The Committee is asked to consider the Financial Management Report – April - December 2015.

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

The Chairman welcomed the Cabinet Member for Finance and the Head of Finance to the meeting.

The report set out the revenue and capital projected outturn for 2015/16 as at the end of December 2015.  The Cabinet Member for Finance stated that he was pleased with the current situation, and added that the Council was still looking to make savings.

The Chairman invited the Committee to focus on prime items and in particular items, that had a variance of +/- £10,000.  He drew Members’ attention to the recommendations in the report, and in response to a question, confirmed that the recommendations were for noting.

Members made comments and asked questions, as minuted below.

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Local Engagement Forum – the Cabinet Member for Finance confirmed that the £30,000 underspend had changed since the report was written, and was now in the region of £3,000.

The Head of Finance reported that the figure in relation to Learning and Skills took into account that one apprentice has left the Council.  He confirmed that apprentices were paid the national apprentice rate.

The Head of Finance agreed to provide further information on:

(1)  the Sports Development item, in particular how funding for the SD-KCC Satellite Club could be applied for;

(2)  the CCTV item and what this involved in terms of additional monitoring costs;

(3)  the £39,000 underspend on salaries due to vacant posts; and

(4)  the length of the SERCO and Biffa contracts.

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The Head of Finance agreed to check what the charge was for Section 106 monitoring.

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The Head of Finance confirmed that the £97,000 underspend on Leisure and Sports was because of savings made on the SERCO contract.

Refuse Collection/Street Cleansing – the Head of Finance drew Members’ attention to the table which included the reasons for the underspend of £58,000.  The Chief Executive further explained that one-off payments were made available for deep-cleaning of specific areas.

A Member raised concern with the Leisure and Sports underspend in relation to non-contract grounds maintenance.  He explained there were areas of land where this underspend could be implemented.

The Head of Finance explained that the Council was in a good position and there was no reason why a particular project should not be implemented if it was considered a priority.  He suggested the Member contact the Cabinet Member or Head of Service for more information.  The Chief Executive advised that it would need to be checked to see if that particular piece of land belonged to the Council, and whether it was currently covered by the management contract.  There was also a difference in approach between revenue and capital expenditure.

The Head of Finance explained that with regard to beach huts, as a number had been sold more income was generated from sales of the huts, than from rental, which had resulted in more capital, rather than revenue funding.  The Chief Executive reported that a further 20 huts were being installed this year, which would generate more income.

The Head of Finance agreed to provide further information on the extra costs at Barton’s Point referred to under Leisure and Sports.

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A Member queried the overspend under MKIP charges for HR Services and considered this was balanced out by the underspend.  The Head of Finance explained that this situation arose as we had budgeted for Tunbridge Wells Borough Council joining the shared service but they did not in the end and the projected savings were not achieved.  The proposed saving had been taken out of the budget for 2016/17 so it would balance out next year.

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A Member considered the Play Areas Commuted Sums item with an underspend of £47,000 could have been spent on play areas in the Borough to raise public perception.  The Head of Finance agreed to provide further information.

The Head of Finance confirmed that the additional monies for Legal MKLS was £20,743, as noted on page 16 of the report.

In response to a question, the Head of Finance explained that the Corporate Provision for Bad Debts reflected an improved position, but the situation was volatile.

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A Member noted the acute vulnerability of the figures at the top of Table 7.

In response to a question on the appeals noted in paragraph 3.14, the Head of Finance advised that a monthly monitoring report was carried out.  The Chief Executive explained that the national appeals system was inefficient and created uncertainty, but hoped this would be resolved within the next few years.

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A Member asked how long the projects in Table 10 would be pending for?  The Head of Finance advised that trusts were being sought and there were certain conditions that needed to be met.  The Chief Executive clarified that the decisions to allocate the sums stood until such a time when the decisions were formally revisited.

The Chairman congratulated the Finance Team on reducing the lists in the Payment of Creditors tables.

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The Cabinet Member for Finance explained that the Performance Fund for Cabinet Members’ ICT Equipment was for portable IT tablets, and this was being delayed until the new Cabinet was formed in May 2016.

A Member questioned whether £1million underspend indicated good management of the Council’s budget, against whether the level of service in some areas should be increased.  In response, the Chief Executive reported that the next monitoring report would provide a breakdown on the headline reasons for underspend, for example, windfall incomes accounted for much of the apparent underspend.  The Member suggested that funds could be vired to another area that had a shortfall.  The Chief Executive explained that this could only be done within each Division under manager delegation, and not across services.  The Head of Finance stated that in the future, the outturn report would go to the Scrutiny Committee before it went  to Cabinet, so Members would get the opportunity to scrutinise the roll-over bids before they went  to Cabinet for approval.  The Member recommended that where there was an underspend there should be the capability of, in the future, doing something to prevent the Council from not delivering services somewhere else.

The Head of Finance explained that the report was the 2015/16 budget and he advised that the financial regulations of the Council set out the virement rules, and these could not be changed by the Scrutiny Committee.  These rules gave the facility to move the budget around.  The Chief Executive suggested that the issue was not related to the underspend, as sums could be identified to enhance service delivery where Members deemed that to be a priority.

Some Members spoke on the flexibility of the budget throughout the year, and that underspend was not always strictly underspend, e.g. windfalls.

The Head of Finance agreed to forward the outstanding issues raised above to the Scrutiny Committee by 29 March 2016.

Resolved:

(1)       That the projected revenue underspend on services of £943,300 for 2015/16 be noted.

(2)       That the projected capital underspend for 2015/16 of £650,000 to end of December 2015 be noted.