Agenda item

(Director of Resources) To consider the attached report (FPM-025-2015/16).

The Director of Resources presented a report on the draft General Fund and Housing Revenue Account (HRA) budgets for the financial year 2016/17. The individual Directorate budgets were presented by the Directors and Chief Executive, highlighting where significant changes had occurred. The Financial Issues Paper which incorporated the Medium Term Financial Strategy (MTFS) had been considered on the 20 July 2015 and identified a savings target of £0.15 million for 2016/17. The MTFS was being updated and expected to show that savings of £0.4 million would be required in the years beyond 2016/17.

 

Communities Directorate

 

The Director of Communities reported that the Directorate was responsible for three distinct budgets which were the General Fund, the Housing General Fund and Community Safety and the Housing Revenue Account (HRA).

 

The General Fund mainly covered the Private Sector Housing and there had been a reduction of around 9% between the original estimate and the probable outturn for 2015/16, which had been a result of reduced expenditure across a number of budget heads, most notably the small reduction in staff time in the Care and Repair Service. The net expenditure in 2016/17 would also be less than the original estimate for the current year. The other main part of the Housing General Fund was Homelessness and the probable outturn for Bed and Breakfast accommodation was 4% higher than the original estimate for 2015/16, which had been mainly due to a significant increased number of households that were presenting themselves as homeless, resulting in further accommodation requirements in bed and breakfast hotels. The Director of Communities advised that single people were normally only accommodated in bed and breakfast but throughout the year, families have had to be because of Norway House and Hemnall House being full. This year the number had doubled to 21 with 6 of the households being families. The probable outturn for non-HRA rebates which related to housing benefit for bed and breakfast showed an increase of 64% compared to the original estimate.

 

With regards to the homelessness advice the probable outturn was higher that the original estimate for the current year because of Housing Options staff having to spend more time on homelessness work, which was mainly homelessness prevention in order to minimise the number of homeless families that would have had to be accommodated by the Council. The probable outturn for next year remained the same as this year.

 

Within the Community Services and Safety budget the expenditure on Voluntary Sector Support was on budget and showed a slight saving and would be the same for next year. The net expenditure for the Arts and Museum was £57,000 higher than budget because of an additional cost relating to the expansion and refurbishment of the Museum and the net expenditure of Community Health and Wellbeing had increased by £44,000 for the current year.

 

Housing Revenue Account

 

The Director of Communities reported that the types of expenditure and income that had been allocated to the HRA were governed by legislation. Therefore the general premise used to assess the legitimacy of a charge to the HRA, was whether it was ‘directly related to, or in support of, the management and maintenance of HRA property.’The balance on the HRA at the end of March 2017 was expected to be £2.163 million and covered all costs and income for the six and half thousand properties within the District.

 

The main controllable budget of Management & Maintenance (M&M) which covered the M&M-General, M&M-Special, the Contribution towards Repairs Fund and Housing Improvements and Enhancements the original estimate was £14 million and the probable outturn was around £300,000 more. This was mainly because of the increased contribution to the Repairs Fund by £300,000 for the current year. The estimate for next year would increase to around £15.4 million and this would be mainly due to the increased contribution to the Repairs Fund of £900,000. The Director of Communities advised that the Repairs fund had not been increased for a number of years and the balances that had accrued with the Repair Fund would be reduced. In 2014/15 the account was around £1.2 million deficient, which in turn would reduced the balance to around £1.5 million by the end of the year. Therefore, if the HRA Contribution to the Fund was not increased in 2016/17, it would result in an overall deficit which could not be allowed to happen.

 

With regards to the Gross Rent of Dwellings, the Government had required that all social landlords must reduce their rents in real terms by 1% per annum for the next 4 years which would reduce the income by around £260,000 next year which contrasts to the expected increase of CPI plus 1% that had been previously agreed. Therefore the overall effect of this required rent reduction would be around £14 million less than expected over the next four years  and around £228million less than anticipated over the next 30 years. With this in mind the Cabinet had received a detailed report at the last meeting of Finance Performance Management Cabinet Committee in November 2015 about the options to deal with the reduction and agreed not to make any decisions but to review the situation later in the year when the Government’s requirements to sell “high value” voids was clearer. The net cost of services for next year showed a healthy surplus with expenditure being around £6.4 million less than the income received.

 

The annual interest payment to the Public Works Loan Board for the £186 million loan taken out in 2012 for the introduction of HRA self-financing, remained at around £5.6 million per annum because most of the loans were at fixed rate and the rates for the one variable rate loan were not expected to rise rapidly.

 

The Director of Communities advised that the Transfer to Self-Financing Reserve, where the Council put aside 10% of the loan in the Reserve each year, would not be in a position to transfer the money into the Reserves next year because of the effects of the 1% rent reduction over the next 4 years. The Cabinet Committee had identified that re-profiling of the Self-Financing Reserve would be necessary and less money would be transferred to the Reserve over the next few years followed by higher transfers towards the end of the 10 year period. This issue would be reviewed again with long term options for the HRA in 2016. Therefore the HRA was expected to remain in balance at the end of next year by around £2.1 million, which was in line with the decision made by the Cabinet in 2014 to keep balances to a minimum of £2 million.

 

Chief Executive

 

The Chief Executive reported that the budget was made up of mostly internal recharges from services for corporate and public accountability activities and subscriptions. The budget had increased in 2016/17 due to the post for the transformation process, a HR Manager and increased recharges from the Housing Policy Group, which would be offset by the proposed savings from the transformation process. 

 

The original estimate for 2015/16 had been an expenditure of £1.171 million, with a probably outturn of £1.124 million. The net DDF costs included £13,000 for Local Land and Property Gazetteer works and £33,000 for the transformation programme, which had been included in the probable outturn for 2015/16 with a further £77,000 for the transformation project in 2016/17.

 

Councillor J M Whitehouse asked what had been learnt one year on from the start of the transformation project budget allocation. The Chief Executive, G Chipp advised that the Head of Transformation had been appointed in November 2015, along with a Customer Contact Review and scoping work for the transformation project, which would be reported in a detailed progress report to Cabinet shortly.

 

Governance Directorate

 

The Director of Governance reported that the budget had been complied based on the new structure with the revised recharges diminishing and the CSB budget becoming more consistent. The total original estimate for 2015/16 had been expenditure of £2.719 million, with a probable outturn of £2.810 million and £3.116 million for 2016/17. Changes in the CSB produce a net £53,000 saving on the probable outturn for 2015/16 and a further net savings of £16,000 for 2016/17. The DDF showed additional saving at probable outturn, although they would be spent in later years due to additional works caused by the upturn in building and developments.

 

The Director of Governance highlighted the changes within the directorate budget as follows;

 

·                     Elections - The main increase in net expenditure from original 2015/16 to probable outturn 2015/16 and original 2016/17 was due to the increased postal costs for “Single Registration” on the register of electors and included in 2014/15 and  2015/16 figures were the DDF amounts of £59,000 and £37,000 income and expenditure for Individual Registration;

·                     Member Activities – This service had picked up very little in the way of ICT costs, although a review of the charges had seen the costs increased due to the additional support being provided to Councillors. Other major increases related to the recharges to the Standards Committee from the Governance Policy Group;

·                     Land Charges - Income for Land Charges had decreased by £39,000 over the last couple of years because of reduction in the number of searches undertaken. There was also an increase in recharges due to an internal audit inspection;

·                     Planning & Development - Income in 2015/16 had been considerably higher than originally anticipated and some of this had been treated as DDF and used to fund some additional staff resources, to assist with the additional workload. The additional income had been assumed to carry on into 2016/17 and an element would again treated as DDF; and

·                     Governance Support Services – The costs were recharged to Direct Services across all Directorates and included both General Fund and HRA expenditure. The major cost reductions related to recharges, mainly on Legal Services, and on Employee costs in Internal Audit which was now part of a Shared Service with Harlow and Broxbourne Councils.

 

Councillor D Stallan asked whether the Council was reimbursed for the Referendum and whether it needed to be included within the budget. The Assistant Director of Accountancy, P Maddock advised that the amount would be reimbursed and would be covered by the Council in the short term and that this was what normally happened.

 

Councillor J Philip advised that as the Portfolio Holder for Governance and Development, he would keep the additional staff resources for planning under review and consider investing to make revenue, if that was what was required in the future.

 

Neighbourhoods Directorate

 

The Director of Neighbourhoods reported that the original estimate for 2015/16 had been £9.034 million, with a probably outturn of £9.249 million for 2015/16 with a year on year increase of £171,000. The CSB Growth and Savings werestable from original 2015/16 to probable outturn with approximate savings of £170,000 in both. The two main changes in the probable outturn were the growth of £92,000 in Estates and Economic Development and the Parking Fee increase generating £189,000 of income.

 

The CSB changes for 2016/17 included a saving of £75,000 for the first third of the predicted savings from the new leisure management contract, although this saving had been matched by the increase in staffing in Forward Planning. The DDF items increased from £750,000 to £1,203,000 for original to probable outturn and the Local Plan and Asset Rationalisation were the main reasons for the increase.

 

The Cabinet Committee noted the highlighted changes within the directorate budget as follows;

 

·                     Environmental Health – The overall spend had reduced by £68,000 because of the new way the Animal Welfare service was being delivered through an agreement with London Borough of Waltham Forest;

·                     Licencing – The net expenditure fell original 2015/16 to original 2016/17 due to reductions in staff costs;

·                      Leisure Management – The fall in net expenditure from original 2015/16 to original 2016/17 was £80,000, which resulted from the predicted saving of £75,000 on the new contract. A further saving of £175,000 was predicted for 2017/18, when the new contract had been in place for a full year;

·                     North Weald Airfield – The airfield strategic review had concluded in 2014/15 and the Market rents continued to effect the operations side of the airfield, which had fell by £73,000 in the probable outturn. A new contractor was now in place and the income should stabilise going forward;

·                     Waste Management – The net expenditure had increased original to original by £156,000 because of the Recycling Income Unit Rate received from Biffa, which would decrease by £133,000 in 2016/17;

·                     Land Drainage & Sewerage – A new post had been created in 2015/16 for a Water & Pollution Control Officer and the DDF spend of £64,000 had been shifted into 2016/17;

·                     Parks & Grounds – There were no major changes to the budget and the  Countrycare budget for External Funding Income had been re-phased to 2016/17;

·                     Technical Services Other – The net income had increased by £125,000 original to original because of the Off Street Car Parking and the tariff increase implemented on 1July 2015;

·                     Forward Planning and Economic Development – The net expenditure original to original had increased £383,000 and had been affected by fluctuations in the Local Plan enquiry and production phases. The Local Plan DDF items had suffered slippage due to the complex nature of the process of compiling the Local Plan and the budgets had increased to £435,000 in 2015/16 and £552,000 in 2016/17. The spending on Economic Development had increased by £103,000 original to original; and

·                     Support and Trading Services – The various elements of employee costs had changed due to the restructure of Neighbourhoods Finance and Admin and other staff changes that were occurring.

 

Councillor J Knapman advised that the Local Highways Panel (LHP) budget at Essex County Council (ECC) had been reduced by 50%, but the ECC Portfolio Holder for Infrastructure, Councillor R Bass had advised that ECC would match fund any money that the District Council was able to provide for the LHP. Councillor C Whitbread commented that it was disappointing with the budget reductions for the LHP, especially as devolution involved authorities working together in partnership with each other. Councillor J Phillip advised that he was unsure whether they would deliver what had been promised; and therefore was sceptical about match funding. Councillor J Knapman advised that the match funding would have to come with an undertaking from Councillor R Bass and a firm commitment. The Cabinet Committee agreed that a bid for £50,000 of DDF money should be included in the budget but that the District’s match funding would only be given once the funding for LHP and ECC match funding had been spent first.

 

Councillor G Waller advised that the new tariffs for the car parks in the District had been received without any complaints and the revenue increase had been encouraging.

 

Resources Directorate

 

The Director of Resources reported that the original estimate decreased the total spend from £2.436 million in 2015/16 to a probably outturn of £2.364 million for 2015/16. The net CSB increased from £2.298 million in 2015/16 to £2.496 million in 2016/17. The increase to the CSB between original and revised in 2015/16 was due to the removal of the vacancy allowance and there were also a number of one off grants received during 2015/16 that would not be spent until 2016/17, and would be treated as DDF.

 

The Director of Resources highlighted the changes within the directorate budget as follows;

 

·                     Housing Benefits -  The Housing Benefit Administration costs were increasing as the DWP admin grant had been reduced again by £73,000 and both the Non-HRA rent rebates and HRA Rent Rebates were showing increased cost;

·                     Local Taxation - The allowance set by Central Government for the collection of NDR was now proving insufficient to keep up with the costs of debt collection, but a technical agreement was in place between all the precepting authorities, which had enabled additional staff resources to be put in place to assist in the collection revenues of all streams;

·                     Other Activities – The Vacancy Allowance was at 1.5% of total salaries for 2016/17. The other main variance was in Finance Miscellaneous which fluctuated depending upon the level of recharges;

·                     Support Services – The costs were recharged to Direct Services across all Directorates and included both General Fund and HRA expenditure;

·                     Office Accommodation – The changes mainly related to the building maintenance programme part of which was funded from the DDF. Other headings within the grouping were fairly stable;

·                     Finance Support Services – The cash collection costs had increased as the number of transactions processed electronically had risen and there were CSB savings in 2016/17, because of the proposed installation of the payment kiosk at Epping;

·                     ICT – The increase was little under 2%, so nothing significant save inflation;

·                     Human Resources, payroll and Reprographics had increased from £1.503 million to £1.574 million, with the increase relating to the new HR Manager appointment.

 

Recommended:

 

(1)          That the detailed Directorate budget for the Chief Executive be recommended to the Cabinet for approval;

 

(2)          That the detailed Directorate budget for Communities be recommended to the Cabinet for approval;

 

(3)          That the detailed Directorate budget for Governance be recommended to the Cabinet for approval;

 

(4)          That the detailed Directorate budget for Neighbourhoods be recommended to the Cabinet for approval;

 

(5)          That the detailed Directorate budget for Resources be recommended to the Cabinet for approval; and

 

(6)          That the detailed Directorate budget for the HRA be recommended to Cabinet.

 

Reasons for Decisions:

 

To give Members an opportunity to review and provide recommendations on the detailed budget prior to adoption by Council.

 

Other Options Considered and Rejected:

 

Other than deciding not to review the budget there were no other options.