Report of the Cabinet Member for Finance.
Members were advised to consider the report of the Cabinet Member for Finance outlining the Council’s forecast 2019/20 financial position as at the end of quarter 1. At the end of quarter 1, the Revenue budget stood at £19.796m and a forecast overspend of £461k. One of the most significant variances to the Revenue Budget General Fund was the forecast underachievement of the workforce efficiency target (vacancy factor). Officers explained that this target was a workforce efficiency measure used to reflect in the budget provision any gaps between an employee leaving the organisation and a replacement being recruited.
Members were informed of the current known budget pressures for 2019/20, including income from Council-owned car parks, trader levels at markets, operational costs relating to St Martin’s Park and the challenges securing the budgeted transformation and procurement savings. At the end of quarter 1, only a proportion of the budgeted savings and income generation were on target to be achieved. Significant variances to the Housing Revenue Account, General Fund Programme and HRA Capital Programme budgets were outlined to Members.
As the information within the report represented the first quarter of the year only, Members were advised that a clearer understanding of the Council’s financial position in relation to budgets would be able to be given at the end of quarter 2.
Members of the Committee were then given the opportunity to ask questions or discuss different aspects of the report:
· One Member noted that it would be useful to have numerical figures relating to market stalls occupied in towns throughout the district, in order to support understanding of the red RAG status for markets in Appendix B.
Ø Officers to provide a breakdown of the usage of market stalls across towns in the district
· Members asked for further explanation of the budget variance in relation to dwelling rents in the Housing Revenue Account budget. Officers advised that this variance could be attributed to an increase in right to buys over the 2018/19 period, which reduced the total number of properties from which rent could be collected. It was noted that the working assumption in the Housing Revenue Account business model may need to be updated in light of the sustained increase in right to buys in excess of the associated assumption.
· One Member asked if there could be an update provided on the New Homes Bonus. Officers explained that they had not received an update from central government regarding this, but at this stage it was assumed that the current four year legacy payment model would continue. As central government was yet to confirm the payment amount for the next financial year, the challenge for the Council moving forward would be balancing the cost of potential external borrowing against investment.
· Members asked for information regarding income for car parks. It was suggested that an account of historical trends for car parking income over the past couple of years would aid their work to ensure that usage was economically driven.
Ø Members to receive figures relating to car park income in Grantham
· One Member asked if the sponsorship money for the Bourne CiCLE festival had been received. The final account for the festival had not yet been confirmed.
Ø The final account of the Bourne CiCLE festival to be confirmed to the Committee at the next meeting
· Members requested further explanation of the budget variances for the General Fund Programme relating to the Guildhall Arts Centre projector and the Public Realm works. The Deputy Leader of the Council explained that there had not been a business case to back the projector scheme at the Guildhall Arts Centre. In relation to the Public Realm, unforeseen costs during construction works had occurred, including the need to provide a separate boiler system for the Civic Suite when it became clear that it would not be feasible to link the heating system to the main offices, as originally planned. Although this outcome had caused budget variances, it had also created the advantage of allowing the Civic Suite to be used as a stand-alone building.
· Members suggested that the RAG system for categorising budget variances in Appendix B needed further explanation. The system was a new introduction to the significant variance analysis report. It was introduced primarily to highlight areas influenced by external factors outside of the Council’s control, identifying when these influences may adversely affect budget projections.