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 2014/15. The information contained within the report had been used to prepare the Council’s Statement of Accounts for 2014/15.

The Cabinet Member said that 2014/15 had been a particularly difficult year for balancing the books. In January 2015 it had been forecast that there would have been a possible overspend of £178,000.  There were at that time particular concerns regarding shortfalls in parking income and crematorium income, although both these items had recovered. He reported however, that another problem had hit the council completely from left field and this related to the impact on the Gloucestershire business rates pool of a successful major re-evaluation appeal by Virgin Media in Tewkesbury Borough. This has led to a far bigger reduction in rateable value than was expected.  He explained that this had hit Tewkesbury the worst but because all the councils in the Pool share the risk, it has left the Pool in deficit and the council has had to contribute £285,000 as its share of the deficit. The Cabinet Member stressed however that he did not believe that this problem outweighed the benefit of being in the business rates pool. That said councils across the country were being hit by valuation appeals and the LGA were pressing Government to provide them with a degree of protection of sudden losses against valuation appeals.

The Cabinet Member reported that despite the business rates problem the council finished the financial year within budget, with a very small underspend of just over £9,000. He paid tribute to the very good financial management within the council by officers. He said that across the authority officers and its partner organisations worked hard to find savings, cut costs and generate income wherever they could. He welcomed the fact that Ubico had delivered an overall net surplus of £370,000 for the Council.

The Cabinet Member then went on to explain that as always a certain amount of revenue expenditure had been carried forward subject to Council approval. This included £23 000 to commission a new tourism and marketing strategy for the town, £40,000 to the planning appeals reserve and £40 000 for costs related to the JCS which would be matched by Tewkesbury and Gloucester councils.

The Cabinet Member also referred to major proposals in the report regarding accelerating capital investment in ICT.  It involved reshaping the existing five-year ICT investment programme, switching some expenditure within the ICT capital budget, bringing some investment forward into 2015 to 2016, and adding a further allocation from unapplied capital resources.  He explained that the effect of this accelerated investment would be to make CBS’s ICT fully fit for purpose and aligned with other councils in the 2020 Vision programme. It would give the council among other things better data recovery in the event of a disaster, better storage arrangements and processing performance, a cluster of high speed servers to support shared working arrangements and reduce licensing costs, and better video conferencing facilities.

The Cabinet Member Finance informed Members that the General Reserve currently stood at £1.6 million. Although this was within the £1.5 to £2 million range that is regarded as adequate, it was not as high as desired due to the business rates impact.  However he reported that there was a possibility that Ubico may want to distribute a further amount of money to its shareholders, subject to the views of its auditors. Should this happen it would bring the General Reserve up to about £1.75, which would be more satisfactory.

The Cabinet Member Finance also highlighted that the Housing Revenue Account faced big challenges in the future. He explained that the Government’s decision that rents should be reduced by one per cent year on year for the next few years would mean that £6.8 million would need to be cut from HRA spending plans between now and March 2020.  The rent cut would test the ability to cut spending without negatively impacting either existing tenants or people in housing need.

Finally the Cabinet Member Finance referred to the Tour of Britain cycle race which was referenced in section 14 of the report.  Cheltenham and some other local councils were in discussion with the organisers of the 2016 Tour of Britain Cycle Race about the possibility that one of the eight stages of the event might begin and end in Gloucestershire.

He emphasised that this was still at the discussion stage; it would be a huge boost to the economy and would raise Cheltenham's profile nationally and internationally as a festival town and tourist destination. If it went ahead, with a major stage of the race taking place in Cheltenham, the council would be asked to underwrite £75,000 of the cost.  Officers were working hard with the Cheltenham Trust to cover that cost through sponsorship by local businesses and other organisations.

The following responses were given to questions raised by Members :

·         The increase in the outstanding balance of section 106 receipts from £573,321 in 2013/14 to £1 801, 684 was due to the development at Thirlestaine Hall by Berkeley homes. Officers were currently working on this.

·         Asked how the decrease or lower increase in Council rents would impact the business model of ALMOs such as CBH, the Cabinet Member Finance explained that whilst it was a benefit that tenants would have to pay lower rents the drawback was that the HRA would decrease by £6.8 million which meant there would be a reduction in investment in the current housing stock and in building new houses. He informed that CBH was looking at reshaping its business plan and the intention was to preserve the most high priority schemes. He would take on board the suggestion to write to Government seeking it to fund the cost.

·         When asked why the increase in the Art Gallery and Museum utilities bill had not been anticipated the Cabinet Member Finance acknowledged that this was a matter of concern and one which property services were investigating. He highlighted that the AGM now comprised a larger floor area and was more intensively used for more hours than previously. There appeared to be more complex problems associated with the controlled environment equipment which was unbalanced and consultants had been engaged to assist with this. Work was also ongoing with regard to monitoring energy consumption and training the Wilson staff to have a greater ownership of energy consumption. He acknowledged that this issue had not figured in earlier budget monitoring reports but highlighted that the budget scrutiny working group would be monitoring this further.

·         Tourism strategy-£22k would be allocated to this and it would dovetail into the response to the economic development strategy. Now there was a need for an organisational structure to carry through the recommendations. The potential to attract external funding and work with partnership organisations was highlighted by the Cabinet Member.

·         Funding Planning appeals-the £40k allocated may not be sufficient which is why the Cabinet Member Finance was anxious to maintain sufficient money in the General Reserve.

The following points were made during the debate :

·         Business rates-Concern was expressed at the level of loss. In response the Leader expressed his concern that Government had delegated its historic valuation appeals locally which in the Virgin media case had effectively wiped out 3 years’ worth of surplus for the whole of Gloucestershire. He emphasised that concerns had been expressed to the Secretary of State and there was an ongoing conversation at Gloucestershire level. Despite this issue the Leader welcomed the fact that the council’s finances were still on track.

·         Members supported the Tour of Britain coming to Cheltenham and acknowledged the need to underwrite this event.

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 2014/15 resulting in a saving (after carry forward requests) of £9,021 which will be returned to general balances.
2. £380,700 of carry forward requests (requiring member approval) at Appendix 5 be approved.
3. the annual treasury management report at Appendix 7 be noted and the actual 2014/15 prudential and treasury indicators be approved.
4. the additional ICT requirements (section 6) to be funded from capital resources unapplied be approved.
5. the additional capital programme in respect of affordable housing (section 7) be approved.
6. the capital programme outturn position as detailed in Appendix 8 be approved and the carry forward of unspent budgets into 2015/16 (section 8) be approved.
7. the position in respect of Section 106 agreements and partnership funding agreements at Appendix 9 be noted(section 10).
8. the outturn position in respect of collection rates for council tax and non-domestic rates for 2014/15 in Appendix 10 be noted (section 11).
9. the outturn position in respect of collection rates for sundry debts for 2014/15 in Appendix 11 be noted (section 12).
10. Receive the financial outturn performance position for the Housing Revenue Account for 2014/15 in Appendices 12 to 13 be received and the carry forward of unspent budgets into 2015/16 be approved (section 13).
11. the guarantee any shortfall in the funding of the Gloucestershire leg of the Tour of Britain up to a value of £75,000 be agreed, to be funded from General Balances as outlined in section 14.
12. the budget monitoring position to the end of June 2015 (section 15) be noted and the budget virement of £65,000 be approved.