Agenda item

 

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

 

Decision

 

That Executive:

 

1.    Note the progress on the financial performance for the period 1 April to 31 December 2019 and the projected outturns for 2019/20.

 

2.    Note the underlying impact of the pressures and underspends identified in paragraphs 3.2, 4.2 and 5.2 of the report, as set out in Appendices B, D and F respectively.

 

3.    Approve the proposed contributions to and from reserves in paragraph 3.5 and the carry forward requests detailed in paragraph 3.6 of the report.

 

4.    Approve the changes to the General Investment Programme and Housing Investment Programme as approved by the Chief Finance Officer and detailed in paragraphs 7.3 and 7.10 of the report.

 

5.    Approve the changes to the General Investment Programme as detailed in paragraph 7.5 of the report.

 

 

None.

 

 

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 which resulting in an estimated level of general balances at the year-end of £2,452,134.

 

The General Fund summary was currently projecting a forecast overspend of £222,080, 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:

 

 

·       Homeless Bed and Breakfast – increased expenditure: £107,800;

·       Savings Target – shortfall in delivery: £201,750;

·       Housing Benefit Overpayment – reduced income: £318,000;

·       Houses in Multiple Occupation – reduced income: £74,260;

·       City Bus Station – reduced expenditure: £104,800;

·       External Interest payable – reduced expenditure: £225,945;

·       City Hall, Industrial Estates and Lincoln Property – increased income: £159,360;

·       Car Parking – increased income: £162,000;

·       Car Parking – increased expenditure: £135,000;

·       Bereavement Services – increased income: £124,150;

·       Bereavement Services – increased expenditure: £88,020;

 

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 £222,080, at this stage in the financial year forecast outturns were difficult to predict and often subject to volatility.

 

Further to additional contributions from reserves there were also a number of contributions to and from earmarked reserves that were required, subject to outturn, as set out in paragraph 3.5 of the report.

 

It was reported that the forecast overspend of £222,080 did not take into account any requested carry forwards.  Assistant Directors had requested a number of items be transferred to an earmarked reserve and spent in future years as set out in paragraph 3.6 of the report. 

 

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 three performance, showed that secured and confident projections totalled £4,448,250, which resulted in a current forecast under achievement of the target in 2019/20 of £201,750. Although there were still a number of reviews in progress these were not expected to deliver savings in this financial year.  The current year target was therefore unlikely to be achieved in full.  A summary of the current position was illustrated in paragraph 3.9 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 actual variance for the third quarter of the financial year, was provided at paragraph 3.10 of the report.

 

Housing Revenue Account

 

For 2019/20 the Council’s Housing Revenue Account net revenue budget was set at £52,040, resulting in an estimated level of general balances at the year-end of £1,078,609.

 

The Housing Revenue Account was currently projecting an in-year underspend of £79,582. 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 at Appendix D of the report whilst the key variances were summarised below:

 

·       Staff Vacancies – reduced expenditure: £177,000;

·       Repairs Costs – increased expenditure (Offset from the Housing Repairs Service Surplus): £62,400;

·       Council Tax – increased expenditure: £67,000;

·       Depreciation: increased expenditure: £375,000;

·       Interest Payable – increased expenditure: £129,000;

·       DRF Contribution – reduced expenditure: £429,000;

·       Housing Repairs Service Surplus – increased income: £117,000;

 

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 three the Housing Repairs Service was forecasting a surplus of £117,075 in 2019/20, with a summary and details of main variances set out in Appendices E of the report.

 

General Fund Investment Programme

 

The last quarterly report approved a General Fund Investment Programme for 2019/20 of £14,755,906. Movements in the programme during the third quarter had decreased overall planned expenditure in 2019/20 to £12,509,748. A summary of overall changes to the programme was set out in paragraph 7.2 of the report.

 

There were no changes that required Executive approval for quarter 3.

 

One new project recommended by the Capital Programme Group was subject to Executive approval, as follows:

 

·         Stamp End Depot demolition works: £134,440 funded from the unallocated capital contingency budget, relating to 50% recharge of capital works undertaken in agreement with a third party.

 

The overall spending on the General Fund Investment Programme for the third quarter was £8.847million, which was 70.7% of the 2019/20 programme and 75.4% of the active programme. This was detailed further at Appendix I of the report.

 

Housing Investment Programme

 

The last quarterly report approved a Housing Investment Programme for 2019/20 of £20,629,324. Movements in the programme since had decreased overall planned expenditure in 2019/20 to £14,906,247. A summary of the changes were shown at paragraph 7.9 of the report.

 

The changes that required approval from Executive were detailed at Appendix J and K of the report and summarised as follows:

 

·       Movements back to available resources from:

-       Hermit Street regeneration 2019/20 £18,725;

-       New Services 2019/20 £51,828;

-       Over bath showers 2019/20 £300,000;

-       Safety Flooring 2019/20 £10,169.

 

·       Movements from available resources into

-       Fire Compartment Works 2019/20 £40,000.

 

Expenditure against the Housing Investment Programme budget during the first 3 quarters was £8.025 million, which was 53.84% of the programme. The expenditure was detailed further at Appendix K to the report.

 

Although this would appear to be low at this stage of the financial year, the following points were noted:

 

·       an element of the programme in 2019/20 related to the De Wint new build scheme and Markham House, construction of which was yet to commence;

·       11 Property acquisitions which were yet to be completed.

 

Councillor Ric Metcalfe thanked the Council’s Chief Finance Officer and her team for their excellent stewardship of the Council’s finances, reflecting that it had been another challenging year.