To consider the attached report.
Contact Officer: Nuala Donnelly (01296) 585164
The Committee received the Quarterly Financial Digest for the period from 1 April to 30 September 2018, which represented financial information on the Council based on the actual income and expenditure for the first six months of the 2018/19 financial year.
As at the end of September 2018, an overspend against budgets was reported of £457,979, along with forecast full year overspend of £238,100, before the use of reserves, for the full year to the end of March 2019.
The Medium Term Financial Plan (MTFP) agreed by full Council in February 2018 had assumed a contribution to balances of £240,000 for 2018/19. Based on the forecast financial position, there was now an assumption that there would be no contribution to balances.
The forecast level of balances for the financial year was reported as £1.927m, marginally below the minimum assessed level of balances of £2.0m. The forecast position did not currently assume any use of reserves to support emerging overspends. Earmarked reserves were held for legitimate reasons and the balances represented a fair assessment of the budgetary pressures that they were held against. Any use of reserves was an essential part of sound financial planning. The use of reserves would be assessed in year with any use of them resulting in a reduction of the forecast overspend and lessening the call on balances.
The end of second quarter position and forecast outturn continued to highlight a number of emerging financial risks that would allow considered corrective actions to be taken. Members were given an assurance that budget holders, managers and finance business partners were working to mitigate issues and to address the year to date financial position.
The main reason for the overspend to date had been for the use of agency staff to support vacancies and some activity pressures. The use of agency staff incurred a premium and an adverse variance to agreed budgets. Members were informed that the dependency on high cost agency staff was being targeted to reduce the risk of further in–year overspends. For all of the areas identified as using agency staff, plans were being developed to address spend and mitigating actions were being taken. Some vacancies were being filled and proposals are being put forward for most effective delivery models
For the 6 months to date, agency staff had been employed in a number of key operational areas to support project work and service delivery. These included:
· People and Payroll department where agency costs had been incurred to support both vacancies and prolonged periods of sickness absences.
· The Connected Knowledge and GDPR programme: These were work programmes for which funding had been allocated.
· IT: to cover key vacant posts.
· The Depot to employ loaders and also to meet additional costs of new waste rounds. The use of agency staff in these areas had allowed for flexibility to meet staffing patterns.
· Planning Department: to cover key vacant posts and to manage workloads.
Budget managers were provided with detailed agency staffing analysis on a monthly basis to ensure they have information on costs and to facilitate decision making in terms of using agency staff. Despite these known pressures on staff costs, it had been possible to largely offset agency costs with additional efficiencies and income to reduce the risk of further in-year overspends as follows:-
· Savings against budget in relation to transitional relief for business rates.
· Increased income from commercial rents particularly at Pembroke Road, for garden waste and commercial waste services.
· Savings on forecast interest charges, due to lower than planning levels of borrowing.
· Savings on vehicle costs at the Depot due to previous capital investment.
· General efficiencies in running costs of departments including Housing Benefits court costs and savings on GDPR implementation provisions.
The Committee was informed that page 14 of the Digest contained details of the reserves and provisions held by the Council against specific risks and commitments. Cabinet had recently agreed that the equalisation funds for business rate and interest rates should be repurposed and made available to offset the transition costs associated with local government reorganisation, subject to any demands being placed upon them in 2019/20. It was uncertain whether the money from these two reserves (circa £5m) would be sufficient so the position would continue to be monitored.
As well as the costs of implementation for the new Council, the decision could also impact on the organisational ability to retain and recruit staff during the transition period. The uncertainty had the potential to lead to a further reliance on agency and temporary staffing arrangements.
The Digest also reported on the level of capital spend to 30 September 2018. Whilst the year to date spend of £4.352m represented 44% of the total anticipated spend, there was no perceived risk on the delivery of the schemes and it was anticipated that the spend would increase in line with plans over the last 6 months of the year.
No new borrowings had been taken out over the last 6 months so the current borrowings remained at £18.5m. The Council had £47.3m invested at the end of September, in a combination of banks, building societies and money market funds.
Members sought additional information and were informed:-
(i) that the Council had reserves that could be used to pay for temporary or agency staff if there were issues with staff retention and recruitment during the transition period to the new Council.
(ii) that the 5 Bucks Councils were already working across professional streams, with HR being one of the first ones, to address uncertainty concerns for the transition to the new Council. It was likely that a protocol on recruiting staff to the new organisation would be agreed in due course. It was likely that many staff could be transferred from their existing Council to the Council but some roles would also need to be externally advertised.
(iii) that the Council did consider recruiting staff on fixed term contracts, as well as using agency staff, to cover for the vacancies in a number of key operational areas such as planning, Digital (IT) Services and People and Payroll.
(iv) that there were no emerging ‘surprises’ that might impact on the budget position for 2018/19.
(v) that where Housing Benefits was overpaid, the Government asked Councils to recover the overpayments and allowed Councils to keep a percentage of it, as well as court fees. The money recovered so far this financial year had been more than anticipated.
(vi) that the current level of bad debt relating to Housing Benefits overpayments was £4m. A report on debt management would be submitted to the scrutiny committee in the New Year.
(vii) that the main reason that the Business Strategy area was over budget was due to lower than anticipated income generated during the period.
(viii) that the finance business partners met regularly with managers and budget holders to identify budget pressures and risks and how to mitigate them.
(ix) that transitioning to the new Council was likely to create greater uncertainty around forecasting and delivery against the budget for 2019/20.
(x) that information in the Financial Digest was provided at a high level against Cabinet portfolios. If Members required additional information against individual budget areas then Finance would be happy to provide it.
(xi) that there was insufficient time to consider devolving assets/services to Town and Parish Councils as a moratorium on devolving assets was likely to apply from March-April 2019. However, the County Council’s bid had been predicated on devolving assets/services to Town and Parish Councils so this matter would likely be considered by the new Buckinghamshire Council in due course.
(xii) that the overspend in the Planning Service was a combination of reduced income and additional staffing costs (use of agency staff).
(xiii) on the dependency of agency staff by the planning service meant that the service was likely running at a loss at the moment, and was a combination of reduced income and additional staffing costs.
That the contents of the Digest and the financial position for the Council for the first six months of the 2018/19 financial year be noted.