The Committee is asked to consider the Financial Management Report – First Quarter 2020/21.

The Chairman welcomed the Leader and Cabinet Member for Finance and the Chief Financial Officer to the meeting.

The Leader introduced the report which set-out the revenue and capital projected outturn position for 2020/21 as at the end of June 2020.  He reminded Members that this had been considered by Cabinet on 23 September 2020 and explained that there had been some updates since then.  The Leader said that the report outlined projections and the likely cost of the Covid-19 pandemic to the agreed budget and the likely overspend over the year.  An overspend of £4.1m was predicted in April 2020, by the end of June 2020 with the combination of the Projected Variance set-out in Table 1 and the under-recovery of Business Rates and Council Tax, the Covid-19 impact had been brought to £3,290,000, and after Government Funds this resulted in a projected over spend of £1.225m.  Grants to Faversham Pools and Swale Community Leisure, plus Government funding for lost income from fees and charges resulting in a revised projected overspend of £700,000.  He reminded Members that these were projections, with the unknown nature of Covid-19 to consider.  The Leader said that August 2020 had shown a rise in the impact of Covid-19, with a projected overspend increased to £860,000, and he acknowledged that there were difficult times ahead.

Members were invited to ask questions and comment on pages 5 to 14 of the report.

A Member offered his thanks to the Chief Financial Officer and his staff for looking after the Borough in these difficult times.  The Chief Financial Officer acknowledged his comments and said that he would pass them onto his staff.  The Chairman extended his thanks to all staff.

A Member sought clarification on paragraph 3.13 on the £50,000 for Swale Community Leisure (SCL).  The Leader explained that SCL was the go-between for the Council and SERCO, and the Chief Financial Officer added that the wording in the report should really reflect that they had needed the financial support from the Council.

A Member sought clarification on paragraph 3.12 in the report and requested a more detailed breakdown of what the identified £1.5m of earmarked reserves were.  The Chief Financial Officer explained that this was General Fund money, plus general reserve funds.  He said that over the years, two very large reserves had been built-up and there was an underspend, and it was agreed policy that this went to a reserve fund.  There was also payment from KCC to fund additional posts in revenue and benefits.  The reserves had not been drawn down, so that meant it could be reduced as it was far too large.  The Chief Financial Officer agreed to forward further information to Members.

A Member asked if the £521,000 variance in Housing, in Table 8 at Appendix I was for the year or a quarterly figure?  The Leader said that this figure was a projection for the year, and was a very conservative figure.

A Member asked whether there were likely to be job losses within the leisure industry in the Borough?  The Chief Financial Officer explained that a series of meetings had taken place where SERCO had set-out what their losses were because of the Covid-19 pandemic, and these losses were substantial, but he could not confirm whether there would be job losses.

The Chairman invited Members to comment on Appendix I of the report.

Page 15

A Member asked whether the underspend in the Customer Service Centre was as a result of vacancies?  The Chief Financial Officer agreed to report back with further information.

Page 16

A Member referred to the note in relation to the Barton Hill Drive, Minster and Wises Lane, Borden appeals and asked where the money was coming from to fund the appeals and why the Wises Lane appeal costs were estimated?  The Leader explained that the funds came from reserves, and the Chief Financial Officer said that the figures for Wises Lane were unknown as it was not known yet what the result would be.

The Chairman referred to the £250,000 shortfall in planning fees income, and asked whether this was Covid-19 related, or was likely to happen anyway, and whether there were any implications for the Local Plan?  The Chief Financial Officer explained that the planning income had been reducing anyway, not solely because of Covid-19.  He added that there would be no financial impact on the Local Plan.  The Chairman drew attention to the £50,000 for agency staff.  The Chief Financial Officer advised that there was an additional Conservation Officer employed at the Council and the funds for this would come out of business rates money.

The Chief Financial Officer agreed to find out more information on the additional cleansing in town centres and contract pressures during the peak of the pandemic.

Page 17

A Member requested further information on the indexation relating to street cleansing.  The Chief Financial Officer explained that there was a complicated calculation in relation to fuel prices as part of the annual index of the contract.  The Member referred to the three reduced incomes items at the bottom of the page and whether they would be recovered in the future.  The Chief Financial Officer said that some might recover, but not all, especially now when households were hit financially.

Page 18

A Member sought clarification on why some of the figures were recorded as zero variance.  The Chief Financial Officer explained that they should all be zero as they were recharges for services brought-in, and the Council were not running the services themselves.  He added that none of those services were ones which would be expected to be impacted by Covid-19.

A Member sought clarification on the contributions to reserves and the Chief Financial Officer explained that Table 2 and 3 in the report provided more detail.

Page 19

The Chief Financial Officer agreed to find further detail on the salary costs for Sittingbourne Regeneration.

The Chairman sought clarification on the Chief Executive underspend and whether staff had acted-up.  The Chief Financial Officer explained that there was no senior staff acting-up allowance to reflect this.

Page 20

A Member said that the Oak Road bus lane bollards had not been installed and asked what happened to the £10,000 allocated to this project.  The Leader explained that the money had been returned to the Special Project Fund.  The Chief Financial Officer reported that there had been a saving of 10% for the refurbishment of Leysdown Village Hall, and the actual funding requested was around 10% of the original bid, and this would be reflected in the next version of this report.

In response to a question, the Leader said that improvements to play equipment included all parks within the Borough.

The Chief Financial agreed to report back on further details of the £25,000 allocated for Member IT.

Page 21

A Member asked about the Section 106 footpath contribution to the High Street, Sittingbourne, and whether this came under Sittingbourne Regeneration or the general budget?  The Chief Financial Officer agreed to report back.

Page 22

A Member queried the zero-forecast variance for beach huts and the Chief Financial Officer said this was because there was no further work on beach huts this year.

A Member asked for clarification on the increased budget for wheeled bins.  The Chief Financial Officer said that this was because many of them were being replaced this year.

Page 25

The Chairman asked if the sundry debt outstanding set-out on Table 11.1 was better or worse than previous years?  The Chief Financial Officer explained that the bottom two lines of the table were key, and there was an issue with one tenant who was not a good payer.

A Member queried why the refurbishment of Swale House was not in the capital programme?  The Leader explained that it was because it was not part of this report, and the refurbishment was not in the current budget  The Chief Financial Officer explained that there would be an update report at December Cabinet, then more detail of the financial side would be considered in February or March 2021.

The Chairman thanked the Leader and Cabinet Member for Finance and the Chief Financial Officer for attending the meeting for this item.

Resolved:

(1)      That the report be noted.