Agenda item

Report of the Cabinet Member Finance

The Cabinet Member Finance introduced the report which updated Members on the council’s current financial position for 2017/18 based on the monitoring exercise at the end of September 2017. The report covered the council’s revenue, capital and treasury management position and identified any known significant variations (minimum £50k) to the 2017/18 original budget and areas with volatile income trends.

The Cabinet Member highlighted the following :

·         the expected savings in business rates were due to less rates payable by the council of £80kfor the year, which included rebates of £ 52K for rateable values backdated from prior years.

·         Cemetery & crematorium surplus income was currently at £10k and was expected to increase by the year end.

·         Off street car parking income to the end of September was overachieving by £91k; she explained that the target income for the first six months of the year was lower to take account of holiday periods.

·         The continued use of older refuse vehicles which were becoming less efficient and incurring higher operating and maintenance costs had given rise to an additional contract charge from Ubico of approximately £120k for the half year to 30th September 2017. These costs would be mitigated by a finance lease payment due back to the council from Ubico for the same period, due to the delay in purchase of new vehicles. New vehicles were however now  in operation so these additional costs would not continue in the second half of the year.

·         The cost of recycling waste wood (previously met by Ubico) was not factored into the budget and was expected to cost £63,000 in 2017/18. Income from cardboard recycling had been adversely affected by a sharp fall in the value of this commodity from £97 to £67 a tonne leading to a projected loss of income of £50,000.  Income from waste and recycling continued to be monitored on a regular basis in conjunction with the Joint Waste Committee.

·         Investment interest was likely to be around £22,000 in surplus against the expected budget of £385,700 for the financial year.  The council  invested  £1m with the Local Authorities Property Fund in August this year with the aim to achieve a return circa 4%. For this financial year the council has held an average balance of £23.4m investments achieving an average rate of 0.50%.

·         The housing revenue account (HRA) showed expenditure on repairs and maintenance for the year was currently forecast at £3,802,000, a reduction of £157,000 in comparison to budget. This reduction was due to a number of factors including lower demand following mild weather and ongoing improvements in working practices and procurement.

·          The current forecast for capital expenditure on existing housing stock was £7,973,000, a reduction of £403,100 in comparison to budget, due to significant project variations in terms of external works and 100k reduction in the Disabled Facilities Grants. Lower expenditure was forecast as a result of lower demand and external delays to the approval of applications.

·         Collection rates for this years council tax was above the target set, whilst business rates collection was slightly below the target which was being carefully monitored.

In conclusion the net effect on the general fund of the variances reported was that there was a forecast net underspend against the budget of £209k for 2017/18.

The Cabinet Member Finance highlighted that the continued impact of the changes in government funding arrangements and the economic climate presented particular concerns for the council’s budgets. It was clearly important to ensure that budgets continued to be closely monitored over the coming months with a view to taking action at a future date, if necessary.

She explained that the next detailed budget monitoring was due in January 2018 which may result in further projected variances. Cabinet and Council would decide in July 2018, when the outturn was finalised, how to apply any potential further savings. However it was recommended that any underspend identified on outturn be transferred firstly to the Budget Deficit (Support) Reserve and secondly to support general balances, bearing in mind the need to keep the level of reserves robust and the uncertainty surrounding possible future budget funding gaps, as outlined in the Council’s Medium Term Financial Strategy report.

Finally the Cabinet Member Finance wished to put on record her thanks to all officers for their diligence in ensuring that the council was on course for all expected services to be delivered and within budget.

RESOLVED THAT

the contents of this report including the key projected variances to the 2017/18 budget and the expected delivery of services within budget be noted.