Agenda item

Report number HOF200 by the Head of Finance.                          (Enclosure)

Decision:

1.    Members of the Governance and Audit Committee have reviewed, appraised and approved the Revenue and Capital Outturn report and associated appendices for 2011/12, including the movement and use of reserves detailed in report HOF200.

2.    The Committee notes the commentary to the outturn report and has identified no issues of which it would like to make Council and Cabinet aware in relation to the Council’s medium term financial planning arrangements.

The Head of Finance presented report number HOF200 on the draft financial outturn 2011-12. The Committee was asked to approve the outturn and the proposed movement of reserves. The Budget for 2011/12 saw a reduction in formula grant of £1.27m.

The general fund revenue account showed an underspend after a number of required accounting transactions. Within this account, the Committee was asked to approve rolling forward specific set asides into 2012/13 budgeted for Property Services, Waste Services and ICT. The Committee was also asked to approve the creation of an ‘invest to save’ reserve. As there was no pay award for staff in 2011/12, £100k set aside for the purpose was transferred back to reserves.

The report highlighted key variances across the Council’s services. Particularly highlighted were car parking, grounds maintenance, leisure centres and the building control trading account.

With the exception of Grantham, all Special Expense Areas maintained costs. There were unforeseen costs for the Grantham SEA as a result of drainage issues at Grantham cemetery. Councillors noted that current works were contained within the SEA and its reserve but financing of future work would need recouping.

The Housing Revenue Account (HRA) had resulted in an overall surplus of £1.284m which had been added to the working balance and will be used to finance future spending programmes.

Performance in respect of dwelling rent income remained strong. Changes to universal credit, bedroom tax (removal of benefit entitlement for tenants that have ‘surplus’ bedrooms) and the direct payment of benefits to tenants could affect this position in the future. Efficiency savings and changes to staffing levels had contributed to the revenue variance, as had depreciation in the value of the housing stock.

The £4m underspend against the capital accounts was evenly split between the general fund and the Housing Investment Programme (HIP). Several general fund projects, including Bourne Core Area, Bourne Community Access Point and Grantham Growth would roll over into 2012/13. Housing improvement grants were not time bound meaning they could move across financial years.

Councillors asked questions on the report. Discussion ensued on the variance in respect of leisure centres as the District Valuer had updated the valuations which impacted the calculation of the depreciation in asset value.

The Head of Community Assets explained the new process through which the Council commissioned repairs and improvements. Rather than tendering for individual jobs, works were grouped. This led to an initial backlog of work however in the long-run the new framework would lead to the more efficient completion of repairs and improvements.

There had been an overspend on heating and installation because the number of boilers that needed repairing and replacing was greater than anticipated. A rolling improvement programme was underway however officers could not insist tenants accept upgrades. The programme was based on the full stock condition survey completed in 2010. A 10% stock survey was completed annually.

Councillors discussed the insurance reserve. The current policy is to  finance any judicial review or planning appeal costs from this reserve to mitigate the impact on the council tax payer. The Council had also moved to an in-house risk profile so that there was less reliance on the external insurer. Officers were reviewing insurance arrangements to optimise the balance between use of internal resources and external arrangements.

The pension reserve allowed the authority to respond to any pension reviews, financing any changes to employer contributions. The priority reserve was a one-off source of funding to pump-prime projects in support of priority outcomes.

The chairman proposed the recommendations, which were agreed by the Committee.

13:30-13:44 – the meeting adjourned.