Agenda item

Outturn Position Report 2019/20

Report of the Cabinet Member for Finance and Resources.

Minutes:

The Interim Director of Finance introduced the report on the outturn position for 2019/20. He explained that the report had already been presented before the Finance, Economic Development and Corporate Services Overview and Scrutiny Committee and Cabinet, to seek feedback before it was presented to the Governance and Audit Committee for approval. Both the Finance, Economic Development and Corporate Services Overview and Scrutiny Committee and Cabinet had supported the contents of the report and the proposed budget carry forwards.

 

The Committee were presented with an outline of the main points from the General Fund outturn position for 2019/20, including the Revenue Budget, Capital Programme and Reserves. The Interim Director of Finance explained that the outturn for the General Fund revenue budget was an overall balanced position. This was highlighted as a positive position which had been achieved through a number of interventions supported by Members, as well as a one-off supplementary gain from the Business Rates Retention Scheme in relation to renewable energy projects. Reference was made to the most significant variances across the three sections of the General Fund outturn position.

 

Members were then given an outline of the Housing Revenue Account (HRA) outturn position for 2019/20, including the Revenue Budget, Capital Programme and Reserves. The Interim Director of Finance explained that the HRA budgeted to make a surplus at the end of each financial year in order to support and maintain a resilient 30 year Business Plan. A significant variance was highlighted in relation to the refurbishment and improvement capital scheme within the 2019/20 Capital Programme. This £9.1m variance in the investment set out for stock growth proposals had contributed to a £9.4m variance overall in the 2019/20 HRA Capital outturn position. The Committee were given the opportunity to ask questions relating to the report and the appended documents.

 

The Committee considered tables 1 and 2 of the report. One Member asked if the General Fund revenue budget amendments in table 2 were recurrent or non-recurrent. It was confirmed that the amendments contained in table 2 were non-recurrent budget amendments that had been agreed during the 2019/20 financial year, including the 2018/19 budget carry forwards agreed by the Committee from the outset of 2019/20.

 

A question was also asked regarding the difference between the current General Fund revenue account budget identified in table 1 as £19.312m and the total budget amendments figure in table 2 of £20.311m. It was explained that the budget amendments identified in table 2 had increased the 2019/20 budget as agreed at Council (£17.917m) to £20.311m. The General Fund revenue account budget figure in table 1 represented this increased total budget with the proposed budget carry forwards to 2020/21 removed.

 

One Member highlighted some of the variances identified within the report that he felt had not been given satisfactory explanations and asked for further information giving the reasons for the variances. The Interim Director of Finance suggested that, in order to evidence the variances accurately and in sufficient detail, the information could be circulated to Members before the next meeting. The Committee agreed that this would be acceptable.

 

Action Point

 

·       The Interim Director of Finance to provide additional information regarding the outturn variances queried in the meeting, to be circulated to the Committee before the next meeting

 

When reviewing the outturn variances contained within the report, the Committee raised concerns regarding the underspend for the HRA Capital Programme. Members acknowledged the need for the HRA to achieve a surplus in order to support its 30 year Business Plan, but felt that the level of surplus for 2019/20 may represent issues in how the HRA Capital Programme was planned and budgeted for.

 

The Interim Director of Finance stressed the importance that lessons were learnt as to why housing investment programmes had been set at levels that had been undeliverable in previous years. He highlighted, however, that part of the variance in 2019/20 would have been deliberately postponed to enable a broader investment programme to be developed in subsequent years. The Committee were also informed that the HRA had performed more positively in business as usual expenditure around decent homes standards and maintenance works. It was recognised that the Capital Programme for 2020/21 and going forward would need to be underpinned by better planning to ensure that investment programmes could be delivered.

 

In response to a question asking if the HRA surplus had an acceptable limit, officers explained that the level of surplus budgeted was based on the modelling within the 30 year HRA Business Plan to build up the balances of the reserves on a cumulative basis, thereby allowing the HRA to deliver against its objectives. However, the figure was not absolute and could vary according to agreed spending plans and fluctuation in income, including rent collection.

 

The Committee requested that plans for future large scale HRA investment programmes be presented to the Governance and Audit Committee prior to their budget being agreed, to give assurance that the necessary governance arrangements had been put in place to ensure their deliverability.

 

Action Point

 

·       The governance arrangements of any future large scale HRA investment programmes to be added to the Committee’s work programme for consideration before any corresponding budgets have been agreed

 

It was proposed, seconded and AGREED that:

 

·       The Governance and Audit Committee approves the Revenue and Capital Outturn report and associated appendices for the financial year 2019/20

·       The Governance and Audit Committee approves the budget carry forwards shown in appendices E and I and reserve movements shown at sections 4 and 7 in the report

 

Supporting documents: