Agenda item

 

To provide the Executive with the third quarter’s performance, up to 31 December 2018, on the Council’s General Fund, Housing Revenue Account, Housing Repairs Service and Capital Programmes.

 

Decision

 

(1)       That progress on financial performance for the period 1 April 2018 to 31 December 2018 and the projected outturns for 2018/19 be noted.

 

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

 

(3)       That the proposed contributions to earmarked reserves, as set out in paragraph 3.7 of the report, be approved.

 

(4)       That the changes to the General Investment Programme and Housing Investment Programme, as detailed in paragraphs 7.4 and 7.10 be approved.

 

 

None.

 

 

The forecast financial position of the Council up to 31 December 2018 for 2018/19 was set out in paragraph 2.1 of the report with further details shown in sections 3 to 7 of the report and accompanying appendices.

 

General Fund

 

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. This resulted in an estimated level of general balances at the year-end of £1,897,724.

 

The General Fund summary was currently projecting a forecast budget shortfall of £206,302 as set out at Appendix A. This forecast variance was the result 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, with key variances noted as follows:

 

·         car parking – reduced income and reduced expenditure equating to £908,090;

·         Christmas Market – increased expenditure and reduced income equating to £85,950;

·         Housing Benefit overpayments – reduced income of £225,280;

·         homelessness Bed & Breakfast – increased costs of £157,990;

·         development management – increased income of £114,190;

·         Houses in Multiple Occupation fees – increased income of £65,930;

·         borrowing costs/contingency – reduced costs of £272,050;

·         balance sheet review – increased income of £70,170;

·         earmarked reserves – increased income of £280,220;

·         contingencies released – reduced costs of £175,930.

 

Given the scale of the shortfall in car parking income targets, as identified in previous quarterly reports, the Council’s Corporate Management Team continued to accelerate the implementation of the car parking income generation strategy. Action taken to date had demonstrated a positive effect in terms of the forecast shortfalls against the car parking income targets which had improved from a forecasted shortfall of £1.141 million at quarter one to £1.011 million at quarter three. It was anticipated that this positive trend would continue, however, reflective of the significant shortfall in achieving the income targets the Medium Term Financial Strategy had been revised, with a significant reduction in income targets to be set in the early years of the Strategy, increasing over time as per paragraph 3.4 of the report.

 

Included within the forecast budget shortfall of £206,302 were a number of proposed transfers to earmarked reserves, as follows:

 

·         Planning Delivery Fund – transfer of £95,000 grant income received to fund additional posts to support large scale applications in 2019/20;

·         overachievement of Crematorium income – transfer £100,000 of surplus income, net of increased cost, to an income equalisation reserve to mitigate against future fluctuations in income levels;

·         Revenues and Benefits Shared Service – transfer of £100,000 of New Burdens funding to a reserve to be utilised in 2019/20, as determined by the Revenues and Benefits Shared Service Joint Committee.

 

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 three performance, showed that secured and confident projections totalled £3,828,050. This had resulted in a current forecast under achievement of the target in 2018/19 of £21,950. A summary of the current position was set out at paragraph 3.10.

 

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 underspend of £4,849 which would increase general balances to £1,027,950 at the end of 2018/19 as set out in Appendix C of the report. The components of this underspend were detailed in Appendix D of the report, with key variances summarised as follows:

 

·         staff vacancies – reduced spending of £90,000;

·         Council Tax payable on void properties – increased spending of £74,000;

·         repairs and maintenance on void properties – increased spending of £208,000;

·         rental income – additional income of £80,000;

·         Housing Repairs Service surplus – additional income of £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 three, the Housing Repairs Service was forecasting a surplus of £145,570 in 2018/19 with a forecast summary and main variances set out in Appendix E and Appendix F of the report respectively.

 

Earmarked Reserves

 

The details of all the earmarked reserves and their forecast balance as at 31 March 2019 were attached at Appendix G and summarised in paragraph 6.1 of the report.

 

General Fund Investment Programme

 

Movements in the General Fund Investment Programme during the third quarter had decreased overall planned expenditure in 2018/19 to £16,635,318. A summary of the overall changes to the programme was shown in paragraph 7.2 of the report.

 

Budget changes this quarter that required Executive approval for the third quarter were as follows:

 

·         non-disabled facility grant – £26,026. The current scheme had been completed and this would be re-profiled into contingencies pending the new grant scheme;

·         diving boards at Yarborough Leisure Centre. The new scheme to improve the existing three boards at Yarborough Leisure Centre.

 

A summary of the General Fund Investment Programme was set out in the table at paragraph 7.6 of the report. The overall spending on the Programme for the third quarter was £12,430,196, which was 74.72% of the agreed programme and 83.8% of the active programme as detailed further in Appendix J of the report.

 

Housing Investment Programme

 

The last quarterly report approved a Housing Investment Programme for 2018/19 of £33,047,788. Movements in the Programme since had reduced overall planned expenditure in 2018/19 to £31,457,789. A summary of the changes were shown in the table at paragraph 7.9 of the report.

 

Changes to the Programme requiring approval from the Executive were detailed in Appendix K and summarised as follows:

 

·         bathrooms and water closets equating to £255,937 and kitchen improvements totalling £214,009 to be re-profiled to the Central Heating Upgrades 2019/20 budget due to budget pressures;

·         landscaping and boundaries equating to £2,000,000 in 2021/22 to be re-profiled to the Central Heating Upgrades programme due to budget pressures on the current scheme. Roll out of £1,000,000 was proposed for 2020/21, £450,000 in 2021/22 and £550,000 in 2022/23;

·         movements from the land acquisition fund of £105,000 due to completion of the De Wint alteration programme;

·         movements into the contingency reserve of £105,000 due to completion of the De Wint alteration programme.

 

The table at paragraph 7.13 of the report provided a summary of the projected outturn position.

 

Expenditure against the Housing Investment Programme budget during the third quarter was £15,681,670 which was 49.85% 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 which was planned to be delivered during quarter four of 2018/19.

 

Councillor Donald Nannestad queried whether the increased income as a result of new licensing arrangements for Houses in Multiple Occupation covered the administrative and running costs of the new regime. It was noted that, based upon current projections, the anticipated income would exceed the cost of implementing the new licensing arrangements.

 

Councillor Jackie Kirk queried the re-profiling of money allocated to a Skate Park into 2019/20. It was noted that this had been re-profiled to the 2019/20 budget as it was known that this money would not be spent within this financial year. The £168,037 associated with the Skate Park scheme had therefore been re-profiled into the 2019/20 budget, although such a project had yet to be brought into fruition.