To consider the projected year end position based on performance to the end of Quarter 3 2018/19 and the changes to the 2018/19 revenue budget as outlined in the report.
Councillor Andrew Jarvis, Finance Portfolio Holder, presented the third quarter financial monitoring report of 2018/19. The report provided an update on how the financial situation was progressing during this year. In part, it was backward looking, highlighting the Council’s expenditure and income during the first nine months of the financial year, but also including the Council’s current projections of expenditure during the rest of the year.
The Portfolio Holder provided details relating to the revenue budget, capital expenditure, collection of Council Tax and business rates and the Council’s current position with regard to debt collection, details of which were contained within the report and appendices.
Appendix 1 set out the revenue variances to date. Overall, at the end of Quarter 3, budget monitoring had identified a forecast year-end underspend of £260,000. In addition, there were projected to be £273,000 of carry-forward requests. Trends identified in these budget monitoring results had been fed into the 2019/20 budget setting process.
Appendix 2 set out the position on the Capital Programme. The capital budget at Quarter 2 2018/19 had stood at £9.795m. Carry-forwards to 2019/20 of £1.557m relating to the ERDF Flood Alleviation scheme and £300,000 relating to the Cross-a-Moor junction and an increase to the Millerground Play scheme of £12,000 due to additional funding had been approved by Council on 18 December 2018 as part of the updated Capital Programme submitted with the 2019/20 Draft Budget. This resulted in a 2018/19 Capital Programme of £7.950m at the end of Quarter 3. Expenditure against this Programme to the end of Quarter 3 had been £3.205m. There was anticipated to be significant expenditure during Quarter 4 and £0.458m of further re-profiling had been identified. A revised Programme was presented as part of the budget process, including any new schemes prioritised against the available funding. Councillor Jarvis informed Members that he remained concerned with regard to the continued over-estimation of the speed with which capital expenditure was undertaken, which was of particular importance as the Council was now undertaking several very large projects. He reminded Members that a Strategic Project and Asset Management Board was being set up to enable enhanced scrutiny of capital expenditure.
Appendix 3 provided an update on Treasury Management for the quarter. There was one issue to report in terms of compliance with the approved Treasury Management Strategy relating to counterparty limits which had arisen as a result of an administrative error, as detailed within the report. Investments had performed better than the relevant benchmarks except in relation to long-term core investments due to the change in interest rates. No repayment of existing borrowing or new borrowing was anticipated up to the end of the financial year.
As part of the 2018/19 Budget Setting process, Council had agreed the removal of budgets in relation to the Social Lettings scheme, as Government had announced an end to the initiative. Subsequently, a reversal of Government policy had led to the Council continuing to provide this service. No budgets existed for this service, but the Council continued to incur expenditure and receive income in the form of Housing Benefit to cover the costs of lettings. It was, therefore, necessary to establish interim budgets for the remainder of 2018/19 to ensure proper authority to incur expenditure was in place. Council was, therefore, being asked to approve the creation of a £140,000 expenditure budget for the Social Lettings scheme, along with a corresponding £140,000 income budget for only the 2018/19 financial year, with a commitment from management to review service provision in future years, as recommended by Cabinet on 6 February 2019.
Councillor Jarvis closed, thanking officers of the Finance Team for their work and in particular to the Chief Accountant who would soon be leaving the Authority. He expressed gratitude to the officers for their work in highlighting the challenges in the budgets and allowing the Management Team to take corrective action.
Councillor Jarvis moved the recommendations contained within the report. He was seconded by Councillor Giles Archibald, Leader and Promoting South Lakeland Portfolio Holder, who pointed out that the report demonstrated that the Council Plan was being delivered within budget and that the Council was in a comfortable financial position. Councillor Archibald echoed thanks to the Finance Team.
In response to a query raised by Councillor John Holmes, the Director People and Places provided reassurance with regard to the Development Control salary overspend £24,000 and income shortfall of £128,000 relating to planning applications. It had been necessary for a number of temporary appointments to be made in order to meet a shortfall in staff, however, the variances in budget were being managed and the service being brought back into line.
Councillor Pat Bell queried the underspend of £80,000 on Community Grants and activities, explaining that she was aware of several applications which had been made for grants. She was advised that a written response would be provided.
Councillor Helen Irving referred to the Capital Programme monitoring document at Appendix 2 and the Festival Infrastructure Scheme which showed that £24,000 was being used for the development of lamp post banners in Kendal. She enquired why no allocation was shown for Ulverston and was offered a written response.
Councillor Ben Berry queried the variances relating to Kerbside Recycling which was projected to be overspent by £128,000, with an £80,000 overspend forecast on salaries and a £35,000 underspend on advertising. He expressed dissatisfaction with the management of the service and, in addition, enquired how much of the Council’s waste was exported overseas. Councillor Jarvis explained that the overspend on the salary budget was largely due to the practice of reducing salary budgets by 4% to reflect turnover but that this may not be appropriate in this instance where it was necessary to ensure services were provided and would be reviewed for the future. He did not accept Councillor Berry’s comments regarding the service and advised that the Council did not send any waste abroad. Councillor Archibald resisted Councillor Berry’s comments with regard to the Recycling Service and highlighted its good ratings. He felt that it was unrealistic to criticise a service based on the figures shown within a financial report and pointed out the difficulties of rolling out Kerbside Recycing within rural areas. Councillor Dyan Jones also expressed disappointment in Councillor Berry’s comments with regard to a successful and highly rated service.
It was, subsequently
RESOLVED – That
(1) the contents of the report be noted; and
(2) the budget changes to increase the income and expenditure budgets by £140,000, as outlined in paragraph 3.5.1 to the report and outlined above be approved.