To consider the attached report.
Contact Officer: Nuala Donnelly (01296) 585164
The Committee received the Quarterly Financial Digest for the period to 1 April to 30 June 2019, which represented the position after the first 3 months of the 2019-20 financial year. The digest was attached as Appendix 1 to the Committee report, and Members referred to it during discussions.
As at the end of June 2019, the Council was reporting a net overspend of £26,813. While a number of risks and issues had been identified and their impact was being monitored and managed, it was anticipated that any additional cost pressures would be offset by budget underspends and additional income across the Council and a forecast balanced budget would be delivered for the 2019-20 financial year. This had also been assumed in the Medium Term Financial Plan (MTFP) agreed by Council in February 2019.
Members were assured that timely reporting had allowed for mitigating actions to be identified by budget holders and managers across the Council to address the emerging financial position. 2019-20 represents an exceptional year for the Council, with the move to the single unitary council in April 2020. Whilst every effort was being made to deliver a balanced budget and remain focused on continuity of service delivery, the decision had a profound impact on strategy and future planning.
The forecast level of balances for the financial year was reported as £2.353m, higher than planned. The increase to the working balances was a result of the 2018-19 financial outturn being better than forecast. Earmarked reserves were held for legitimate reasons and the use of earmarked reserves was an essential part of sound financial planning.
The year to date forecast position currently assumed the use of reserves to support some one off or exceptional spend and to offset agency costs for some areas where there are unusual pressures. The use of further reserves would be assessed during the year.
Details of the significant cost pressures and efficiencies for the year to date included:-
· Pay overspends of £0.4m (after the use of reserves and offset of income due) which included the use of agency to support staffing.
· Operational pressures for the housing benefit, waste team at the depot and legal team had necessitated additional temporary staffing costs. These were being actively managed and were forecast to be largely addressed in the coming months.
· For the three months to the end of June, a number of vacancies across the Council remain unfilled and not covered by agency, resulting in underspends. This was mainly related to the Project Management Office, the Communications and the Electoral and Democratic teams. This was mostly as a result of secondments made to the unitary team leaving vacancies at AVDC.
· The Council was reporting a year to date overspend of £120,000 on waste disposal costs. The cost of disposal was based mainly on the commodity value of each material (plastic, card, paper etc.) and therefore the cost paid was largely outside of the Council control. At current spend levels, the annual budget allocation would be exceeded by circa £400K. This compared to the first 5 months of 2018-19, when the Council received income for disposal. This had been highlighted as a future financial risk.
· Also, at the depot, the year to date financial position reflected additional income in relation to waste for mixed recyclates, for sale of bins and for commercial waste services (£110,000). BCC pay AVDC recycling credits per tonne of recycling. This was an incentive to divert waste from the EfW as this had a higher gate fee. The income would fluctuate each quarter and depended on how much recycling was collected from resident properties.
· that the tenants at 66 High Street, Aylesbury, had given notice to vacate the property on 30 September 2019. It had not been forecast that the property would be re-let but if it was then the forecast outturn would improve.
· Pressure on SEED income due to the impact of unitary decisions. Whilst pipeline council to council income remained strong, the ability to deliver it was reducing pending Unitary. Resources in the team were also being diverted to support other corporate priorities.
· Budget savings arising as a result of the delay in implementation of the taxi token scheme (£35,000).
· Savings against budget in relation to transitional relief for business rates was £105,000
· Savings on vehicle parts and maintenance at the depot due to previous capital investment was £80,000.
· Above budgeted levels of income in relation to recovery of costs for the recovery of income from council tax and business rates debtors was £140,000 for the period to date. The income recovered would vary over the financial year and should cover costs.
There were many other less significant variances across the Council and budget holders were reviewing these on a monthly basis.
The report also contained information on the use of agency/temp staff that had been discussed as a separate agenda item at the meeting.
The Digest at page 14 detailed the reserves and provisions currently held by the Council against specific risks and commitments. The level of reserves held would change during the financial year as commitments are confirmed and approved.
Page 15 of the Digest reported on the level of capital spend to 30 June 2019, with there being a spend of £847,000 to date. The spend was primarily on existing projects. The spend on existing and planned projects would be reviewed over the coming months to assess any capital slippage for the financial year.
Members were informed that no new borrowings had been taken out so the current level remained at £18.5m. The council had £44.3m invested at the end of June, in a combination of banks, building societies and money market funds.
Members sought additional information and were informed:-
(i) that AVDC was the only one of the 5 Buckinghamshire Councils that had allocated a share of the New Homes Bonus monies to parish and town councils to help alleviate the impacts of housing growth on local communities. Town and Parish Councils had been notified when the process for the latest round of grants had commenced that this would be last year that AVDC operated the scheme. It would be a decision for the new Council to make in due course as to whether they operated a similar scheme.
(ii) that Officers would provide Members with updated information on the Aylesbury Special Expenses.
(iii) that there was likely to be some slippage on the capital programme schemes, in particular relating to £4.5m allocated to the regeneration of the Aylesbury Town Centre.
(iv) that the Council had forgone some income through keeping space vacant at the Gateway offices to meet unitary requirements.
That the contents of the Digest and the position for the Council after the first 3 months of the 2019-20 financial year be noted.