Financial Management Report
The Committee is asked to consider the Financial Management Report – Second Quarter 2020/21.
The Leader and the Chief Financial Officer will be attending the meeting.
The Leader and Cabinet Member for Finance introduced the report which set out the revenue and capital project outturn position for Quarter 2 2020/21 as at the end of September 2020 which had been considered by Cabinet on 16 December 2020.
The Leader and Cabinet Member for Finance highlighted the projected £3.5m overspend as a result of the Covid-19 pandemic, and drew attention to Table 4 on page 8 of the report which detailed the Forecast Variance and Total overspend of £3.89m, which included the projected loss of Swale Borough Council’s (SBC) share of income from Business Rates and Council Tax.
Referring to Government Funding at table 5 on page 9 of the report, the Leader and Cabinet Member for Finance said that whilst the future impact was unknown, SBC were currently in a good position, even though the impact of the Covid-19 pandemic was greater than expected.
The Leader and Cabinet Member for Finance drew attention to paragraph 3.15 on page 11 of the report, which set out the proposed support for projects funded from the pooled Business Pooled Growth Fund which were a one-off spend for growth purposes only. He praised and thanked the Finance Team.
The Chief Financial Officer explained that the current closure of the courts had affected the collection of Council Tax payments. He said that the Finance Team were currently working on the Quarter 3 report and praised the Financial Services Manager.
Members were invited to asked questions and make comments.
Referring to paragraph 3.18 on page 12 of the report, a Member sought an update on the Leisure Contract. The Leader and Cabinet Member for Finance explained that negotiations were ongoing on the sensitive, confidential matter and progress had been made which would be clarified soon. He added that once the matter was resolved, and details had been confirmed, the Leisure Contract would be discussed.
In response to a Member’s question on the Litigation Settlement, the Leader and Cabinet Member for Finance advised that funding had not been set aside in previous years and the settlement was full and final.
The Leader explained that £1.1m Malro capital receipt as set out in paragraph 3.15 on page 11 of the report was income received for the purchase of land on the Isle of Sheppey, and would fund future projects on the Isle of Sheppey.
A Member sought an update to any progress on projects listed at paragraph 3.21 on page 14 of the report which the Leader agreed to provide.
A Member offered his thanks to the Finance team and spoke positively on the financial support received from Government. He questioned whether using £220k from the £800k allocated to Town Centres from the Business Pool to fund staff to manage it was a good use of resources? In response, the Leader acknowledged the support from Government but said that SBC had greater needs than some other Boroughs and he highlighted the current high borrowing of the Government. He said that recruiting specialist staff for one-off spending would have a better outcome and have less impact on the current staff resource. During the discussion, the Chairman raised concerns of wellbeing of staff. The Leader confirmed that there had been some redeployment of staff to cover Covid-related tasks.
A Member sought more information on the additional foundation costs at Barton’s Point Coastal Park and the Sittingbourne Town Centre (STC) as listed at paragraph 3.21 on page 14 of the report. The Head of Commissioning, Environment and Leisure said that there was unanticipated work after a survey due to the area’s ancient monument listing. He said that Historic England were currently looking at SBC’s alternative designs and he hoped the project would soon be in progress. In respect of the STC, the Cabinet Member for Economy and Property explained that some of the units were adapted to accommodate the bowling alley and the minor costs of this were met by SBC.
Drawing attention to the Payment of Creditors at paragraph 3.24 on page 15 of the report, a Member praised staff for maintaining the level of service during the Covid-19 pandemic.
Appendix 1 -Table 8
The Head of Planning Services, in response to a Member’s question, clarified that the Local Plan overspend was as a result of the costs of bringing the consultation forward after the proposed changes to housing numbers. A Member sought an update on the costs of the Barton Hill Drive, Minster appeal. The Cabinet Member for Planning said he hoped to provide an update for the quarter 4 report.
The Cabinet Member for Community explained that the cost variance of £38k on the Parking Partnership with Maidstone Borough Council was as a result of a time and motion study carried out, for shared officers, and the costs would be added to subsequent year’s budgets.
The Cabinet Member for Environment explained that the cost variance to Garden Waste collection was due to additional subscribers to the service but reminded Members that SBC did not charge for the purchase of the bin, only the emptying.
Table 9 – Allocations from Funds
There was a discussion around the allocation of funds, particularly for staff resource, from the Special Projects Fund. The Leader confirmed that the staff employed on the projects were employed on a short-term basis so that they were delivered. He noted but did not agree with the concerns of a Member who raised an issue of using funds from the Special Project Fund for staffing and for some other projects that were already being carried out. The Cabinet Member for Environment added that, in relation to the Biffa deep-cleans, the funds allocated were for additional cleans, specifically in the Air Quality Management areas, and he said that whilst work on Air Quality had been underway previously, the funding from the Special Project Fund was for additional research and management projects.
A Member highlighted that the £27k allocated to Leysdown Village Hall kitchen refurbishment had been reduced. The Leader said that this would be adjusted.
A Member commented that much of the allocated spending was projected and might not be made. In the discussion that followed the Leader said that he hoped the Area Committees would have committed their project funding but there would be some flexibility and some projects would be rolled over. The Chief Financial Officer advised that the Oak Road, Murston bus lane bollards item had now been removed from the list.
A Member was critical of the process to apply for funding through the Area Committees. The Policy and Performance Officer advised that forms enabling organisations to apply for Area Committee funding were currently being produced.
The Chief Financial Officer clarified that the figures in the table were agreed through the formal agreement process and were the amount that had been committed but the actual figures would be provided.
In relation to the Member IT cost £25k in the Performance Fund, the Chief Financial Officer confirmed that this was equipment costs for Members.
A Member queried the £122,931 for the Modular Toilet Kiosk at Minster Leas and requested an update. The Head of Commissioning, Environment and Leisure said that the budget was set before the contract was tendered and was awarded at approximately £100k. He confirmed that a pathway was included in the specification for the work but that some amendments had been made to its location and remaining budget would be used for additional planting.
The Head of Housing, Economy and Community Services explained that the Queenborough and Rushenden Klondyke scheme was externally funded by Homes England and the delay to the project had caused the variance.
The Chief Financial Officer agreed to discuss the variances around the STC with a Member separately outside of the meeting as it was commercially sensitive.
Councillor Mike Dendor proposed an additional recommendation to form a process and forms for Area Committee funding. This was seconded by Councillor Pete Neal. On being put to the vote the recommendation was not agreed.
(1) That the total projected revenue overspend of £3,319,000 (£2,555,000 as at end of June 2020) be noted.
(2) That the settlement on litigation as set out in paragraph 3.16. 3 be noted.
(3) That the use of reserve funds as set out in paragraph 3.15 be noted.
(4) That the payments regarding the loss of income claims for the leisure contract as set out in paragraph 3.18 be noted.
(5) That the projected capital overspend of £2,279,256 and expenditure of £5,676,723 as detailed in paragraph 3.23 and Table 10 Appendix I be noted.
(6) That the additional Government funding received by the Council in response to the coronavirus be noted.
(7) That the capital variances and their funding as detailed in paragraph 3.21 and Table 10 Appendix I refers be noted.