Agenda item

Presented by Azhar Rafiq, Finance Manager, Resources – Joint Report of Corporate Director Regeneration and Economic Development and Corporate Director Resources.

The Chair introduced the Finance Manager, Resources, Azhar Rafiq who was in attendance to speak to Members in relation to the Forecast of Revenue Outturn, Quarter 1, 2011/12 report (for copy, see file of minutes).

The Finance Manager, Resources explained that the report followed the usual format for budgetary reports and was the first of the 3 in-year reports, looking at the figures for the first 3 months of the financial year and the projected outturn for the year end.  Members noted the three components for the RED budget, those being:

·        RED Revenue Budget (General Fund) -           £39.617 Million

·        Housing Revenue Account (HRA) -                   £57.631 Million

·        RED Capital Programme -                                £107.064 Million

The Committee noted the underspend of approximately £300,000 for the RED General Fund noting that the key variances broken down by Service areas were in relation to Economic Development, Planning and Transport.  The Finance Manager, Resources highlighted the overspend in Business Services of £232,423, noting this was due increased National Non-Domestic Rates (NNDR) costs on vacant units due to a change in rate relief rules.

Members were reminded of the Medium Term Financial Plan (MTFP) savings required for the 2011/12 period and noted that whilst corporately it was a 30% saving, for RED it was approximately 47%.  The Committee noted that all areas identified within the MTFP for RED were on track, though the loss of ABG would have a negative effect upon regeneration performance indicators.

The Finance Manager, Resources noted that the HRA was solely funded by rental income and capital receipts from “Right to Buy” sales and not subsidised by Council Tax income.  Members learned that the HRA had an overall surplus and that this would be balanced against the overspend in the capital programme in order to reduce the Council’s reliance on borrowing.

The Committee noted the items reported under Risk Based or Volatility Reporting with the two areas that were not on track relating to the income from Building Control fees and rental income from Business Space, both due to economic conditions leading to an downturn in activity.

In relation to the Capital Programme, the Finance Manager, Resources explained the differences between current figures and those reported previously to Council and the reasons for the variances, noting that future reporting would include further narrative for Members’ information.

Councillors noted the position of Earmarked Reserves for the RED service grouping and noted that the cash limit for RED was expected to rise to £2.7 Million incorporating the 2011/12 forecast underspend and that this money would be retained within RED and not return to the corporate core.

The Chair thanked the Finance Manager, Resources and asked Members for their questions. 

Members noted the bad debt write-off of £381,000 within the table on page 31 of the Agenda Paper and queried this amount.  The Finance Manager, Resources noted that this was a typographical error, and that whilst the figure was listed as 381 within the column for the hundreds of thousands pounds, the amount was actually just £381.

Councillor M Wilkes asked why there appeared to be costs of approximately £21 Million in relation to agency costs, with the Council employee figure being around £24 Million and if there was a £2.7 Million underspend that would be retained within RED for use supporting the capital programme, was this necessary given that with a budget of around £107 Million, Quarter 1 had only saw a spend of £10 Million against the capital budget.  The Finance Manager, Resources explained that the majority of the £21 Million in “agency costs” was in fact subsidy to bus companies for contracted services.  Councillor M Wilkes acknowledged this, adding that employee costs of £24 Million seemed to be very high, a third of the budget for in effect “administering” the remainder of the money.  The Finance Manager, Resources explained that that RED did not only comprise of regeneration schemes and projects, there were ongoing capital schemes together with statutory services  such as Planning, Housing, Transport and indeed the MTFP set out staff savings of around £3.8 Million, equating to over 200 posts to be removed next year, and the number of services reducing within RED from 5 to 4.  The Head of Planning, Policy and Performance, RED added that there was a saving of 33% set out within the MTFP for management and back office staff, though the majority of RED staff worked in statutory services.  In relation to the apparently large cash limit, the Finance Manager, Resources explained this allowed flexibility for services to spend over the longer term, for example with Masterplans, and that as the money was ringfenced within RED this enabled better longer term budget planning.

Councillor P Jopling asked whether figures for the shortfall in revenue from industrial units included those owned by the Council and why so many were not occupied, was it an issue of the rent levels.  The Finance Manager, Resources explained that the figures related solely to those within the Council’s ownership and that a Business Case Study was being developed in relation to this issue by the Business Service Section.

Resolved:    

That the report be noted.