behind creating an investment portfolio.

The Cabinet Member reported that the business case for Delta Place had now been remodelled, based on revised occupancy needs. This confirmed that the rental stream previously used to finance voluntary debt repayments are now better served to support the budget proposals in 2018/19 and 2019/20, using the money now not paying off debt or cutting front line services.

The Cabinet Member proposed that any revenue savings should be used to strengthen general fund balances wherever possible and to that end she intended that the budget saving balance of £571.443 be transferred to the budget strategy reserve which would give the council more flexibility to support projects and initiatives that have the potential to deliver future savings.

In terms of carry forward of revenue expenditure she referred Members to Appendix 5 of the report.

The Cabinet Member highlighted to Members that whilst this had been a challenging year there had been some positive news:

·         Enterprise Way would see the construction of three small new build commercial units generating an additional income of £45k a year to support the revenue budget

·         The funding for two new changing places public conveniences had been secured and one site in Pittville Park had been identified

·         Delta place was proving to be a wise investment

·         The provision of purpose built homes for veterans

·         The forthcoming cycling and walking festival for Cheltenham with the added value of hosting the finish on the penultimate day of the OVO Tour of Britain Cycling race

Finally the Cabinet Member wished to put on record her thanks to staff at CBC without which the delivery of services within budget or the under-spend would not have been achieved.

The following questions were raised and addressed by the relevant Cabinet Portfolio holder:

·         What plans existed to move forward with the £2 million S106 monies? The Cabinet Member Development and Safety explained that officers were mindful that it only had 5 years to spend these monies. He undertook to ask officers to provide Members with a full list of projects on which the monies were anticipated to be spend on.

·         £6.8 m HRA reserve-the strategy was part of the overall 4 year plan to deal with the rent reductions

·         Salary vacancy target of £375k-what assessment has been made of the impact of setting this target? -A number of these were associated with the REST restructuring; the Cabinet Member reported that a new Environmental Health Officer was being recruited and appointments were being made where there was a specific need

·         Update on whether CBC was collecting the penalty payments from the owner of the North Place site-the Cabinet Member confirmed that these were not being received but there were ongoing negotiations with the developer, the details of which were confidential so he could provide more information outside the meeting. Concern was expressed with regard to the lack of progress in developing this site and a request for this item to be discussed at Group Leader’s briefing was made.

·         £60k underspend on car parking income-the Cabinet Member Development and Safety explained that income did fluctuate against projections and plans within the car parking strategy were completely separate and not reliant on this underspend.

·         Uncertainty with regard to business rates-the Cabinet Member Finance reminded Members that from 2020 there would no longer be a Revenue Support Grant. Whilst Government wished to work with local authorities there was no means that they could plan into the future. CBC was therefore putting underspends into the budget support reserve in order to have a buffer post 2020.

In the debate that ensued the following points were made :

·         A suggestion was made to the Public Art Panel that funding could be considered for public art installations which would improve air quality in the town at the same time as supporting a business start up in the town. The Cabinet Member Healthy Lifestyles requested that further details be sent to her so this could be taken forward. She also highlighted that a new public art strategy would be considered by Cabinet in September.

·         A Member paid tribute to officers and the Cabinet for making prudent investments and decisions, including in Delta Place, which had enabled the underspend this year.

·         Members again expressed their concern that the future for business rates had been left out of the legislative programme.

·         The Cabinet Member Corporate Services informed Members that a working group to look into the sound system in the chamber would be set up.

RESOLVED (unanimously) 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 2016/17 resulting in a saving (after carry forward requests) of £571,443.

2. £80,000 of carry forward requests (requiring member approval) at Appendix 5 be approved.

3. the use of the budget saving of £571,443 as detailed in Section 3 be approved.

4. the suspension of voluntary debt repayments to support existing commitments and future budget proposals as detailed in Section 3 be approved.

5. the annual treasury management report at Appendix 7 be noted and that  the actual 2016/17 prudential and treasury indicators be approved.

6. Investments in corporate bonds in respect of Green Investment Bonds increased to a maximum of 5 years with a monetary value limit of £2m as detailed in Section 5 be approved.

7. the capital programme outturn position as detailed in Appendix 8 be noted and  the carry forward of unspent budgets into 2017/18 (section 7)be approved.

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

9. the outturn position in respect of collection rates for council tax and non-domestic rates for 2016/17 in Appendix 10 (section 10)be noted.

10. the outturn position in respect of collection rates for sundry debts for 2016/17 in Appendix 11 (section 11)be noted.

11. the financial outturn performance position for the Housing Revenue Account for 2016/17 in Appendices 12 to 13 be received and that the carry forward of unspent budgets into 2017/18 (section 12) be approved.

12. the budget monitoring position to the end of June 2017 (section 13)be noted.