Agenda item

Report of the Cabinet Member for Finance.

The Cabinet Member for Finance introduced his report giving an update on the forecast 2019/20 outturn positions for Revenue, Savings and Income Generation and Capital. At the last meeting of the Committee the quarter 2 forecast overspend position had been reported at £388k; the quarter 3 figure forecast a positive reduction in the outturn position to £182k. The Cabinet Member directed the Committee’s attention to the other areas for noting within the report, including the significant variances in the General Fund and Housing Revenue Account budgets and their corresponding Capital Programmes.

The Committee were asked if they had any questions relating to the report or the appended documents.

The Committee discussed the significant budget variances and referred specifically to the General Fund Revenue Account variances relating to the budgeted procurement and transformation savings. A number of Members expressed concern that it had not been anticipated during the 2019/20 budget setting process that the budgeted savings could not be achieved. Members sought reassurance that the 2020/21 budgeted savings were realistic and asked what lessons had been learned.

The Committee were assured that significant work had been undertaken throughout the 2020/21 budget setting process to ensure that targets were realistic and achievable. The Cabinet Member for Finance stressed the importance of adhering to the final budget, when approved, and confirmed that any in-year budget framework amendments would be referred to Council or Cabinet as stipulated by the financial thresholds within the Financial Regulations recently approved at Council.

One Member asked if project plans were in place for the budgeted procurement and transformation savings and if these were monitored, particularly in relation to financial risk. Officers confirmed that both of these areas were underpinned by project plans and had reported quarterly progress to the Committee, where arising issues with the potential to prevent the achievement of these targets had been explained. A risk ratio analysis was undertaken during the budget setting process and Officers confirmed that the unmet procurement and transformation savings were not material enough to affect the overall budget framework.

The Committee requested further detail regarding the significant variances in relation to the transformation and procurement budgeted savings to understand why they had not been met. The Director of Finance explained that an absence of information regarding existing contracts and the lack of a dedicated resource had created challenges to achieving the budgeted savings for procurement. In September 2019 a Procurement Officer had been appointed with a clear focus on supporting procurement activity across the Council. The continuation of this work in the 2020/21 period would support the achievement of the budgeted savings.

The Strategic Director, Transformation and Change gave further information on the budgeted transformation savings for the automation project and why these had not been met. The work undertaken with Ernst and Young had included the Revenues and Benefits, Housing and Planning service areas. The programme of work had changed significantly since the work had begun, as the way information was received by the Council had changed in some of these areas and further service charges had occurred that were not forecast in the initial assessment. The project had also started later than initially planned because of a prolonged negotiation process. These challenges had caused a delay in the achievement of the budgeted savings.

Although savings had not yet been achieved by the automation programme, an indirect saving had been achieved by putting recruitment for posts in these areas on hold. One Member expressed concern that achieving savings in this way could negatively affect front line services. Another member of the Committee asked how the Council was managing change. The Organisational Development and Change team had been created to assist the Council in its ambition to become more agile and work in different ways. The team had received Lean Six Sigma training and agile project management training had been facilitated for officers from a number of service areas to enable the Council to manage a range of changes. It was hoped that effectively training the relevant officers would allow the Council to continue expanding the automation project after the contract with Ernst and Young had come to an end. There was also an ambition to generate further income by marketing the Council’s automated processes to other organisations, once fully developed.

During discussion, Members commented that a significant proportion of some budgets were expected to be utilised in quarter 4. It was explained that service managers held responsibility for how their agreed budgets were managed, including ensuring that profiling was in line with delivery requirements. The Chair requested that a review be undertaken to establish how effectively budget profiling was being managed in service areas.

Action Point

Ø  A review to be undertaken to assess the management of budget profiling within service areas

A Member referred to the significant variance within the General Fund Capital Budget in relation to the commercial investment and regeneration scheme and asked why the £10m budget had not been fully utilised. It was confirmed that £700k of the budget had been allocated in line with the property investment policy, but the legacy amount had been put on hold pending the completion of the leisure centre business cases. The Committee also sought further information regarding the vehicle replacement programme significant variance. Officers explained that the procurement of the two food waste vehicles had been met by external funding from Lincolnshire County Council.

Recommendations

·         Officers were thanked for their hard work in reducing the variance in the forecast position of the budget since the last meeting of the Committee.

·         The use of plain English (where possible) is encouraged for future finance update reports to enable Councillors and members of the public to clearly understand the Council’s budget position.