Agenda item

(Director of Resources) To consider the attached report (FPM-025-2016/17).

The Assistant Director Accountancy presented a summary of the detailed directorate budgets for 2017/18.

 

The report provided the draft General Fund and Housing Revenue Account (HRA) Budgets for the financial year 2017/18, which were presented on a directorate by directorate basis. There were accompanying notes highlighting areas where significant changes had occurred, which were presented to the Cabinet Committee to give an opportunity for Members to comment and make any recommendations prior to the budget being formally set during February 2017. The budget setting process commenced with the Financial Issues Paper incorporating the Medium Term Financial Strategy (MTFS) being presented in July 2016, which had identified a savings target for 2017/18 of £0.25 million.

 

The settlement figures provided in December 2015 were for four years and providing that the Council had signed up to an efficiency plan. The Council duly agreed to accept the settlement during the autumn on the basis that indications were that failure to do so could mean a worse settlement, although the figures had not included the New Homes Bonus. The released proposals had been rather more draconian than expected as a significant amount had been redirected to Adult Social care, meaning a reduction for districts but a gain for county’s. The actual reduction was around £2.5 million for this Council but because the MTFS had assumed some loses going forward the actual growth required to meet the shortfall over the next four years was £1.9 million. The impact on the Council of this was serious but because of the savings on the new Leisure Management Contract, income from the Epping Forest Retail Park, the Winston Churchill development and other assets, the Council would be in a far better position than some other districts. The commitment made to move to 100% retention of Business Rates locally was still being worked on by Central Government and the current retention proportions (40% District, 9% County and 1% fire) were likely to be changed.

 

The budgets were presented on a directorate by directorate basis, highlighting areas where Continuing Services Budget (CSB), District Development Fund (DDF) savings or growth and Invest to Save (ITS) expenditure had occurred and also where allocation or other changes had affected budgets.

 

Chief Executive

 

The Chief Executive reported that the budget was made up of mostly recharges from services for corporate and public accountability activities, subscriptions and Transformation Projects. The original estimate for 2016/17 had been an expenditure of £1.174 million, with a probably outcome of £1.317 million. The net increase had been attributed to the new Head of Customer Services position reporting directly to the Chief Executive and the Invest to Save amount of £83,000 for the accommodation review. The 2017/18 budget also included an additional DDF allocation of £100,000 to support work to integrate and increase efficiency in the delivery of public services.

 

Communities Directorate

 

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

 

The Housing General Fund mainly covered Private Sector Housing, which showed a reduction of around 17% between the original estimate and probable outturn for 2016/17, which had received more external funding from the Better Care Fund than expected and reduced the Council’s costs with a similar amount being assumed for 2017/18. The other main part of the Housing General Fund was Homelessness, which showed a reduction of 6% between the original estimate and the probable outturn for 2016/17. This had been mainly due to changes in salary allocations, although CSB growth for Homelessness budget would increase next year.

 

Within the Community Services and Safety budget the expenditure on Voluntary Sector Support was on budget at £412,000 with the 2017/18 budget being similar. The Museum, Heritage and Culture budget had been able to make a 10% saving on expenditure in 2015/16, compared to the previous year but the budget for 2016/17 was slightly higher to account for the running costs of the new bigger Museum following the recent redevelopment project. Finally, expenditure this year on Community, Health and Wellbeing was on target and a 5% saving had been made on the Safer Communities budget for 2017/18. 

 

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 and therefore not controlled by the Council. The Management and Maintenance budget, which covered  Supervision & Management (General), Supervision & Management (Special) and the Repairs Fund was around £15,444 million and the probable outturn was around £170,000 less. Although the Housing Repairs Fund was showing a reduction of £400,000, it had been accounted for under Supervision & Management (General). The budget for Management and Maintenance was showing an overall increase of 3% in 2017/18.

 

Within the Income for Gross Rent of Dwellings, 2016/17 was the first year of the 1% Rent Reductions and whilst being good for tenants, income to the HRA had been reduced and was further impacted by the loss of rental income from right-to-buy sales. In 2016/17 rental income was expected to fall by around £390,000 and in 2017/18 a further reduction of £244,000 was predicted. This impact had been reduced due to the properties built through the Council Housebuilding Programme coming into use in 2017/18.

 

Income from non-dwelling rents had increased by 2% and, in line with the general increases for Fees and Charges, although the Services and Facilities charges had increased by 9% for 2016/17, due to support charges for Careline users and tenants in the sheltered housing schemes being increased to cover the cut in housing related support of £185,000. Finally, the net cost for services next year showed a healthy surplus of expenditure, being around £2.5 million less than income received.

 

The annual interest payment to the Public Works Loan Board for the Self-Financing Debt Settlement remained at around £5.6 million per annum because most of the loans were fixed rates and the interest rates were not expected to rise significantly for the one variable rate loan.

 

The Director of Communities advised that the Council was not in a position to transfer money into the Self-Financing Reserve, for the second year running, because of the effects of the 1% rent reductions. The issue would be revisited with long term options being reviewed by the Cabinet Committee in Spring 2017, when it undertakes Stage 1 of the further HRA Financial Options Review. It was noted that the HRA was expected to remain in balance at the end of the year by around £2 million, which was inline with the Cabinet’s decision in 2014.

 

Governance Directorate

 

The Director of Governance reported that the net expenditure had fallen from £3.12 million to £3.04 million, which had been predominantly attributed to income received from planning and building control applications, large development and extensions.

 

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

 

·                     The estimates remained static for Elections and the probable outturn included the reimbursement of the EU Referendum held in June 2016 and a DDF saving of £41,000 in 2017/18, as there are no District Election scheduled for in May 2017;

·                     Member Activities had reduced in both 2016/17 and 2017/18 which had been mainly due to the reallocation of support charges;

·                     Planning and Development income had increased by 46% since 2013/14 which had been split to allow some for DDF, to employ an additional planning officer and administration staff;

·                      Governance Support Services were recharged to direct Services across the directorates and included both General Fund and HRA expenditure.

 

Neighbourhoods Directorate

 

The Director of Neighbourhoods reported that the main items of large expenditure were the outsourced contracts for Waste Management and Recycling, Leisure Management and the production of the Local Plan. The income of the Council’s assets looked to generate just over £4.1 million in 2017/18. The total directorate budget was £9.28 million in 2016/17, which would see a year on year increase to £9.83 million in 2017/18.

 

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

·                     Waste and Recycling – A growth item of £427,000 for a variation by Biffa to reflect the composition of the Councils dry recycling and the volume of dry recycling bags that were being issued. Going forward measures were being taken to mitigate the costs and continued dialogue with the contractor on service review options to reduce costs with the possibility of a third wheeled bin;

·                     Forward Planning and Economic Development – A growth of £228,000 was required for the timetable of the Local Plan and the changing of goal posts from Central Government including the increased costs of producing the evidence base. However DCLG had award the Council £500,000 to take forward the Garden City bid;

·                     Land Drainage/Sewerage – A growth of £37,000 had been agreed to appoint a further Land Drainage officer to mitigate the largest risk to the District;

·                     Asset Management – It had been anticipated that an increase of £490,000 of income would be received as a result of the Epping Forest Shopping Park opening in August 2017 and a lease review in Waltham Abbey that would generate another £100,000;

·                     North Weald Market - Following the new operator the declining trend in occupancy and income had begun to reverse;

·                      Leisure Management  Contract – The 20 year contract had been award with a savings total of £1 million per year, although this would not be realised until year 5 of the contract;

·                     Off Street Parking – Members had elected to take back the off street parking which would produce a £56,000 per annum saving. 

 

Councillor G Mohindra advised that on behalf of the Environment Portfolio it was looking increasingly likely that the Council would have to look at other options because of the increasing costs of the recycling sacks.

 

Resources Directorate

 

The Director of Resources reported that there was a decrease between the original estimate in 2016/17 of £2.56 million down to £2.42 million for 2017/18, despite the CSB growth of Apprentices and the Apprenticeship Levy of £60,000 and £69,000. Furthermore, within the CSB growth the Non-Domestic Rates for the Civic Offices would be appealed, due to the new rating list coming into action in 2017/18. 

 

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

·                     Local Taxation – The external auditors requested that some of the income be treated differently and therefore no longer showing within the Local Taxation figure but shown in the General income. There had been no increase in the net costs.

 

The Director of Resources thanked P Maddock, J Bell, F Ahmed and the other Officers for what had been a difficult year of estimates to produce with staff issues and late announcements including the New Homes Bonus and NNDR.

 

The Portfolio Holder for Finance also thanked the Officers for their efforts.

 

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 for approval.

 

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.