Agenda and minutes

Budget Scrutiny Panel - Tuesday, 29th September, 2020 3.30 pm

Venue: Virtual Meeting - Zoom. View directions

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Media

Items
No. Item

1.

Disclosures of Pecuniary and Personal Interests

Minutes:

No disclosures were made.

2.

Declarations - The Party Whip

Minutes:

No declarations were made.

3.

Questions under Scrutiny Committee Procedure 11.17

No questions were submitted.

Minutes:

No questions had been submitted.

4.

Revised Budget 2020-21 (draft) pdf icon PDF 641 KB

A report of the Head of Financial Services setting out the (draft) revised budget for 2020-21, including the Medium Term Financial Strategy 2020-23 for scrutiny by the Panel.

 

Report to follow.

 

Minutes:

The Strategic Director of Environmental and Corporate Services presented a Finance Update setting out the details of the revised 2020/21 budget, the updated MTFS 2020-2023, the revised Capital Plan 2020-2023 and the Capital Strategy 2020-21.

 

Assisting with the consideration of the presentation: The Cabinet Lead Member for Finance and Property Services, the Strategic Director of Environmental and Corporate Services, the Strategic Director for Commercial Development, Asset and Leisure and the Head of Finance Services.

 

Summary, key points of discussion:

·         revenue contributions to capital of 213K for 2019/20 -  this was an indicator of the Council’s capital purchases and contributions from the revenue budget.  It was not proposed to budget for this in 2020/21.

·         less interest on balances - money earnt by the Council through investment in money markets was used as a balance to support returns, earn interest and undertake commercialisation.

·         changes from the original budget to revised budget highlighted - DCLG COVID income loss claim and DCLG COVID emergency grant approx. £3mill difference. The Council had received £2.1mill to cover additional COVID costs and anticipated a further £1.2mill from the Government.  This was based on estimates of the predicted total claim by the end of the year.  Three claims would be made (September, December and April) and with this support the budget position was more favourable.  With the Government grant, balances had not depleted significantly in the first half of the year, but interest received had reduced to £300K in comparison to previously stated £500K.

·         in-year cost savings – it was indicated that the Town Hall was expected to be closed for the remainder of this year and that the Panto for 2020 had been cancelled; this had been budgeted for.

·         salary savings of £700K – this did not impact service delivery. This had been calculated after a thorough exercise reviewing vacancy provision.  The Council usually budgeted for a 100% filled vacancy factor but over time as certain positions reduced in hours or were not filled, extra money had been carried over.  This has resulted in a history of underspend by the Council although the money had also been allocated towards agency costs.  The monitoring exercise completed in period 4 had resulted in the salary savings and would be taken forward into the following year’s budget.

·         Minimum Revenue Provision (MRP) would be paid to replenish borrowing. This was perceived as beneficial and it was noted that it related to a policy change whereby there would not be an MRP charge until a year after the asset had been acquired.

·         interest on General Account – the previous year had resulted in good interest gains.  It was noted that the ‘interest marketplace’ was volatile, would be monitored on a quarterly basis and that figures reflected a lower amount than previously conjectured.  Currently the Council had not seen a reduction in its cash holdings although interest rates had not risen as much as anticipated.  The Council had benefited from investments in the portfolio receiving a good rate of interest from before the  ...  view the full minutes text for item 4.

5.

Revised Capital Plan 2020-23 (draft) pdf icon PDF 329 KB

A report of the Head of Financial Services setting out a (draft) revised Capital Plan covering the period (financial years) 2020/21 -2022/23 for scrutiny by the Panel.

Minutes:

Considered a report of the Head of Financial Services setting out details of the revised Capital Plan 2020-23 (item 6 on the agenda filed with these minutes).  It was noted that details in this report had been partially covered during item 5.

 

Assisting with consideration of the report: the Cabinet Lead Member for Finance and Property Services, Strategic Director of Environmental and Corporate Services, the Strategic Director for Commercial Development, Asset and Leisure and Head of Financial Services.

 

Summary, key points of discussion:

·         the Environmental Services fleet would be partially funded using reserves earmarked for capital expenditure, allowing the reduction in MRP to create savings of £350K per year.  Previously the Council had stated the funding would be through prudential borrowing, but this was now being applied to other projects.  If the fleet had been funded through prudential borrowing the costs would have depended on the interest rate but could have cost up to £700K a year rather than the proposed £350K costs.

·         the deferral or postponement of pre-existing capital schemes was disappointing as they appeared to relate to local or neighbourhood schemes.  As these projects were the responsibility of the Council, local groups did not require notifying and Heads of Service had reviewed carefully which capital schemes could be deferred.  Schemes under S106 agreements or by Parish councils would not be impacted.

·         the proposed increase of investment in commercial property acquisitions from £10mill to £25mill appeared high risk, particularly as Government rules were likely to change.  The Council would cease operations if regulations required but powers given under 1972 legislation entitled the Council to make commercial property acquisitions.  Issues seen at other local authorities in purchasing commercial property had related to the types of assets acquired and level of due diligence performed.  The Council would mitigate risk by completing due diligence on the property, the tenant and the economic viability before acquisition.  A member briefing would be arranged to inform members on the process and explain further the rationale behind the expansion of funding for commercial property.

·         concerns were raised in relation to recommendation 6 of the Budget Scrutiny Panel 2019-20 report.  ‘Random’ amounts of money were being committed for general as yet unspecified revenue generation and this appeared to be an inappropriate way of proceeding.  It was acknowledged that it was challenging to provide the rationale, risk profiles and detailed strategy for increased funding for the Town Deal, the Enterprise Zone and commercial property acquisition as individual  projects had not yet been identified and  it would be based on conjecture. Any commercial investment by the Council would require a minimum 3.5% net income target to be met.  All potential commercial property purchases would be subject to a robust due diligence process and be available for scrutiny.

·         an explanation regarding the allocation of £15mill to the Town Deal was given.  Although funding was provided nationally by the Government for Town Deals, some projects identified could require match funding or additional funds to be viable commercially.  The Council wished to  ...  view the full minutes text for item 5.

6.

Budget Scrutiny Panel report 2019-20 pdf icon PDF 644 KB

A report of the Head of Strategic Support detailing the recommendations of the Budget Scrutiny Panel 2019-20 for scrutiny by the Panel.

Minutes:

Considered a report of the Head of Strategic Support setting out details of the Budget Scrutiny Panel 2019-20 recommendations (item 7 on the agenda filed with these minutes).

 

The Panel had no questions.

 

RESOLVED to note the report.

 

Reason

 

Members acknowledged that circumstances had altered significantly since the Budget Scrutiny Panel of 2019-20 had made its recommendations.

 

Items for the next meeting

 

Members considered items to be submitted to its next meeting and discussed the benefits of scrutinising the Outturn Accounts for 2019-20 to aid its scrutiny of the 2021-22 Budget.  After consulting with the Lead Member of Finance and Property Services and the Director of Environmental and Corporate Services it was suggested scrutinising the Outturn Accounts for 2019-20 would not add value as circumstances had since changed dramatically and it was the Panel’s remit to scrutinise the draft Budget for 2021-22.

 

RESOLVED that the following items and other requests for information as agreed during this meeting be submitted to the Budget Scrutiny Panel meeting scheduled for 1st December 2020:

 

1.    Reflection on 2019-20 outturn accounts to inform its scrutiny of draft 2021-22 budget;

2.    Draft Budget for 2021-22 – to include proposed areas for savings and pressures;

3.    Further  information regarding the Environmental Services Fleet clarifying why it has been proposed to finance with reserves, an analysis of other options that were considered and the benefits of proposed approach.

 

Reasons

 

1-3.   to support the Panel’s scrutiny of the finances of the Council.