Agenda item

Financial Performance - Quarterly Monitoring


Purpose of Report


To present the first quarter performance on the Council’s General Fund, Housing Revenue Account, Housing Repairs Service and Capital Programme.




That the Executive:


(1)       Notes the progress on the financial performance for the period 1 April 2019 to 30 June 2019 and the projected outturns for 2019/20.


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


(3)       Approves the changes to the General Investment Programme and Housing Investment Programme as detailed in paragraphs 7.4 and 7.13 of the report.


(4)       Approves the proposed contributions to and from reserves.


Alternative Options Considered and Rejected




Reason for Decision


Updates were reported as follows:


General Fund Revenue Account


For 2019/20 the Council’s net General Fund revenue budget was set at £13,655,090, including a planned contribution from balances of £554,410, resulting in an estimated level of general balances at the year-end of £13,433,314.


The General Fund summary was currently projecting a forecast overspend of £235,912, as set out in Appendix A of the report. 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 provided in Appendix B of the report while the key variances were noted as follows:


·         Housing Benefit overpayment reduction - £368,000;

·         Houses in Multiple Occupation reduced income - £93,260;

·         Christmas Market reduced income and additional expenditure - £77,470;

·         Car Parking additional income net of additional expenditure - £175,000;

·         Crematorium additional income - £106,000.


The most significant of the forecast variations was the reduction in the level of housing benefit overpayment being raised. Whilst this was positive in that the number of overpayments were reducing, this in turn created a budgetary pressure. This was a continuation of a trend from 2017/18 and 2018/19 with the transition of benefits customers to Universal Credit and the use of ‘real time’ information which meant that the level of overpayments raised had drastically reduced. The budget pressure was as a result of the consequential reduced income from reclaiming the overpayment from the claimant and would require a budget realignment as part of the Medium Term Financial Strategy.


Although forecast outturn for the General Fund was a shortfall of £235,912, at this stage in the financial year forecast outturns were difficult to predict and often subject to volatility. This would continue to be monitored, with a further report to the Executive on this issue as part of the quarter two update report.


Additional contributions to earmarked reserves that the Chief Finance Officer had identified as being required, subject to outturn, included:


·         Western Growth Corridor – Local Planning Authority. It was proposed that the planning application fee received for the Western Growth Corridor submission was transferred to a reserve and used for additional resourcing requirements in determining the application. A contribution of £150,000 was recommended;

·         Active Nation – as part of the Active Nation agreement it was proposed that any underspends on maintenance and utilities would be put into an Earmarked Reserve to help fund any future major maintenance requirements.


Further to these additional contributions from reserves there were also a number of contributions from earmarked reserves that were required, subject to outturn, as set out in paragraph 3.6 of the report.


A question was raised regarding the reduced income associated with Houses in Multiple Occupation. It was reported that this related to new licensing requirements for Houses in Multiple Occupation and the associated license fee. It had been anticipated that the majority of landlords would sign up and pay the required license fee within a two year period from the commencement of the new Regulations. Out of approximately 900 landlords in the city, currently 300 had paid the fee and signed up to the new requirements. Further work would take place to remind landlords of their new obligations, which could result in enforcement action in some cases, but it was expected that the reduced income would be recovered albeit over the next three years, within five years of the implementation of the new Regulations regarding licensing of Houses in Multiple Occupation.


Towards Financial Sustainability Programme


The savings target included in the Medium Term Financial Strategy for 2019/20 was £4,650,000. Progress against this target, based on quarter one performance, showed that secured and confident projections totalled £4,622,790, which resulted in a current forecast under achievement of the target in 2018/19 of £27,210. Work was currently underway through the Towards Financial Sustainability Programme Board to progress a further phase of year six projects, with a summary of the current position illustrated in paragraph 3.8 of the report.


Fees and Charges Income


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 of these key income streams against the approved budget, together with the forecast variance for the first quarter of the financial year, was provided at paragraph 3.9 of the report.


Housing Revenue Account


For 2019/20 the Council’s Housing Revenue Account net revenue budget was set at £7,610, resulting in an estimated level of general balances at the year-end of £1,034,179.


The Housing Revenue Account was currently projecting an in-year underspend of £98,923, which would increase the general balances to £1,133,102 at the end of 2019/20. The assessed prudent minimum balance for the Housing Revenue Account was currently £1 million. 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 2018-23 process.


The components of the underspend were detailed in Appendix D of the report and were summarised as follows:


·         staff variances – reduced expenditure of £187,000;

·         rental income – reduced income of £52,000;

·         Council Tax – increased expenditure of £37,000;

·         increased Direct Revenue Fund contribution – increased expenditure £287,000;

·         Housing Repairs Service surplus – additional income of £287,268.


Housing Repairs Service


For 2019/20 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 £287,268 in 2019/20, with a summary and details of main variances set out in Appendices E and F respectively.


General Fund Investment Programme


The original General Fund Investment Programme for 2019/20 in the Medium Term Financial Strategy 2019-24 amounted to £3.123 million. This was increased to £14,392 million following quarter four approvals and year-end re-profiles from 2018/19. This had been further increased to £14.977 million during the first quarter of 2019/20, with a summary of the overall changes set out at paragraph 7.2 of the report.


Changes that required Executive approval for the first quarter, as illustrated in Appendix I of the report, were reported as follows:


·         increase to the Disabled Facilities Grant scheme in line with additional grant received - £450,881;

·         increase to Birchwood Leisure Centre for scheme delivery, which was funded from prudential borrowing - £30,000;

·         increase to car park ticket machines funded from the Direct Revenue Fund - £20,000;

·         Transport Hub completion – final accounts had now been settled and the remaining contingency would remain within the capital programme;

·         increase to the artificial grass pitch scheme - £227,525. £136,121 had previously been agreed as part of contract agreements with Castle Academy/Active Nation and £60,000 of funding had been agreed from additional grants and Section 106 contributions.


Four new projects recommended by the Capital Programme Group were subject to Executive approval, as follows:


·         addition of Boultham Park tennis courts scheme - £16,234 funded from town and country planning agreements;

·         addition of Birchwood Leisure Centre roof scheme - £120,354 funded from the Strategic Properties Revenue Reserve (£38,490), Asset Improvement Reserve (£31,850) and backdated rent review reserve (£50,014);

·         Hartsholme Country Park play area improvement scheme - £86,010 funded from capital contingencies (£48,014) and the unplanned capital works budget (£37,996);

·         Lucy Tower Car Park lift refurbishment scheme - £116,632 funded from prudential borrowing via the agreed planning capital maintenance budget.


The overall spending on the General Fund Investment Programme for the first quarter was £7.8 million, which was 52.10% of the 2019/20 programme and 55.22% of the active programme and was detailed further at Appendix J of the report. Although this appeared to be a relatively high percentage of expenditure at this stage of the financial year, the expenditure related largely to the Deacon Road retail park scheme, with expenditure on the remaining programme being 8.32%.


Housing Investment Programme


The original Housing Investment Programme for 2019/20 in the Medium Term Financial Strategy 2019-24 amounted to £16.225 million and was increased to £26,560 million following approvals and year-end re-profiles as part of the 2018/19 outturn. This had been further adjusted to £19.124 million during the first quarter of 2019/20, with a summary of the changes set out at paragraph 7.9 of the report.


Expenditure against the Housing Investment Programme budget during the first quarter was £1.558 million, which was 8.15% of the programme. A further £626,600 had been spent as at the end of July 2019, with expenditure detailed further at Appendix L to the report.

Supporting documents: