To consider the attached report.
Contact Officer: Nuala Donnelly (01296) 585164
The Committee received the Financial Digest for the period up to the end of December, 2017. The financial information was based on the actual income and expenditure for the 9 months April to December, 2017. An overspend of £2.323m had been identified as at the end of December, 2017. The forecast for the end of the financial year was a predicted overspend of £487,400 against budget, after the application of reserves. The financial position was consistent with that used in budget planning for 2018/19 and future years.
Members had previously discussed the content and format of the Financial Digest and it was noted that work was continuing in this respect. The report now before the Committee was the first iteration of alternative reporting arrangements and Members indicated that this was an improvement over the previous reporting mechanism. The report contained a number of tables which it was agreed were more helpful to Members’ understanding of the financial performance of the Council. The report could be viewed in full on the Council’s web site at:
The year to date expenditure of £64.596m represented an overspend against the year to date budget of £3.217. Total income recovery was £48.333m which was £0.894m above budgeted levels. The year to date position by portfolio was submitted, with service detail being included within the Financial Digest itself.
The financial position was largely being driven by above budgeted levels of staff costs in relation to business transformation. Over the past 12 months, the Council had undergone a series of business reviews to better position itself as a commercial organisation. The reorganisation had realised significant savings in staff costs running into future years and had been a central plank in the Council being able to set a balanced budget for 2018/19.
Whilst in the 9 months to the end of December, £0.943m of salary savings had been achieved as a result of the business reviews, it had been necessary to engage temporary staff in some areas where there was a national shortage of suitably qualified personnel. For 9 months of the financial year, temporary staffing costs had been £2.309m above budgeted levels. However, as the year progressed, it was anticipated that these vacancies would be filled on a full time basis, thus reducing considerably the reliance on agency staff. Redundancy costs of £1.667m had been included to date.
For non pay budgets there was an adverse variance against the year to date budget of £0.18m which related spend on premises and properties, utility costs and also included transport costs and other non pay costs related to service delivery.
As at the end of December, 2017, income recovery was £0.894 above budgeted levels. The over recovery included additional income from rents and lettings, grants and income from planning and garden waste.
The outturn position at the end of the last financial year was forecast to be £2.169m adverse against budget. This included £1.739m of redundancy costs although these would be funded from reserves. The Council anticipated however a payback of costs incurred through staff savings over the next few years. The forecast overspend, after the use of reserves was therefore forecast to be £487,400. Members appreciated that 2017/2018 had been an exceptional year, given the comprehensive restructuring that had taken place. The Committee report presented a high level summary of the key issues impacting on each portfolio. The report also covered budget profiling, reserves and provisions, capital spending, risks and mitigations and investment and borrowing.
As mentioned at the beginning of this Minute, members felt that the reporting format was an improvement over that previously submitted for the Committee’s consideration and appreciated that this was still a work in progress, with further improvements being made in presentation having regard to individual Member comments.
Members sought further information and were advised as follows:-
· It was accepted that it was difficult to determine whether individual sector spending was within forecasts as the overall position was somewhat obscured by the redundancy costs/agency staff. It was indicated that hopefully the position would become clearer from this financial year onwards but these views would be borne in mind in future reports.
· It was noted that there was a typographical error in the general spend table on page 27 of the Financial Digest. The figure of £487,000 was an overspend rather than an underspend.
· Officers advised that every endeavour was being made to reduce the degree of reliance on agency staff and that this would occur naturally as vacant posts were filled. There were still some difficulties in recruiting to specialist professions such as IT and planning, but this was being addressed. It was confirmed that the Council had a robust contractual arrangement with the company who supplied agency staff and that the costs associated with this were very competitive. An important issue for the Council was the fact that it was imperative to maintain day to day service provision during a significant period of organisational change, which in itself was designed to make the Council much more competitive going into the future. This had necessitated the appointment of temporary staff. The appointment of specialist staff sometimes involved the payment of a premium. It was commented that the Audit Committee had reduced the risk level in relation to the use of agency staff, but the picture now presented suggested that this action might perhaps have been premature. However, Members were assured that agency staff levels were being carefully monitored at sector level and there was an expectation that there would be a significant reduction across the coming financial year.
· It was indicated that reserves currently stood around £1.9m but with contributions at the year end and during the course of the new financial year, this was likely to increase to around £2m which was considered to be the prudential figure.
· An explanation was given of the position concerning some areas of the Council where it was difficult to recruit to lower pay grades. The Vale was an area of high employment and there was significant competition at this pay level. In particular action had been taken to make pay grades at the Council’s depot much more competitive and consistent with the wider market.
· Members also sought some clarification around the phasing of the housing benefits budgets and officers agreed to look at this in relation to future reports.
· Members asked for and were assured that the next report would offer a clearer explanation of the figures associated with car parking and in relation to budget profiling of community centre costs. In relation to the latter it was indicated that there was still some work needed on the explanation of the profiling of expenditure across the year.
· It was confirmed that there were no perceived significant risks around the Council’s Capital Programme.
That the Financial Digest be noted.