Agenda item

Purpose of Report

 

To present to the Executive the first quarter’s performance up to 30 June 2018 on the Council’s General Fund, Housing Revenue Account, Housing Repairs Service and Capital Programmes.

 

Decision

 

(1)          The progress on the financial performance for the period 1 April 2018 to 30 June 2018 and the projected outturns for 2018/19 be noted.

 

(2)          The underlying impact of the pressures and underspends identified in paragraphs 3.2, 4.3 and 5.2 of the report, together with Appendices B, D and F be noted.

 

(3)          The changes to the General Investment Programme and Housing Investments Programme, as set out in paragraphs 7.4 and 7.10 of the report be approved.

 

Alternative Options Considered and Rejected

 

None.

 

Reason for Decision

 

General Fund Revenue Account

 

For 2018/19 the Council’s net General Fund revenue budget was set at £14,276,460, including a planned contribution to balances of £288,360 resulting in an estimated level of general balances at the year-end of £1,897,724.

 

The General Fund summary was currently projecting a forecast variance of £717,343, as set out in Appendix A of the report. Full details of the main variances were provided in Appendix B and were summarised as follows:

 

·         car parking – reduced income of £1,141,000;

·         income volatility reserve – increased income of £178,000;

·         borrowing contingency – reduced costs of £200,000;

·         balance sheet review – increased income of £82,450;

·         pay contingencies – reduced costs of £82,600.

 

The most significant of these variances was the shortfall of car parking income against the budget target. This was a trend that began to emerge towards the end of 2017/18 and reflected a reduction in demand for shopper car parking spaces. This position was in line with a reduction in footfall in the city centre and general decline in high street shopping and fragility of the retail sector. In response to this emerging trend, £178,000 of the General Fund underspend at the end of 2017/18 was set aside in an income volatility reserve to mitigate part of the shortfall forecasted for 2018/19. Given the scale of the shortfall in car parking income targets, the Council’s Corporate Management Team had accelerated the implementation of the car parking income generation strategy.

 

This strategy focused on the following five key strands:

 

·         car park improvements – focussing on making City Council car parks the preferred choice, including enhanced ticket machines to improve connectivity and to offer contactless payment and improved security arrangements;

·         promotion of the city as a destination – focussing on maximising the linkages between visitor numbers into the city and an improving offer in the city with the utilisation of the Council’s parking stock;

·         maximisation of car parking stock – focussing on ensuring that the Council’s car parks were in the correct location and condition, in line with the Car Parking Strategy and considering alternative income generation opportunities for some sites;

·         permit parking – focussing on increasing the number of permit parking arrangements with major employers in the city;

·         residents’ parking – focussing on responding to residents’ concerns and encouraging commuters to modal shift or to move into city centre car parks.

 

The savings target for the Towards Financial Sustainability Programme included in the Medium Term Financial Strategy for 2018/19 was £3,850,000. Progress against this target, based on quarter one performance, showed that secured and confident projections totalled £3,867,900. This resulted in a current forecast underachievement of the target in 2018/19 of £12,890. A summary of the current position was set out in paragraph 3.9 of the report.

 

Housing Revenue Account

 

For 2018/19 the Council’s Housing Revenue Account net revenue budget was set at break even, resulting in an estimated level of general balances at the year-end of £1,023,099.

 

The Housing Revenue Account was currently projecting an in-year overspend of £37,243 which would reduce general balances to £985,858 at the end of 2018/19. A summary was set out in Appendix C of the report. The assessed prudent minimum balance for the Housing Revenue Account was currently £1,000,000. The level of forecast Housing Revenue Account balances would be monitored closely during the coming quarter and would be subject to a fundamental review as part of the Medium Term Financial Strategy 2018-2023 process which was currently getting underway.

 

The components of the underspend were detailed in Appendix D of the report, with a summary of key variances noted as follows:

 

·         staff vacancies – reduced costs of £205,000;

·         rental income – increased income of £108,000;

·         Housing Repairs Service surplus – increased income of £159,000;

·         repairs and maintenance – increased costs of £423,000.

 

Housing Repairs Service

 

For 2018/19 the Council’s Housing Repairs Service net revenue budget was set at zero, reflecting its full cost recovery nature.

 

At quarter one, the Housing Repairs Service was forecasting a surplus of £159,000 in 2018/19. Appendix E contained a summary of this forecast, with any variances detailed in Appendix F of the report.

 

General Fund Investment Programme

 

The original General Fund Investment Programme for 2018/19 in the Medium Term Financial Strategy 2018-23 amounted to £14,208,836. This was increased to £17,032,859 following year end re-profiles from 2017/18 and had been further increased to £17,112,478 during the first quarter of 2018/19. A summary of the overall changes was set out in paragraph 7.2 of the report.

 

Changes to the Capital Programme requiring Executive approval were noted as follows:

 

·         increase to disabled facilities grant scheme in line with additional grant received - £395,866;

·         decrease to the Boultham Park scheme regarding in kind funding - £215,900;

·         decrease to telephony scheme due to contribution by supplier - £100,347.

 

The table set out in paragraph 7.6 of the report provided a summary of the projected outturn position for the General Investment Programme.

 

Housing Investment Programme

 

The original Housing Investment Programme for 2018/19 in the Medium Term Financial Strategy 2018-23 amounted to £25,804,701 which was increased to £29,597,788 following year end movements as part of the 2017/18 outturn. This had been further adjusted to £30,197,788 during the first quarter of 2018/19, with a summary of changes set out in paragraph 7.9 of the report.

 

Changes to the Capital programme requiring Executive approval were noted as follows:

 

·         movement of purchase costs for Ingleby Crescent from generic new build budget to specific scheme budget - £6,870,000;

·         movement of purchase costs for two land sites to specific scheme budgets - £335,000;

·         re-profile of door replacement budget from 2019/20 to 2018/19 - £600,000.