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Agenda item

Budget Strategy Report

Joint Report of the Corporate Director of Regeneration and Local Services and Corporate Director Resources and Treasurer to the Joint Committee.

Minutes:

The Joint Committee considered a joint report of the Corporate Director of Regeneration and Local Services and Corporate Director Resources and Treasurer to the Joint Committee which outlined a range of issues that were to be considered as part of the medium term budget strategy and set out proposals to increase the surplus distribution to both partners authorities from 2019/20 (for copy see file of Minutes).

 

The Head of Finance and Transactional Services advised that since 2009 there had been significant investment in the Mountsett Crematorium totalling £1,951,297, including major improvements works.  Future improvement works had been identified and were included in the 4 year Service Asset Management Plan alongside budgets for the completion of each. It was noted that budgets would need to be increased slightly year on year to fund the proposed investments and this would need to be factored into the medium term budget forecast.

 

In addition, the Head of Finance and Transactional Services further noted that as the two cremators at the crematorium had just been replaced and mercury abatement installed, it was expected that these would have a life expectancy of 20 years and therefore the next cremator replacement programme was not scheduled until 2038. It was therefore considered prudent for the Joint Committee to build up the Cremator Reserve over the next ten years to cover this cost.

 

Moving on to discuss earmarked reserves, the Head of Finance and Transactional Services advised that at 31 March 2019 the projected reserves and balances totalled £631,864 (£300,000 of which had already been set aside for the cremator replacement programme).

 

The report went on to highlight the current fees and charges set by the Joint Committee and members noted that cremation fees at Mountsett remained the lowest in comparison with all other neighbouring facilities in the region.

 

The Head of Finance and Commercial Services therefore suggested that the joint committee may wish to review and increase the surplus distribution to both constituent authorities, bearing in mind all the factors outlined within the report.

 

Councillor Dodds added that whilst he agreed with the recommendation of the report he did suggest that further information may be required from the Bereavement Services Manager to determine whether any other issues could be seen to impact upon the budget for example, legislation changes regarding emissions following Brexit or changes to cremation methods which may require the purchase of new equipment.

 

The Head of Finance and Transactional Services advised that the crematorium maintained a healthy repairs and maintenance reserve to cover unforeseen costs. However, it was also important to note that the budget was set prudently and based on the average number of cremations undertaken, resulted in an over achievement of income. With regard to queries raised relating to changes to law and cremations methods the Head of Finance and Transactional Services suggested that the Joint Committee could review its distributable surplus at that time.

 

The Bereavement Services Manager further pointed out that current new methods of cremation being used in other countries were not licenced in the UK at this time, however the costs of such equipment were in the region of £400,000.

 

Councillor Batey in referring to paragraph 13 of the report queried why there was only a £10 increase in cremation charges in 2018/19 and should this not be increased further to fall more in line with regional comparators. She further queried whether it was anticipated that further extension works would be required to the crematorium in the future and could this lead to some unforeseen building costs.

 

Further discussion took place regarding works identified within the SAMP and it was noted that major maintenance and repairs such as the roof replacement, was included within the 4 year plan.

 

Councillor Bradford asked whether it was considered feasible to build up the cremator replacement reserve over 15 years rather than doing so over s shorter period of time. The Head of Finance and Transactional Services advised that this could be reviewed and the budget could be modelled accordingly. He further suggested that when the budget was considered in January information could be provided showing a breakdown of how the reserves could be built up over a number of years.

 

Councillor Charlton asked whether any information could be provided from other crematoriums on their charging policies and numbers of cremations undertaken. Councillor Temple advised Gateshead and Durham crematoriums were the only realistic comparators. The Head of Finance and Commercial Services advised that Durham Crematorium charges were the same however the numbers there were 800/900 higher than Mountsett.

 

M Morley, Gateshead Council advised that the numbers of cremations were not affected by price as many families want the service to be held within their locale.

 

Resolved:

 

·       That the content of the report be noted

·       That the joint committee approve the proposed increase in the fees and charges and surplus redistribution , as identified in the report; and

·       That the Joint Committee agree to review the budget strategy and surplus redistribution in three years’ time in preparation for the 2022/23 budget setting year.

 

 

 

 

Supporting documents:

 

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