Agenda item

Report of the Cabinet Member Finance

The item was introduced by Councillor John Rawson, Cabinet Member Finance. The report 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 2012/13. The information contained in the report had been used to prepare the Council’s Statement of Accounts for 2012/13.

The Cabinet Member Finance explained that the Financial Outturn report had been put together in difficult circumstances with unprecedented levels of cuts in Government funding. He indicated that the council had managed its resources well and delivered services slightly within budget, leaving a budget saving of £201,000 in 2012/13. He was proposing that this was added to the General Reserve. In addition £186,000 had been set aside to provide a safety net against possible future fluctuation in business rates income, following the localisation of business rates.

Where budgets were committed or still needed to be spent on the items for which they were budgeted, the Section 151 officer had delegated power to carry them forward.  Other carry forward items required member approval were set out in the report and he highlighted two of these. 

He proposed that £10,000 should be carried forward from the Town Hall underspend mainly to fund initial costings and designs for the Town Hall redevelopment scheme.   This was a hugely important project which had the potential to increase the council’s income as well as giving Cheltenham a Town Hall fit for the 21st century. 

He was also proposing that £170,000 of the substantial Ubico underspend should be reinvested in Ubico, to fund new vehicles and technology, to assist in rationalisation, and to train staff.  This would result in a better and more efficient service for the people of Cheltenham.

The Council received £100,000 of funding from the High Street Innovation fund. This had paid for retail skills workshops for local businesses as well as enabling the continuation of the business rates discount scheme. However, take up of the scheme had been lower than expected. Therefore, there was a plan to reallocate some funds to other services. For example, £15,000 would be spent on funding consultation with the business community regarding the possibility of setting up a Business Improvement District and £24,000 was to be spent on new equipment for the pedestrianised area of the town centre to make it cleaner and more welcoming for businesses, tourists and shoppers.

The Cabinet Member Finance informed members that the investment that Cheltenham Borough Council had put in to Gloucestershire Airport had seen a disappointing return. Gloucestershire City Council and Cheltenham Borough Council had each provided a temporary lending facility of £350k which had been provided to support the extension of the runway. They had not seen a return on investment and the airport could not afford to repay the loan in the original timeline set. He also indicated that Cheltenham and Gloucester councils would not be receiving any dividend this year, though to be fair this was as a result of the pension deficit which is outside the control of the airport.   It was also important to recognise that the airport was being supported financially by the councils that own it, because it draws rents from sub-letting airport land, some of which would otherwise come to the council.   All this meant that the airport was currently delivering a very poor return on investment to Cheltenham and Gloucester councils, and he felt it was important for the council to take a long, hard look at the airport's performance.

The Treasury Management Panel had considered the matter and decided that the loan should be reviewed annually and the Cabinet Member felt this was appropriate as council tax payers should not be expected to support the airport financially.  

He referred members to Appendix 4 which demonstrated the 2013/14 budget and showed that in 2015 there will be a 10% cut in funding across the whole of the local authority. There had been £5 million of savings made by the council since 2010. A third of a million of new savings had already been identified towards bridging next year’s budget gap and the council would need to consider radical changes in order to bridge the remaining gap. This would be partially achieved through new technology and accommodation.

He advised Members that the authority along with four others in Gloucestershire and Oxfordshire were pursuing a joint bid to the Government for Transformation Challenge Award funding.  The application would be for £1.5 million of investment with a view to achieving £4 million a year of savings across the five councils by the end of year 5. 

He concluded that it was an encouraging report which demonstrated the council’s sound financial management. It demonstrated how much had been achieved in cutting costs but also set out clearly the work still to be done. He thanked officers, including the Senior Leadership Team, for their help and guidance.

It was agreed that recommendation five – which reads ‘Approve the revision of the Treasury Management policy to reflect the revised borrowing facility to support the airport’ would have the words ‘subject to annual review’ added to it.

A Member made reference to the disabled facilities grant which was referred to in appendix 3 of the report on page 107. This outlined that there was a budget of £81,000, but adjustments were made which brought the total to £107,354. The councillor asked why there had been an overspend of £37,000. The Finance Officer stated that the £81,000 had come from staffing budgets to administer the disabled facilities. The 2012/13 expenditure on disabled facilities had been £416,000 of which £350,000 had come from government grants. The Finance Officer referred members to Appendix 11 which demonstrated that the disabled facilities grant was part of the capital programme.

Councillor Harman, as the chair of the Treasury Management Panel, told Members that the addition to recommendation five was sound and that it sent a strong message to the airport.

A Member suggested that they should be careful regarding what they said and did regarding Gloucestershire Airport. In his view it may be better to have an airport and the greenbelt land around it rather than have houses built on the land. He also made reference to the amount of highly skilled jobs at the airport and its contribution to the local economy.

The Leader of the Council, reminded Council that the loan to the airport would be under annual review as this had been a Treasury Management Panel recommendation. He said that a report into the airport, initiated by Gloucester City Council, would be available shortly and this council would review the report with interest and respond accordingly.

Councillor Rowena Hay, Corporate Member Leisure and Culture, commented on the HRA supporting people grant and said that people who found it difficult to support themselves had received £5,000 in support. She said that Cheltenham Borough Homes were working well to support this scheme.

The Cabinet Member Finance thanked the Treasury Management Panel for their work during the year. Responding to the comments made relating to the airport, he reiterated that the council were not thinking of closing the airport, but the council did need to review its position as a shareholder. He could distribute more information to members on this matter if required.

Upon a vote it was unanimously,

RESOLVED that the following recommendations be approved:

1. Receive the financial outturn performance position for the General Fund, summarised at Appendix 2, and note that services have been delivered within the revised budget for 2012/13 resulting in a saving (after carry forward requests) of £201,801.
2. a) Approve £216,400 of carry forward requests (requiring member approval) at Appendix 6.
   b) Approve the transfer of the budget saving £201,801 to general fund balances.
3. Note the updated MTFS and budget strategy at Appendix 4.
4. Note the treasury management outturn at Appendix 8 and approve the actual 2012/13 prudential and treasury indicators.
5. Approve the revision to the Treasury Management policy to reflect the revised borrowing facility to support the airport (Appendix 9) subject to annual review.
6. Approve the amendments to financial rule I9 in respect of write-off limits as set out in Appendix 15 (section 7).
7. Approve the High Street Innovation Fund reallocation (section 8).
8. Note the capital programme outturn position as detailed in Appendix 11 and approve the carry forward of unspent budgets into 2013/14 (section 10).
9. Note the position in respect of section 106 agreements and partnership funding agreements at Appendix 12 (section 11).
10. Note the outturn position in respect of collection rates for council tax and non domestic rates for 2012/13 in Appendix 13 (section 12).
11. Note the outturn position in respect of collection rates for sundry debts for 2012/13 in Appendix 14 (section 13).
12. Receive the financial outturn performance position for the Housing Revenue Account for 2012/13 in Appendices 16 to 17 (section 14).
13. Note the budget monitoring position to the end of May 2013 (section 15).