The Committee is asked to consider the Financial Management Report for April – September 2016. 

The Cabinet Member for Finance and Performance and the Head of Finance have been invited to attend.

The Chairman welcomed Members and Officers to the meeting.  The Cabinet Member for Finance and Performance advised that the report represented the first six months of the financial year, which showed an underspend of £670,000.  Savings were being made throughout the year where possible, and he applauded officers for good financial management.

The Chairman invited the Scrutiny Committee to ask questions, and went through the report page by page.  The following summarises the responses given to questions.

·        Page 2 - Planning pre-application advice: the Head of Planning Services advised that due to workload, the pre-application advice service had been ceased for around three months, to allow for recruitment of additional staff.  It was anticipated that the increase in planning fees would help to compensate for the increase in costs as a result of this delay. 

·        Page 3 – a Member considered that planning application income should be budgeted more carefully.

·        Page 4 – the Head of Resident Services confirmed that, unfortunately, there had been a saving as it had not been possible to gain further access to the private sector.  A Member suggested that this was an area for future review by the Scrutiny Committee.

·        Page 4 – the Chief Accountant drew attention to page 12, which set out the detail of the bad debt provision of £30k.

·        Page 5 – the Cabinet Member for Planning advised that the £25k loss of income for section 106 agreements was as a result of changes required following a court decision elsewhere.

·        Page 6 – the Cabinet Member for Regeneration advised that a “more cautious” approach to marketing apprenticeships was required due to a change in the number of applications/school leavers, and a change in guidelines from the Department for Education.  A Member asked for information about when this decision had been taken.

·        Page 6 – the Chief Executive explained that the savings in Chief Executive and Corporate Costs were largely due to staff salary saving and a reduction in the use of facilitators and away days.

·        Page 6 – the Cabinet Member for Safer Families and Communities advised that the reduction in income for closed circuit television was a result of Minster Parish Council no longer making a contribution.

·        Page 6 – Underspend on WWI Grants – it was clarified that there was unlikely to be an underspend by the end of the year as additional grants had been awarded since the report had been produced. 

·        Page 6 – Economy and Community Services – it was clarified that savings had been made as the officers acting up would have been positioned at the lowest point of the relevant salary scale.

·        Page 7 – the Head of Resident Services advised that the overspend of £177k on the Bed and Breakfast budget was higher than they would like, but the £35k underspend on the homeless hostel budget was as a result of the renegotiation of the agreement with AmicusHorizon.  She further explained that £177k was the projection to year-end, and next year this may increase but they were exploring all options available, and the underlying issue was the lack of affordable housing.  Another Member spoke of difficulties of the private sector refusing to let homes to potentially homeless people.  The Cabinet Member for Housing and Wellbeing advised that this was a national problem which was exacerbated in Kent due to its proximity to London, but they were looking at options available as it was proving ever more difficult to find suitable accommodation.

·        Page 8 – the Cabinet Member for Planning advised that the overspends for defending appeals were as a result of an unusually high number of appeals, which it was right for the Council to defend.  It was not possible to predict how many there would be in any given year.

·        Page 9 – £106k net estimated contract costs and contract variation savings: the Head of Commissioning and Customer Contact advised that significant savings were due to indexation being negative and where default notices had been issued.  None of the variations reduced the standards in service, but there had been opportunities to achieve efficiencies.

·        Page 9 – Leisure, Sports, Open Spaces, Parks, Countryside and Allotments: a Member asked when the decision had been taken to use £94k of reserves for consultancy advice, non-contract grounds maintenance and play equipment maintenance, and asked for a breakdown of how this would be spent and why?  Another Member also asked why there had been a £5k overspend in non-contract grounds maintenance.  The Chairman asked for this information to be circulated.

·        Page 9 – Kent Resource Partnership: the Cabinet Member for Environment and Rural Affairs explained the remit of the Kent Resource Partnership, and that there had been an additional contribution to promote food waste recycling across the County.

·        Page 10 – Environmental Health Mid-Kent Services (MKS): the Cabinet Member for Environment and Rural Affairs and the Mid-Kent Environmental Health Manager advised that £10k savings had been made as businesses in Swale and Maidstone had utilised Swale’s expertise in food safety training.  A Chartermark had been developed for tattooists, and additional income from registrations had been received as a result of the increased popularity of tattoos.  Market supplements were no longer offered as it had become easier to recruit environmental health officers over the last few years.

·        Page 11 – Legal, Mid-Kent Legal Services (MKLS): the Leader advised that there was a £28k increase in costs, as the Council had used more services.  The Chief Executive advised that the service charged by time, and that there had been additional demand, for example due to planning appeals.  The Director of Corporate Services referred to the increase in Fixed Penalty Notices being issued.  The Cabinet Member for Planning advised that regular bulletins were distributed to Members which set out the planning work being undertaken by MKLS.  

·        Page 11 – External legal fees: a Member asked for a breakdown to show planning costs as a separate item, and anticipated a lag due to recovery of costs from court.

·        Page 12 – Corporate Items: in response to a question about the terminology, the Head of Finance undertook to discuss this with a Member outside of the meeting.

·        Page 12 – paragraph 3.5 and 3.6: the Head of Finance explained that, whilst the Council had benefited so far from the localisation of business rates, there was increased volatility of income.  This would become even more so from 2020 under the plans for business rates to become the main source of local government funding, and the removal of revenue support grant.  £8.1m had been set aside for business rate appeals, and the Chief Accountant explained how this figure had been calculated and that it was regularly reviewed and assessed, including by External Audit.  The Head of Finance undertook to provide Members with a copy of the response to the Department for Communities and Local Government (DCLG) consultation referred to in paragraph 3.7.

·        Page 13 – paragraph 3.12, Bell Road Cemetery: the Cabinet Member for Environment and Rural Affairs and the Head of Property Services advised that the works had been necessary for health and safety reasons, and that as it was a listed building the Council had a statutory duty to keep it in good repair.  It was possible that the figure of £41,000 would increase.

·        Page 13 – paragraph 3.14, Appendix III, page 23: the Mid-Kent Environmental Health Manager answered a question regarding the £55k underspend on replacement of air quality stations.  A review and replacement of the air quality equipment at Ospringe was underway, and a review of the equipment at St. Paul’s air quality station had identified that it was possible to extend the life of some equipment through recommissioning stored equipment. 

·        Page 13 – Table 4: the Head of Finance explained that Table 4 was what had actually been spent, but Appendix II set out what was committed.

·        Page 14 – congratulations were given regarding the improvement in debt recovery.

·        Page 15 – Table 7: the Head of Finance undertook to discuss this table with a Member outside of the meeting, and agreed to provide details of how many properties this included.  It was clarified that the Council had no control over when a property was sold.

·        Page 18 – Residents’ Parking Permits: the Cabinet Member for Families and Safer Communities advised that additional income had been received as the Council had sold more permits.

·        The Head of Finance answered a question on the working budget and actual budget for the capital programme.

During the discussion, the Head of Finance undertook to look at the suggestion to add an additional column to the report to show the saving as a percentage of the overall budget.  He also advised that he would review the terminology “overspends” for future reports, as the term did not reflect where some deliberate decisions had been taken to increase expenditure (such as on homelessness and planning appeals).  A Member also suggested that the costs could be split between those that were major and those that were minor.

Resolved:

(1) That the report be noted.