Agenda item

To submit a report by the Head of Function (Resources)/Section 151 Officer.

The report of the Head of Function (Resources) and Section 151 Officer setting out the financial performance of the Council’s services for the first quarter of the 2017/18 financial year along with a summary of the projected position for the year as a whole was presented for the Executive’s consideration.

The Portfolio Member for Finance reported that based on the information to date, the overall projected financial position for 2017/18 including Corporate Finance and the Council Tax Fund is an overspend of £2.119m which is 1.68% of the Council’s net budget for 2017/18. The provisional outturn for 2016/17 resulted in general balances at the start of the current financial year of £8.697 m (subject to audit). However, there is a risk against this £8.697m in the form of Equal Pay claims of £2m which the Council may or may not be able to capitalise depending on a capitalisation directive from Welsh Government. The report details the significant variances in service budgets but excludes the impact of winter maintenance as well as the impact of the new highways maintenance contract which is likely to cost more.

There is a risk therefore that the overspend might be higher than £2.19m. The most significant budgetary pressure is the cost of Corporate Parenting, as the Children and Families Service is expected to overspend by £2.106m. If the current forecast is realised, the general reserve will be put under considerable pressure. An alternative to funding the overspend from the general reserve would be to review earmarked reserves of which there are £13.357m. This would identify any reserves that are no longer required or which do not meet the priorities of the Council given the difficult financial position which the Council is likely to be at year end. However, some earmarked reserves can only be used for their specific purpose e.g. delegated schools funded reserves or grant funded reserves.

The Head of F unction (Resources) and Section 151 Officer said that Quarter 1 is early in the financial year and many things can happen in the period from now until year end. However, the report does flag up the risk that services including smaller as well as larger services, will be under pressure to provide within their budgets. Any spare capacity within service budgets has long gone after several years of efficiency savings meaning that any unforeseen expenditure during the year is likely to tip services into a position of overspend.

The Executive noted the position and noted also that certain areas e.g. school transport/taxis budget could benefit from closer scrutiny and tighter management. The Executive whilst it noted that agency and consultancy costs for the quarter are relatively high, recognised that Agency cover is sometimes required at times of staff turnover or absences and that consultants are used on occasion for their specific expertise and are often funded from external sources/grants for the projects in which they are involved. The Executive further noted that routine scrutiny of budget monitoring will now be undertaken by the Scrutiny Finance Panel which will report to the Corporate Scrutiny Committee including escalating to that Committee’s attention any issues of concern which the Panel identifies.

It was resolved –

•  To note the position set out in respect of financial performance to date.

•  To agree to a review of earmarked reserves to identify earmarked reserves which are no longer a priority and which could be used to help fund the significant projected overspend.

•  To note the position of the invest to save programmes.

•  To note the position of the efficiency savings 2017/18.

•  To note the monitoring of agency and consultancy costs 2017/18.

•  To delegate the release of the Council Tax Premium to the Section 151 Officer based on the calculations that the Premiums have been paid.