Purpose of Report
To present to the Executive the provisional 2018/19 financial outturn position on the Council’s revenue and capital budgets, including the General Fund, the Housing Revenue Account, the Housing Repairs Service and Capital Programmes.
That the Executive:
(1) Notes the provisional 2018/19 financial outturn for the general fund, housing revenue account, housing repairs service and capital programmes as set out in sections three to seven of the report and, in particular, the reasons for any variances.
(2) Approves the proposed transfer to general fund earmarked reserves as set out in paragraphs 3.11 and 3.12 of the report.
(3) Approves the financial changes to both the general investment programme and the housing investment programme, as set out in paragraphs 7.3 and 7.9 in the report, that are above the 10% budget variance delegated to the Chief Finance Officer.
Alternative Options Considered and Rejected
Reason for Decision
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 financial performance quarterly monitoring report for the third quarter predicted a shortfall against the revised budget of £206,302. The provisional outturn for 2018/19 now indicated that this shortfall had decreased by £159,946, resulting in an overall budget shortfall of £46,356 and represented a variance against the revised budget of 0.33%.
Full details of the main variances were provided in Appendix B, but the key variances were summarised as follows:
· car parking – reduced income of £1,015,648;
· housing benefit overpayments – reduced income of £604,533
· homelessness bed and breakfast – increased expenditure of £101,418
· borrowing costs – reduced expenditure of £270,063
· earmarked reserves – released increased income of £280,220
· contingencies released – reduced costs of £175,930
· business rates Section 31 grants – increased income of £385,881
· revenues and benefits new burdens – increased income of £180,207.
The following contributions to earmarked reserves were requested as part of the report:
· planning delivery fund – the transfer of £95,000 of grant income received to fund an additional post to support large scale applications in 2019/20;
· overachievement of crematorium income – the transfer of £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 £100,00 of new burdens funding to a reserve to be utilised in 2019/20, as determined by the Joint Committee.
Following the final outturn being known, it was proposed that the £95,000 planning delivery grant and £100,000 crematorium income were transferred into reserves as previously agreed. However, due to the significant reduction in housing benefit overpayments within the revenues and benefits area, it was proposed that only £45,000 of the new burdens funding was transferred into the reserve. These transfers to reserves were reflected in the provisional outturn position.
Towards Financial Sustainability Programme
The savings target included in the Medium Term Financial Strategy for 2018/19 was £3,800,000. Progress against this target, based on the outturn position, showed a secured total of £3,828,050. A summary of the provisional outturn position was shown in the table at paragraph 3.15 of the report.
Housing Revenue Account
For 2018/19 the Council’s Housing Revenue Account net revenue budget was set at zero, resulting in an estimated level of general balances at the year-end of £1,023,099.
performance quarterly monitoring report for the third quarter
predicted an underspend of £5,000. The provisional outturn
for 2018/19 now indicated an underspend of £3,467 and would
result in Housing Revenue Account balances at 31 March 2019 of
£1,026,568. The main over and underspends included within the
provisional outturn were summarised as follows:
· Housing Repairs Service – additional income of £271,534;
· rental income – additional income of £161,055;
· supervision and management – additional income and reduced expenditure equating to £141,547;
· repairs and maintenance – increased expenditure of £641,287.
Following outturn, Housing Revenue Account general balances would be £1,026,568, in line with the Medium Term Financial Strategy.
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.
The financial performance quarterly monitoring report for the third quarter predicted a £146,000 surplus outturn for 2018/19. The provisional outturn for 2018/19 showed a trading surplus of £271,534.
The net trading surplus of £271,534 was the result of a number of year-end variations in income and expenditure against the approved budget. The fluctuation between the forecast at quarter three and the final outturn was mainly down to the performance of voids function.
The surplus of £271,534 had been repatriated to the Housing Revenue Account which was the major service user and was reflected in the Housing Revenue Account outturn within the report.
The details of all earmarked reserves and their balance as at 31 March 2019 were attached to the report at Appendix G and summarised in paragraph 6.1 of the report.
General Fund Investment Programme
The revised General Fund Investment Programme for 2018/19, as approved in the Medium Term Financial Strategy, amounted to £23,460,862. Movements in the programme since the approval of the revised budget decreased actual capital expenditure in 2018/19 to £13,968,238. A further £175,000 was approved in 2018/19 to transfer land from the Housing Revenue Account to the General Fund, creating additional resources within the Housing Investment Programme. No physical income, receipt or expenditure had been recorded as transfer occurred between council funds.
Budget re-profiles approved by the Chief Finance Officer during the final quarter were detailed at Appendix I attached to the report.
The provisional outturn position for the General Investment Programme was set out in paragraph 7.5. Overall spending on the programme for 2018/19 was £13,968,238 which was 59.54% of the revised 2018/19 programme as per the 2018-23 Medium Term Financial Strategy. It was noted that the following should be taken into consideration alongside these figures:
· expected budgeted expenditure of £6.9 million relating to Deacon Road occurred in April 2019 just after the 2018/19 financial year;
· Disabled Facilities Grant works of £467,687 had been agreed and were expected to occur within 2019/20;
· the retention payment and related expenditure of £845,357 with regards to the Lincoln Transport HUB had not yet been paid due to delays on final sign off.
Housing Investment Programme
The revised Housing Investment Programme for 2018/19 as approved in the Medium Term Financial Strategy amounted to £31,457,789. Movements in the programme since the approval of the revised budget decreased actual capital expenditure to £24,985,322 in 2018/19.
Changes approved by the Chief Finance Officer in the final quarter were set out in Appendix K of the report and summarised in paragraph 7.9 of the report.
Changes requiring Executive approved were highlighted as follows:
· six property purchases funded from the unallocated new build programme under delegated authority on 20 March 2019 at Turner Street (£67,465), Williamson Street (£110,210) and Naval Court (£680,125);
· reallocations from the unallocated new build programme to Trelawney Crescent (£30,259), Marham House (£6,589) within the 2018/19 programme;
· landscaping and boundaries reallocated into CO Detector Installation (£40,826), Communal Hardstanding (£118,150) and communal electrics (£23,202);
· new services reallocated into Decent Homes (£11,481) and CO Detector Installation (£7,961) in 2018/19;
· the 2018/19 wall structure repairs (£6,951), over bath showers (£28,003), asbestos surveys (£51,457), plastering (£222,854), adaption works (£28,916), landscaping and boundaries (£110,623), void capitalised works (£26,555) programmes moved into uncommitted resources.
The overall spending on the Housing Investment Programme for 2018/19 was £24,985,322 which was 79.42% of the revised 2018/19 programme, as per the Medium Term Financial Strategy 2018-23. It was noted that the following should be considered alongside these figures:
· due to external factors, work programmed on individual flat fire door sets a Shuttleworth House for £739,000 was only around 30% complete at the end of the financial year;
· the budget included £18.3 million for the 2018/19 New Build Programme. £15.6 million had been spent on the new build programme including homes at Allenby, Westwick, Ingleby and Lytton Street, further budget had been earmarked for the DeWint Extra Care facility which was approved during 2018/19.
· the budget included £3 million for land acquisitions, of which £1.9 million had been spent in 2018/19. The remaining budget of £1.1 million had been allocated against the Western Growth Corridor Scheme to fund the Housing Investment Programme contribution towards the scheme.