Agenda item

(Director of Finance) To consider the attached report (FPM-005-2016/17).

The Assistant Director Accountancy provided an overall summary of the revenue outturn for the financial year 2015/16.

The net expenditure for 2015/16 totalled £16.204 million, which was £2,856,000 (21.5%) above the original estimate and £435,000 (3%) above the revised. The large movement between Original and Revised was due to including some revenue funding of capital expenditure which had reduced the General Fund balance down to £7.3 million from £9.3 million. It had been felt sensible to use some of the balance because in recent years there had been Central Government criticism of Local Authorities holding “excessive” reserves. There were improvements in the funding position as this had shown an increase of £879,000 when compared to the original position and £88,000 compared to the revised position, which had been due to the inclusion of additional business rates Section 31 income. The in year deficit on the business rates collection fund was approximately £27,000 and the main factor which had created this had been the provision to cover future rating appeals.

The Continuing Services Budget (CSB) expenditure was £283,000 below the original estimate and £407,000 higher than the revised. Variances had arisen on both the opening CSB and the in year figures. The opening CSB was £369,000 higher than the revised estimate and the in year figures £38,000 higher than the revised estimate. When measured against the Original Budget, salaries were underspent by £465,000 and the actual salary spending for the authority in total including agency costs was £20.802 million compared against an original estimate of £21.267 million. When comparing to the Revised Estimate there was an underspend of £302,000, half of which fell on the General Fund, though £72,000 of this was actually DDF or Building Control savings rather than CSB.

There was an additional amount of £215,000 added to the General Fund Bad & Doubtful debts provision as a number of uncollectable debts had been written off and Housing Benefit Overpayment debts outstanding at the year end had increased significantly from £2,382,000 to £2,723,000. The Housing Revenue Account (HRA) capital expenditure was underspent by some £3.5 million and this increased the interest payable to the HRA, contributing to an overall net reduction of £190,000 to the Genral Fund.

The main other movement between the Original estimate and the Revised and Actual position was that the decision to Fund Capital Expenditure of £3 million from the General Fund balance.

The original in year CSB savings figure of £573,000 became an in year savings figure of £634,000, which was primarily due to additional Development Control fee income of £55,000 and a couple of other more minor items with the in year savings falling short by £38,000. The two main areas were Non-HRA Rent Rebates £40,000 and the Waste Management Contract £18,000 and there were a number of minor items that offset these.

The net District Development Fund (DDF) expenditure was expected to be £1,129,000 in the original estimate and £949,000 in the revised estimate and actually showed net income of £143,000. This was £1,272,000 below the original and £1,092,000 below the revised. There were requests for carry forwards totalling £775,000 for one-off projects and a net underspend of £317,000. The DDF reduced between the Original and Revised position by £180,000, which overall was not significant but there were some large swings on both income and expenditure. The Income side relatied to Development Control £220,000, Land Charges new burdens £103,000, a dividend following the liquidation of the former waste management contractor, South Herts Waste Management £100,000 and additional income from the technical agreement with major precptors £119,000. Offsetting this were the amounts brought forward from 2014/15 for the Local Plan £185,000 and Assets Rationalistion £85,000.

The difference between the revised position and the outturn position was a reduction of £1,092,000 and around half of this related to income from the Recycling Reward Scheme £268,000 and further income relating to the aforementioned technical agreement. It had been proposed that £100,000 of the latter be used to create a transformation project budget and £154,000 be used to top up the Invest to Save Reserve. The main items making up the remaining £570,000 were £139,000 relating to Local Plan slippage, £82,000 to Asset rationalisation, £73,000 to the planned maintenance programme, £62,000 to Electoral registration and £43,000 to town centre support.

The expenditure for the Invest to Save Reserve was estimated at £87,000 and the actual being £75,000, with the underspend relating to investigating the withdrawal from the NEPP contract. It had been recommended for the transformation budget that for projects to proceed quickly but with appropriate oversight, the DDF budget would be established under the control of Management Board and subject to consultation with the Leader. Additional funds had already been allocated from the Invest to save Reserve in 2016/17 and to ensure money remained available for suitable projects the proposed top up to the fund was required.

A Surplus within the HRA of £60,000 and deficit of £83,000, which had been expected within its original and revised revenue budgets respectively, the actual outturn was a surplus of £633,000. There had been savings on Revenue Expenditure of £520,000 when compared to the revised position and these included salary savings due to vacancies in a number of areas amounting to around £150,000, savings on professional and consultancy fees £86,000, gas and electricity £79,000, various communal services £63,000, Grounds Maintenance £63,000, rent collection costs £20,000, furniture and equipment at sheltered units £17,000 and Corporate Core contribution £11,000. Income from Dwelling Rents had been down by £139,000 although other income was up through interest received on capital and revenue balances by around £300,000. The depreciation charge relating to HRA assets was £346,000 higher than expected but the difference was reversed back to the HRA and formed the bulk of the remainder of the £681,000 underspend shown. The current financial year was likely to be more difficult for the HRA with the 1% rent reduction coming in and the potential effects of the forced sale of high value voids, the detail of which has yet to be decided.

RESOLVED:

(1)          That the provisional 2015/16 revenue out-turn for the General Fund and Housing Revenue Account (HRA) be noted; and

(2)          That as detailed in Appendix E, the carry forward of £775,000 District        Development Fund and £12,000 Invest to Save Reserve expenditure be noted.

RECOMMENDED:

(3)          That the additional unbudgeted income of £254,000 from the agreement with the major preceptors to create a District Development Fund budget of £100,000 for transformation projects and to top up the Invest to Save Fund be recommended to Cabinet; and;

(4)          That the transformation projects only being funded from the transformation budget following approval by Management Board and in consultation with the Leader be recommended to Cabinet.

Reasons for Decision:

To ensure adequate funding going forward for both transformation and invest to save projects.

Other options Considered and Rejected:

Members could decide to use the unbudgeted income to further increase the balance on the DDF and not to provide additional funding for transformation and invest to save projects. However, this would slow progress on transformation and necessitate reports to Cabinet and Council for supplementary funding for relatively small amounts of money.