To consider the attached report.
Contact Officers: Nuala Donnelly (01296) 585164 / Tamsin Ireland (01296) 585004
The Committee received the Quarterly Financial Digest for the period to 31 March 2018, which represented the final outturn position for the Council for the financial year 2017-18. The digest was attached as Appendix 1 to the Committee report, and was based on the actual income and expenditure for the 12 month period from April 2017 to March 2018. The Council’s financial statements for this period would be subject to external audit.
As at the end of March 2018, an overspend against budgets (after the use of reserves) of £453,507 was reported which was slight better than the forecast anticipated in December 2017. The slight improvement to the financial outturn left the General Fund working balances at a marginally higher level than predicted, with a closing balance on the General Fund for 2017-18 of £1.977m. This was also consistent with the financial outturn position used in budget planning for 2018/19.
Members were informed that the draft annual accounts had been completed by 31 May and presented to the Audit Committee meeting on 26th June 2018. Final approval of the accounts was due by 31 July 2018.
While the accounts present the definitive position on the Authority by way of its financial resources, it did not inform the reader as to whether this was a planned or expected position. The Quarterly Financial Digest was the primary reporting tool for in-year financial management and provided management information. It was designed to explain significant financial events which occurred during the year by comparing them with the expected or budgeted equivalent figures. Members referred to the Digest whilst considering the Committee report.
Income and Expenditure
The total income and expenditure position for the period to the end of March 2018 showed a total expenditure of £135.770m, which represents an overspend against the annual budget of £3.1m. These costs largely relate to the significant restructuring exercise undertaken in 2017/18 as part of the process of delivering a financially sustainable organisation for the period of the medium term financial plan. The financial benefit of the re-organisation would help to realise significant savings in staff costs in the future years and had been central to the Council setting a balanced budget for 4 years in January 2018.
For the financial year, £1.222m of salary savings had been recognised as a result of business reviews and vacancies. Some of these vacant posts were however filled by temporary staff (agency and consultants) at a premium cost. For the financial year, temporary staffing costs were reported as being £3.137m above budgeted levels.
Further staff cost pressures to date include redundancy cost of £1.725m. All opportunities to realise in-year savings through efficiencies are actioned to ensure financial benefit. In year, there have been significant savings arising from the introduction of the new waste fleet in that running costs have been reduced significantly.
Work continues to provide Members with additional information and details on income and expenditure, and to ensure systems support the information requirements. The Committee report included details on:
· the top 20 types of income for 2017/18 (which represented more than 85% of the total income).
· the top 20 types of expenditure for 2017/18 (which represented more than 99% of the total expenditure).
· the final financial outturn, by portfolio, with further details of services provided in the Digest.
Whilst overall the variance for the Council had remained largely unchanged from the forecast outturn position reported at the end of December 2017, there have been some changes which were reported. Producing forecasts for 2017-18 had been difficult given the particularly transitional changes happening across the Organisation in the financial year.
The forecast variance, at portfolio level, was worse than the year end position by £1.188m. The report detailed the main changes from the December forecast to the 2017-18 outturn, which included:-
· housing payments made in error as a result of system changes. This could not have been foreseen when completing the forecast at December 2017;
· changes in forecast income for car parking income and lettings, the forecast fell short of expectations.
· lower than forecast income from trade waste disposal fees and recycling credits. It had previously been indicated that income from recycling would reduce but this has happened earlier than anticipated;
· the impact of the staff changes across the organisation have been difficult to assess with precise accuracy. For operational issues, some changes didn’t happen as quickly as forecast, and additional unanticipated costs were incurred in the last quarter; and
There had also been a number of changes in relation to the financing items, the overall impact of which was to offset the position reported at portfolio level. This included lower borrowing costs and higher than expected income from business rates.
The finance team engaged on a regular basis with budget holders to ensure that any emerging issues in relation to finance and related activities were flagged as early as possible to allow corrective action as required and to ensure forecasting was as accurate as possible.
Financial Performance by Portfolio
The 2017/18 financial performance comprised portfolio overspends of £3.358m, offset by underspends in Corporate Costs of £2.904m. The Council had established financial management procedures in place to monitor budgets and mitigate any forecast overspending. This had been successful in acting as an early warning of any budget variations. Revenue and capital budget monitoring information was reported to the Scrutiny Committee and Cabinet throughout the year and specific areas of concern were highlighted. This process facilitated a level of challenge, including a review of any potential impacts on budgets.
Portfolio information was provided setting out variances from the budget and which demonstrated that despite known pressures on staff costs, it had been possible to achieve additional efficiencies and income to offset these exception costs for 2017/18. In managing budgets, managers were encouraged to remain within the planned budget, whilst ensuring cost pressures were minimised and opportunities for additional income were maximised.
Reserves and Provisions
Detail of the earmarked reserves and provisions held by the Council were detailed on page 14 of the Digest. The closing balance for the financial year was £33.382m. This represented an increase of £760,000 over the balance held at the end of the previous financial year. Reserves were held against specific risks and commitments.
A total capital spend of £8.505m had been incurred in 2017-18. Capital expenditure was financed by revenue contributions and capital receipts. It was anticipated during the year that a significant element of the programme would be funded from prudential borrowing.
The Council had taken a prudent approach to financing the capital programme by deploying revenue reserves and cash balances instead of using external borrowing where possible as this produces a lower net cost. The following issues in relation to the capital programme were highlighted:-
· The capital programme for 2017-18 had included spend and credits in relation to retention payments for completed schemes, including Aqua Vale and Waitrose.
· The capital works in relation to University Campus, Aylesbury Vale have now largely been completed. The residual carry forward of funding into 2018/19 represented funds allocated for residual and any required remedial works.
· Waterside North Phase 1 (The Exchange scheme) had commenced in January 2017 and consists of four restaurants, with 47 one and two bedroom apartments above and a new public square that was due to be completed by autumn 2018. The spend for Phase 1 was now almost completed.
· The capital programme included £4.1m for the purchase of a new Refuse and Recycling fleet all of which were in place at the end of the financial year. These were all the latest and most efficient vehicles and enabled the Council to address the effects of increasing demands from growth in the district for at least the next 3 years. The increased spend above budget included spend on Telematics for the vehicles.
· At 26 October 2016, the Council had agreed to a scheme to develop the existing waste and recycling depot site at Pembroke Road. The total scheme cost was £9.2 million, of which £1.9 million would only be required if there was sufficient evidence of the demand and take up for the expanded vehicle testing facilities. This capital scheme continued into 2018/19.
· The capital spend for 2017-18 included a small spend on community centres. The residual allocation was likely to be spent on Community Centre renewal funded by the receipts from the sale of Elmhurst Community Centre some years ago, and also on some play area renewal work.
Investment and Borrowing
Information on the Treasury Management Outturn for 2017-18 was detailed in the report, and had been considered as a separate agenda item at the scrutiny committee.
Members sought additional information and were informed:-
(i) that the overall financial position for 2017/18 was due to staffing costs in relation to the Council’s reorganisation, being a combination of salary savings from business reviews and vacancies, offset by some vacant posts having to be filled temporarily by agency staff and consultants, and further staff cost pressures including redundancy costs of £1.725m. The reliance on agency staff and consultants was reducing all the time as people were recruited to the vacant posts.
(ii) that the delay in an announcement regarding modernising local government in Buckinghamshire had not negatively impacted on the recruitment of staff.
(iii) Report paragraph 4.7 (Expenditure table) – that the Rent allowances overpayment in year was not recoverable.
(iv) Report paragraph 4.7 (Expenditure table) – that the figures for Basic Salary did not include on-costs (National Insurance and superannuation costs)
That the contents of the Digest and the final outturn position for the Council for the financial year 2017-18 be noted.