Agenda item

Purpose of Report

 

To provide the Executive with an opportunity to consider the second quarter’s performance, up to 30 September 2018, on the General Fund, Housing Revenue Account, Housing Repairs Service and capital programmes.

 

Decision

 

That the Executive:

 

(1)       Notes the progress on the financial performance for the period 1 April 2018 to 30 September 2018 and  the projected outturns for 2018/19.

 

(2)       Notes the underlying impact of the pressures and underspends identified in paragraphs 3.2, 4.3 and 5.2 of the report and appendices B, D and F respectively.

 

(3)       Approves the changes to the General Investment Programme and Housing Investment Programme as detailed in paragraphs 7.5, 7.10 and 7.11 in the report.

 

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 planning 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 overspend of £299,600 which was a variance of a number of forecast year-end variations in income and expenditure against the approved budget. Full details of the main variances were set out in Appendix B to the report and were summarised as follows:

 

·         car parking reduced income - £1,133,500;

·         development management increase income - £84,810;

·         houses in multiple occupation fees increased income - £256,910;

·         borrowing contingency reduced cost - £200,000;

·         balance sheet review increased income - £70,170;

·         income volatility reserve increased income - £178,070;

·         pay contingencies reduced cost - £82,600.

 

In terms of the Towards Financial Sustainability Programme, the savings target included in the Medium Term Financial Strategy for 2018/19 was £3,850,000. Progress against this target based on quarter two performance showed that secured and confident projections totalled £3,867,900 which resulted in a current forecast under achievement of the target in 2018/19 of £12,890.

 

Income from fees and charges represented a significant proportion of income to the Council, with primary sources being from car parking, development management and building regulations. A summary of the progress against these key income streams against the approved budget, together with the forecast variance for the second quarter of the financial year, was provided in paragraph 3.4 of the report. Given the scale of the shortfall in car parking income targets, the implementation of the car parking income generation strategy had been accelerated which focussed on five key strands:

 

·         car park improvements;

·         promotion of the city as a destination;

·         maximisation of car parking stock;

·         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.

 

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 £63,988 which would decrease general balances to £959,113 at the end of 2018/19. The assessed prudent minimum balance for the Housing Revenue Account was currently £1,000,000 and the level of forecast 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 2018-23 process which was currently underway. The components of this overspend were detailed in Appendix D to the report and were summarised as follows:

 

·         staff vacancies reduced spending - £221,000;

·         council tax payable on void properties increased spending - £74,000;

·         repairs and maintenance void properties increased spending - £423,000;

·         rental income additional income - £79,000;

·         Housing Repairs Service additional income - £145,570.

 

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 two the Housing Repairs Service was forecasting a surplus of £145,570 in 2018/19.

 

Capital Programmes

 

In respect of the General Fund Investment Programme, movements in the programme during the second quarter had decreased overall planned expenditure in 2018/19 to £16,867,296 with a summary of overall changes set out in paragraph 7.2 of the report.

 

Budget re-profiles approved by the Chief Finance Officer during the second quarter were noted as follows:

 

·         the Terrace Heat Mitigation Works - £257,965 re-profiled into 2019/20;

·         flood alleviation scheme – Hartsholme Park £88,293 re-profiled into 2019/20.

 

One project required Executive approval in relation to electric vehicle replacement totalling £16,076.

 

Overall spending on the General Fund Investment Programme for the second quarter was £875,816, which was 5.19% of the agreed programme and 3.34% of the active programme. Although this appeared to be a relatively low percentage of expenditure at this stage of the financial year, the budget for the active programme included:

 

·         residual expenditure on the Transport Hub which was the subject of a retention period;

·         Disabled Facilities Grants of £1,000,000, some of which may be committed or offered but the expenditure was not incurred until later in the year or perhaps the following accounting period;

·         the largest scheme, which was a land and building acquisition at Tentercroft Street, was projected to be fully spent during quarter three at approximately £12,000,000 in 2018/19.

 

The last quarterly report approved a Housing Investment Programme for 2018/19 of £30,197,788 and movements in the programme since had increased overall planning expenditure in 2018/19 to £33,047,788. The following changes were approved by the Chief Finance Officer in the second quarter:

 

·         movement out of decent homes rewiring budget of £45,000 re-profiled into communal electrics;

·         increases to the CCTV scheme of £10,500 and an increase of £57,811 to existing properties major aid and adaption schemes from available resources.

 

Further changes requiring Executive approval were summarised as follows:

 

·         movements from over bath showers for £600,000 and asbestos removal £150,000 back into available resources based on current year work profiling;

·         movements within the financial year with regards to Ingleby Crescent for £328,399 which had been allocated from the new build programme;

·         re-profile from 2019/20 to 2018/19 due to timing movement of the Waterloo Housing new build programme.

 

Authority was also required to replace all site equipment across six of the Council’s supported housing schemes on a three year rolling programme. The Housing Revenue Account supported housing service had four long standing vacant posts from which it was proposed the £197,000 three year project was funded from 2019/20.

 

Expenditure against the Housing Improvement Programme budget during the second quarter was £6,181,928 which was 18.71% of the approved programme. Although this appeared to be low at this stage of the financial year a large element of the programme in 2018/19 was the new build programme, most of which was planned to be delivered during quarter three of 2018/19.