Meeting documents

Joint Scrutiny Committee (Budget Monitoring)
Monday, 11th September, 2017 9.30 am

Date: Monday 11th September 2017 Time: 9.30 a.m. Place: Executive Room, Civic Centre, Ebbw Vale

Please note: all Minutes are subject to approval at the next Meeting

PresentAndReport toReport of
COUNCILLOR L. ELIAS (CHAIR)
Item
No
Item/Resolution Status Action
PUBLIC
1. TUDALEN GLAWR AGENDA GYMRAEG/WELSH VERSION OF AGENDA COVERSHEET
Tudalen Glawr Agenda Gymraeg/Welsh Agenda Coversheet (178K/bytes)
Noted
2. SIMULTANEOUS TRANSLATION

It was noted that no requests had been received for the simultaneous translation service.

Noted
3. APOLOGIES


Apologies for absence were received from: -

Councillors G. A. Davies, G. L. Davies, P. Edwards, M. Moore, T. Sharrem, G. Thomas, Mr. A. Williams (Co-opted Member), Temporary Lead Corporate Director/Head of Paid Service, the Corporate Director of Environment & Regeneration and the Chief Finance Officer.

Noted
4. DECLARATIONS OF INTEREST AND DISPENSATIONS

There were no declarations of interest or dispensations reported.

Noted
5. JOINT (BUDGET) SCRUTINY COMMITTEE
Minutes (229K/bytes)

Consideration was given to the Minutes of the Joint Scrutiny Committee (Budget Monitoring) held on 2nd February, 2017.

RESOLVED that the Minutes be accepted as a true record of proceedings.

Agreed
6. ACTION SHEET
Action Sheet (92K/bytes)
Attachment 1 (142K/bytes)
Attachment 2 (121K/bytes)


The Action Sheet arising from the Joint Scrutiny Committee meeting held on 2nd February, 2017 was submitted, whereupon:-

Council Tax Billing

For clarification, it was reported that the sum of 344,705,610.86 was the amount of council tax that the authority had billed for up to the end of the 2015/16 financial year. The sum of 2,577,853.40 related to the amount of unpaid council tax as at the same date.

RESOLVED, subject to the foregoing, that the Action Sheet be noted.

Agreed
7. REVENUE BUDGET MONITORING 2016/2017, PROVISIONAL OUTTURN
Report (381K/bytes)
Appendix 1 (22K/bytes)
Appendix 2 (347K/bytes)
Appendix 3 (109K/bytes)
Appendix 4 (187K/bytes)
Appendix 5 (73K/bytes)


Consideration was given to report of the Chief Finance Officer which presented an update for Members on the provisional outturn across all portfolios for the financial year 2016/17.

The Head of Financial Services advised Members that until the 2016/17 financial outturn position was approved by the Audit Committee (12th September, 2017) and the accounts 'signed off' by the Auditor General for Wales, the outturn position had to be reported as 'provisional' at this stage.

The report highlighted a favourable variance across all portfolios of 71,000 against a total revenue budget of 137 million. This was after the application of 2.3 million net drawings from specific reserves to address 'one-off' in-year planned expenditure. This outturn was an improvement compared to the quarter 3 reporting 2016/17 which at that time was forecasting a 450,000 adverse variance.

A number of budget virements had been actioned within and between portfolios to reflect in year changed service needs and priorities or overspends and budget pressures. Budget virements in excess of 250,000 required the approval of the Executive Committee and the most significant variance related to the Social Services portfolio relating to an increase in the number of looked after children and residential placements.

Councillor J. Millard joined the meeting at this juncture.

A number of mitigating actions had been implemented to address the overspend including a freeze on non-essential recruitment and expenditure and a review of expenditure and income commitments to identify further savings of 1.1 million.

On a positive note the income received from fees and charges had exceeded the target of 9 million by 345,000 due to fee income received within Social Services.

Overall 2016/17 had been a difficult year due to cost pressures and the level of savings required, however, the outturn position for 2016/17 had been positive - the impact of measures to limit expenditure coupled with the planned use of reserves had been successful in mitigating the adverse variances across all portfolios by the end of the financial year.

Members were then given the opportunity to raise questions/comment on the report.

Fees and Charges Income

In reply to a question raised, the Head of Financial Services confirmed that the net income generated from fees and charges was credited to departmental budgets during the year.

VITCC

A Member expressed his concern that the VITCC building had been reported as a cost pressure for a considerable period of time and asked whether this cost pressure would now transfer to the Social Services Portfolio because Social Services officers were now occupying the building.


The Head of Technical Services reported that previously the VITCC formed part of the Economy Portfolio and this facility had been set very challenging income targets which had never been realised. The building had now transferred to the Corporate Landlord budget. In order to address this adverse variance a business case was in the process of being developed which would also include the Business Resource Centre in an attempt to reduce these on-going costs.

A Member wished to place on record

his appreciation to officers of all departments for the good work which had been undertaken throughout the year in order to achieve this positive outturn position for 2016/17.

Upon a vote being undertaken it was unanimously,

RESOLVED to recommend that the report be accepted and

„ budget holders be supported to operate within approved budgetary control procedures for the 2016/17 financial year; and

„ the budget virements proposed retrospectively during the period be supported.

Agreed
8. CAPITAL EXPENDITURE OUTTURN 2016/2017
Report (334K/bytes)
Appendix 1 (393K/bytes)
Appendix 2 (63K/bytes)
Appendix 3 (67K/bytes)

Consideration was given to report of the Chief Finance Officer which provided details of each portfolio's capital expenditure outturn for 2016/17, whereupon:-

Funding Approval

Members were advised that against a total funding approval of 9,755,000 there was a small underspend of 57,247 relating to the Infrastructure Portfolio, namely, the Regional Transport Plan - Prep Work Grants Phase 2 of the Cwm to Aberbeeg Cycleway.


It was noted that the total cost of the works had been less than the in-year grant approval allocated by the Welsh Government. Therefore, the grant allocation was not able to be claimed in full.

In reply to a question, the Head of Financial Services advised that this underspend related to a specific grant and could, therefore, not be utilised on an alternative project.

Purchase of Anvil Court

Members were advised of the background and current position regarding the purchase of Anvil Court. It was noted that the Authority's long term rental agreement continued with the new landlord.

Upon a vote being taken it was unanimously,

RESOLVED to recommend that the report be accepted and

„ the actual spend for 2016/17 be noted;

„ the appropriate financial control procedures agreed by Council continue to be supported; and

„ the budgetary control and monitoring procedures in place within the Capital Team to safeguard authority funding be noted.

Agreed
9. REVENUE BUDGET MONITORING 2017/2018, FORECAST TO 31 MARCH 2018 (AS AT 30 JUNE 2017)
Report (383K/bytes)
Appendix 1 (26K/bytes)
Appendix 2 (273K/bytes)
Appendix 3 (126K/bytes)
Appendix 4 (317K/bytes)
Appendix 6 (60K/bytes)
Appendix 5 (71K/bytes)

Consideration was given to report of the Chief Finance Officer which provided Members with the revenue expenditure forecast at the end of Quarter 1 across all portfolios for 2017/18.

Members were advised that the 2017/18 revised revenue budget totalled 144.60 million. However, in order to set a balanced budget for 2017/18 financial year 5.3 million of savings had been identified along with the use of 1.3 million from general reserves.

Whilst a number of cost pressures and growth items had been identified during the last financial year totalling 5 million, 400,000 still remained unfunded.

The 2017/18 forecast outturn across all portfolios was 1.4 million adverse variance as at 30th June, 2017. This was after the application of 280,000 from specific reserves to address 'one-off' in year planned expenditure, of which 128,000 related to funding for the elections.

The most significant cost pressures related to the Environment and Social Services portfolios and these were detailed within Paragraphs 2.7 to 2.9 of the report.

It was noted by Members that the portfolio estimates included an income budget of 9.1 million relating to fees and charges. However, at this point in time the income forecast was lower than the target by 263,000. It was anticipated that this forecast would improve during the current financial year.

Action plans had been developed by budget holders for all services forecasting an adverse variance and mitigating actions were being implemented to address cost pressures as part of the 2017/18 financial efficiency projects.

The Head of Financial Services advised that 2017/18 would be another challenging year to achieve the identified savings target and mitigate the adverse variance. The supporting action plans would need to be robust in order to address the cost pressures in the medium and longer term.

Members were then given the opportunity to raise questions/comment on the report.

A Member expressed his concern regarding the 1.4 million adverse position and said that action would have to be taken to address this variance during the year. The financial position would be a real challenge in the future with a possibility that the Authority would receive a further predicated 4% reduction in funding during the 2018/19 financial year. Therefore, a planned programme of action was required to deal with the underlying malaise with focus on the following three critical elements:-

„ In the longer term it was critical that the collaboration agenda be progressed - the Authority would be unable to continue operate as it was currently in the future due to continuous reductions in funding.

„ In the short term actions to address and mitigate the financial position would have to be identified - difficult decisions would have to be made by Members going forward due to insufficient funding.

„ Discussions were required/assistance sought from the Welsh Government regarding the collaboration agenda.

Recycling Disposal - 265,570/Waste Disposal

It was noted that the 265,570 related to the disposal of recyclates.

A Member expressed his concern that the level of income generated from the sale of recyclate materials was nominal. However, waste disposal charges were continually increasing.

The Head of Financial Services in the absence of the Head of Service advised that Silent Valley Waste Services did not dispose of recyclate materials. However, the Council was currently in discussion with the company regarding future service provision.

Another Member expressed his concern that the relevant officers should be in attendance at Committee meetings to respond to questions raised.

Following a discussion regarding waste services it was proposed that a Member Briefing be convened to discuss issues raised including Silent Valley Waste Services and income generation.

RESOLVED to recommend accordingly.

Members acknowledged the merit of Joint Scrutiny Committees were relevant on specific topics but it was recognised that each individual Scrutiny Committee had their own specific remit and forward work programme to progress. It was noted that whilst Members were not appointed to all Scrutiny Committees each Member received copies of the agenda coversheet of all Committees detailing the items that were due to be considered.

Aneurin Leisure Trust (ALT)

In reply to a question regarding the 143,000 ALT adverse variance, the Head of Financial Services confirmed that the Council was liable to fund the increase in the employers' pension contributions as per the Funding and Management Agreement.

It was noted that specific discussions were taking place with ALT moving forward regarding future budgets.

Land at Blaenant Road

It was noted that following court proceedings the land had been returned to Council ownership and it was now the responsibility of the Council to reinstate the land to a reasonable condition. A provision of 1.1 million had been established to deal with these works to be undertaken.

The Head of Technical Services advised the extent of the risk was still unknown at this present time because there were a number of on-going investigations, the findings from which would determine the Council's financial liability. A part provision had also been included in the 2018/19 capital programme to address this issue.

Upon a vote being taken it was unanimously,

FURTHER RESOLVED to recommend, subject to the foregoing, that the report be accepted and

„ the forecast financial outcomes including progress against the 2017/18 financial efficiency projects and the identified cost pressures be noted;

„ budget holders continue to be supported to operate within approved budgetary control procedures for the 2017/18 financial year;

„ the action plans to address forecast adverse variance when considering the financial forecast, produced as at the end of June 2017 be noted; and

„ the proposed virements actioned during the period be noted.

Agreed
10. FORECAST CAPITAL EXPENDITURE 2017/2018 Q1 (AS AT 30 JUNE 2017)
Report (425K/bytes)
Appendix 1 (402K/bytes)
Appendix 2 (66K/bytes)


Members considered the report of the Chief Finance Officer which provided details of each portfolio's forecast capital expenditure against allocation at the end of Quarter 1.

The Committee was advised that 2017/18 capital funding approvals amounted to 9,017,000 against a forecast expenditure of 9,241,000. This indicated a current forecast overspend of 223,506 for which funding would be required to be identified.

It was noted that the significant adverse variances related to the demolition of Abertillery Leisure Centre and The Company Shop, Tredegar.

Abertillery Leisure Centre

In reply to a question, the Head of Technical Services gave the background details of the demolition works and explained the impact of unforeseen issues arising during the commencement of these works. It was noted that this issue had been discussed previously by the appropriate Scrutiny Committee.

As a result of the unforeseen issues arising, further investigations were being undertaken and once the findings of the investigations had been published the contract would be re-tendered.

It was noted that the available funding to undertake these demolition works would be able to be supplemented with surplus funding that had become available via school demolition budget (due to demolitions not proceeding). However, taking into account this surplus funding it was still anticipated that there would still remain a current forecast overspend of 211,109.

Workplace Transformation

In reply to question, the Head of Financial Services undertook to investigate the reason for the change in the forecast between the 2016/17 capital programme of 93,944 and 2017/18 capital programme of 57,898 and report back to the next meeting.

21st Century Schools Six Bells Project

The Corporate Director of Education confirmed that the 1,954,414 forecast related to the 2017/18 financial year. It was noted that the majority of the funding would be utilised on consultancy fees and investigations.

Contaminated Land - Cwmcrachen & Other

For clarification, the Head of Technical Services advised that there were two on-going issues at present, namely Cwmcrachen Gypsy/Traveller Site and Blaenant Road. With regard to the residue funding of 95,085 this related to the Cwmcrachen site.

RESOLVED to recommend, subject to the foregoing, that the report be accepted and

„ the forecast capital spend for 2017/18 be noted;

„ the appropriate financial control procedures agreed by Council continue to be supported; and

„ the budgetary control and monitoring procedures in place within the Capital Team to safeguard authority funding be noted.

Agreed
11. USE OF GENERAL AND EARMARKED RESERVES - 2017/2018, FORECAST TO 31 MARCH 2018 (AS AT 30 JUNE 2017)
Report (534K/bytes)
Appendix 2 (107K/bytes)
Appendix 3 (44K/bytes)

Consideration was given to the report of the Chief Finance Officer which presented the actual and forecast use of general and earmarked reserves at the end of Quarter 1.

Members were advised that the un-audited level of the Council's General Reserve as at 31st March, 2017 was 5,863,000 equating to 4.32% of net revenue expenditure. The current 4% target level of General Reserves in accordance with the reserves protocol was 5,423,000.

The revenue budget forecast year-end position for 2017/18 indicated an overspend of 1.4 million after the application of 1,580,000 from general and earmarked reserves. It was noted that this was in addition to the budgeted use of 1.3 million general reserves agreed in setting the 2017/18 budget.

Therefore, the forecast general reserve balance as at 31st March, 2018 of 3.163 million would represent 2.33% of net revenue expenditure. The general reserve would need to be increased by 2.260 million to return to the target level of 5.423 million i.e. 4%.

The Head of Financial Services concluded by referring to the options for consideration going forward contained in Paragraph 6 of the report.

Members were then given the opportunity to raise questions/comment on the report.


A Member expressed his concern that until the overspend of 1.4 million had been addressed the reserves would be unable to be replenished.

In reply to a question raised relating to the replenishment and utilisation of the reserve fund, the Head of Financial Services explained that there was no specific requirement for the reserve level to be set at 4% - this was an internal target that the Council had agreed and this level was similar to other local authorities reserve levels.

As long as the Council had a medium to long term strategy in place for the use and replenishment of reserves and the plan was delivered it was anticipated that this would satisfy the external regulators. The reserves could be replenished over a period of time i.e. it did not have to happen within a 12 month period.

Reserves were held to assist the Council in dealing with unexpected issues. This was the reason the replenishment of the reserves were being advocated with a planned approach and this process could be undertaken as part of the budget setting process during the next few months.

A discussion ensued when a Member pointed out that the use of general and earmarked reserves required close, careful and controlled management.

Upon a vote being taken it was unanimously

RESOLVED to recommend that the report be accepted and

„ the forecast use of general and earmarked reserves for 2017/18 be noted;

„ Option 2 be endorsed, namely the development of action plans to address the 1.4 million forecast adverse variance for 2017/2018; and

„ Option 3 be endorsed, namely the development of a replenishment plan to re-establish the General Reserve to the 4% target level.

Agreed
12. USE OF GENERAL AND EARMARKED RESERVES - 2016/17 PROVISIONAL OUTTURN
Report (478K/bytes)
Appendix 2 (107K/bytes)
Appendix 3 (90K/bytes)
Appendix 4 (105K/bytes)

Members were advised of the need to consider the following item as a matter of urgency. The Chair confirmed that the following matters can be considered under the Provisions of Paragraph 4(b), Section 100(b) of the Local Government Act, 1972.

Members considered the draft outturn reserves position for 2016/17.

Upon a vote being taken it was unanimously,

RESOLVED to recommend that the report be accepted and the draft outturn use of general and earmarked reserves for 2016/17 be noted.

Agreed