Report of the Cabinet Member for Finance.
The Cabinet Member for Finance presented his report outlining the Council’s forecast financial position as at the end of quarter 2 of 2019/20. He referred to the tables and appendices within the report, which gave information regarding the current 2019/20 budget and the forecast variances for the Revenue Budget General Fund, the Housing Revenue Account, the General Fund Capital Programme and the HRA Capital Programme. Members were asked to review and note the forecast outturn position at this point in the financial year and to ask any questions that had arisen from the information provided.
A Member enquired as to whether the vacant cinema project A3 sites had impacted the Council’s forecast outturn position. Officers explained that rental income from the A3 sites had not been factored into the 2019/20 budget and therefore had not affected the Council’s financial position at this point.
Members asked for an explanation of the shortfall in corporate procurement savings, which showed a forecast variance of £250k at the end of quarter 2. Officers confirmed that although a saving of £300k had been budgeted for the 2019/20 period, it was anticipated that only £50k would be saved in relation to corporate procurement. A Procurement Officer had been recruited during the year and the focus of this role had been reviewing current arrangements and contracts and putting into place updated procurement processes, in order for further savings to be made in this area moving forward. As contracts were time-bound in nature and spanned all Service Areas, it was noted that achieving further procurement savings would be a gradual process.
Officers were asked what arrangements were being put into place to rectify the areas not currently meeting their budgets, and what lessons could be learned from the significant variances highlighted in table 1.3 moving forward. It was explained that although there were significant variances, the Council was on track to meet the majority of the budgetary targets. Reference was made to changes in market trends and other external factors exposing budgets to volatility. It was also recognised that some of the 2019/20 budget and savings targets had been very ambitious. The areas that had caused the most significant variances would be either removed, updated or reviewed as part of the 2020/21 budget setting process. The 2020/21 budget proposals would be undertaken with a more realistic approach, in order for the final budgets to align more closely with the reality of which savings and targets could be achieved in the next financial year. Any changes made would need to be offset with corresponding entries to ensure that the Council achieved a balanced position overall.
One Member asked how employment agency costs were accommodated within the budget. It was explained that agency spend was not a budgeted item and that the service area budgets for permanent staffing were used to secure temporary agency support, working within the existing budget for the vacancy. In instances such as maternity leave or long term sick leave where the cost of an agency worker would be in addition to the salary paid to the employed member of staff, the individual directorate would need to consider the whole of the responsible area and realign budgets elsewhere to cover these costs.
A question was asked regarding staff salaries and if there was the intention for the Council to increase these to be more comparable with neighbouring authorities. Officers highlighted an exercise currently being undertaken to review the pay structure and look at the potential for a broader reward package to be introduced. This work would be completed in December and taken to the Employment Committee for consideration in the new year.
Attention then turned to the significant variance in relation to car parks in Grantham; Members queried the assumed budget increases that had not been achieved and whether this corresponded with the decision not to have increased parking charges. The budget had been set based on the assumption that there would be increased usage of car parks in the town centre, but this demand had not materialised. The Chairman reminded Members that car parking would be considered in further depth as part of the Committee’s Work Programme.
· The Committee supports the principle of incorporating more realistic targets and savings in the 2020/21 budget setting process
· The Committee would like to see a more in-depth explanation of unmet targets at the end of quarter 3