Agenda item

(Director of Resources) To consider the attached report (FPM-020-2017/18).

The Assistant Director Accountancy presented a summary of the detailed directorate budgets for 2018/19. He advised that the checking process would continue and slight adjustments would be made until the Budget was agreed by Council on 22 February 2018.

The report provided the draft General Fund and Housing Revenue Account (HRA) Budgets for the financial year 2018/19 and was presented on a directorate by directorate basis. There were accompanying notes giving some background to each service heading and any CSB (Continuing Services Budget) and DDF (District Development Fund) changes proposed. This was the Cabinet Committee’s opportunity to comment and make recommendations prior to the budget being formally set.

The budget setting process had commenced with the presentation of the Financial Issues Paper incorporating the Medium Term Financial Strategy (MTFS) at the Cabinet Sub-Committee on 20 July 2017, which had identified a savings target for 2018/19 of £0.3 million. The settlement figures provided in December 2015 had been for four years and the Council signed up on the understanding that the figures would be set at that level. However an update had been provided which had reduced the 2018/19 figure by £7,000 and the 2019/20 figure by £50,000. The Government had also provided an update on the New Homes Bonus which would provide £50,000 less than previously estimated in 2018/19. This had resulted in the CSB lists now showing a reduction in funding of £1.125 million as opposed to £1.075 million previously. However there were significant savings from the new Leisure Management Contract and additional income from Land and Property.

The move to 100% retention of Business Rates locally, was still being worked on by Central Government and was likely to be later than originally expected. Furthermore, a number of the county areas had applied for pilot status but unfortunately Essex had not been successful and the current retention proportions of 40% District, 9% County and 1% fire were likely to change.

The budgets highlighted 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 the budgets. It was noted that with regard to ITS, the figures included within the budgets related to revenue items only. Each budget was presented by the relevant Director.

Chief Executive

The Chief Executive reported that the budget was made up of mostly recharges for corporate and public accountability activities, subscriptions and Transformation Projects. The original estimate for 2017/18 had been expenditure of £1,466 million, with a probably outcome of £1,408 million. The net increases had been attributed to internal recharges of the Customer Services Team incorporating the Neighbourhoods Contact Centre. The 2018/19 budget also included DDF allocations for process mapping and organisational redesign activities, as well as an ITS allocation for a behavioural insights programme.

Communities Directorate

The Director of Communities reported that the directorate was responsible for three distinct budgets, which were 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 9% between the original and probable outturn for 2017/18. This was mainly down to a reduction in Private Housing grants and more external funding from the Better Care Fund being received than expected, which reduced the Council’s costs. The other main part of the Housing General Fund was Homelessness, which showed a reduction of 32% between the original estimates and probable outturn for 2017/18, which was mainly due to receiving all of the Flexible Homelessness Support Grant in 2017/18, to implement the Homelessness Reduction Act.

The Community Services and Safety budget on Voluntary Sector Support was approximately on budget at £430,000 with the 2018/19 budget being similar. There had been a small increase in the Museum, Heritage and Culture budget for support services charges for externally funded projects.

The Director of Communities advised that the Community, Health and Wellbeing budget had increase by 4.5% because of funding from externally funded projects being received last year. Finally, the Safer Communities budget showed an increase of £34,000, which related to the Cabinet decision to employ the Parkguard Security Company, to provide additional security presence in the District until March 2018. The budget for next year had not included any provision for the report being considered at the Cabinet meeting on 1 February 2018 for additional Police Officers which would need to be included, if agreed. 

The Cabinet Committee commented that under the Voluntary Sector Support Budget, a correction was required, advising that the Welfare Transport was provided by Community Transport and not Voluntary Action Epping Forest (VAEF).

Housing Revenue Account

The Director of Communities reported that some of the expenditure and income allocated to the HRA were governed by legislation and were therefore not controlled by the Council. The Management and Maintenance budget, which covered Supervision& Management (General), Supervision & Management (Special) and the Housing Repairs Fund showed a probable outcome of 2.5% lower than the original estimate.

The budget for next year had been increased by 4.1%, mainly in respect of the redundancy and pension strain for the Council’s new organisational structure, and a 1.6% contribution to the Housing Repairs Fund for inflation repair costs. The Major Repairs on Leasehold Properties showed significant expenditure changes in 2017/18 and 2018/19, which had been due to how the expenditure on leasehold properties was now accounted for, having previously been accounted for within the Housing Capital Programme and gross rent of dwellings had been expected to fall by around £388,000 because of the requirement to reduce rents by 1% in real terms. The Director of Communities commented that the reduction in income would have been greater if the Council had not been undertaking its Council house building Programme. It was also noted that there would again be no contribution to the Self Financing Reserve, although the recent HRA Financial Options Review had already identified that this would not be possible and that additional borrowing would be  required in any event, but that the thirty year HRA Financial Plan had made provisions for this fact.

Governance Directorate

The Director of Governance reported that the net expenditure had increased from £3.015 million to £3.560 million in 2018/19, which had been mainly accounted for in an increase in expenditure of DDF items.

The highlighted variances within the directorate budget showed a 20% increase in  Development Control Fees and Charges; the cost of District Elections in 2018/19 of £139,000; £278,000 for the establishment of a Strategic Sites Implementation Team for the Local Plan implementation work, which would be off-set by any additional development control applications, developer contributions and planning performance agreements.

The Director of Governance advised that Corporate Fraud Team had started to provide a shared service with Brentwood District Council and had achieved an expected income of £13,910 in 2017/18 and £27,280 in 2018/19. There were also the on going costs of modernising the Planning, Building Control and Legal Services to electronic records.

Neighbourhoods Directorate

The Director of Neighbourhoods reported that the net expenditure had decreased from £9.679 million to £7. 243 million in 2018/19, which had been partly to do with the revenue costs falling away, increased income from land and property assets and savings from the leisure contract.

With regards to the Epping Forest Retail Park, three vacant units were in active negotiations and the full year effects of the income would be confirmed in 2018/19. The leisure contract was due to deliver further efficiency savings and the main DDF item of expenditure had been the Local Plan.

Other items worth mentioning were the Harlow & Gilston Garden Town expenditure, which the Council held the funds for, as part of a tri-authority project; the increased cost associated with fly tipping, although some recovery costs were being obtained from ECC and private land owners; the North Weald Airfield events income which had been slightly down although compensated for by other income streams; the potential costs of paper and cardboard recycling in the  Waste Management Contract and the increase in properties in the district pushing up the collection costs. Furthermore, income of the three new car parks had been delayed and officers had undertaken to review the parking tariffs in light of the TfL increases.

Following the Extraordinary Council meeting on 14 December 2017, the Council undertook the gathering of evidence for Regulation 19, to enable the submission of the Local Plan by 31 March 2018. This had caused revisions to both the estimates and DDF in 2017/18.

Resources Directorate 

The Director of Resources reported that there had been a significant increase in net expenditure from the probable outturn of £2.549 million to £3.537 million. This had been due to the People Strategy, which included the anticipated redundancy, early retirement costs and the first part of the salary savings at a combined net cost of around £700,000 and the new IT Strategy for £500,000.

Other highlighted changes within the directorate budget were the associated costs of providing Housing Benefit services which had increased by £50,000; the Finance Miscellaneous net expenditure which included the costs and savings relating to the People Strategy; a CSB growth of £67,000 for an uplift in the Civic Offices Non Domestic Rates, which was being appealed by the Estates Department and a one-off amount of £120,000 for the accommodation review; a reduction in CSB of £15,000 for payment card surcharge income on credit card payments; and finally other support services costs associated with the apprentices levy of £75,120.

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 budget for Neighbourhoods be recommended to the Cabinet for approval;

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

(6)          That the detailed 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.