To provide Cabinet with an update on the Council’s financial position as at 31st December 2016.

The Head of Finance Section 151 Officer reported on an update on the Council’s financial position as at 31 December 2016.  

He informed Cabinet that Council on 10 March 2016 had approved a net revenue budget of £254.891 million for 2016-17 along with a capital programme of £43.553 million, which was revised to £47.121 million.  He reported that the overall projected position as at 31 December 2016 was a net under spend of £418k, comprising a £1.525 million net under spend on Directorates and a £5.363 million net under spend on corporate budgets, offset by net transfers to earmarked reserves of £6.470 million.  The Head of Finance and Section 151 Officer stated that the Draft Budget for 2017-18 and an outline Medium Term Financial Strategy (MTFS) for 2017-2021 approved for consultation by Cabinet in November 2016 had estimated that £33.6 million of recurrent budget reductions between 2017 and 2021 would have to be found based on the most likely scenario.   

He reported on the monitoring of budget reduction proposals in that of the £11.225 million budget reduction proposals for 2015-16, £2.692 million had not been met in full, leaving a shortfall in the financial year of £1.909 million.  There remained an ongoing shortfall of £1.167 million in 2016-17 against these specific proposals.  A MTFS Budget Reduction Contingency had been established as an earmarked reserve of £333,000 which will be used to partly mitigate the shortfall on MREC, Blue Badges and School Transport.    He reported that of the budget reductions proposals totalling £7.477 million, seven of the proposals totalling £1.302 million are Red and twelve of the savings proposals are Amber, which total £821,000.  He informed Cabinet that he had reviewed the shortfalls and had made an additional one-off allocation from the MTFS Budget Reduction Contingency of £195,000 to rationalise the core office estate – leasing of Raven’s Court.    He stated that work is ongoing to deliver the proposals or alternatives which have been reflected in the forecast outturn for the year.  He summarised the financial position for each main service area by Directorate as at 31 December 2016. 

The Head of Finance and Section 151 Officer reported on the position on the Council wide budgets which is £42.173 million with a projected outturn of £36.810 million, resulting in a projected under spend of £5.363 million as a result of lower demand than forecast for the Council Tax Reduction Scheme, an under spend on the interest paid on Capital financing due to lower borrowing than anticipated and an under spend on other Corporate Budgets.  He stated that funding was held corporately to meet the budget pressures associated with Extra Care scheme, however due to the delay in the scheme, the funding has been transferred to an earmarked reserve, pending construction works.  He stated that this projection could change significantly during the financial year, depending on the extent of inclement weather during the winter period, the outcome of the Welsh Language appeals and further demands on the Council Tax Reduction Scheme. 

The Section 151 Officer reported on the monitoring of the capital programme for 2016-17, which was approved by Council in March 2016 and further revised during the year to incorporate budgets brought forward from 2015-16, budgets carried forward into 2017-18 and any new schemes and grant approvals.  The revised programme totalled £28.133 million following slippage of £18.47 million, of which £18.393 million is met from Council resources with the remaining £9.74 million coming from external resources. 

He outlined the position on the review of earmarked reserves, the movement of earmarked reserves to the end of Quarter 3 and on the creation of new earmarked reserve, increases to existing earmarked reserves and amounts that have been unwound from reserves during Quarter 3.  He stated that following a review of public realm assets, the Communities Directorate had identified a range of urgent works required across the County Borough.  A public realm reserve of £200,000 had been created from existing resources to be drawn against as quickly as works can be completed. 

The Leader questioned whether the Extra Care scheme would be eligible for social housing grant.  The Corporate Director Social Services and Wellbeing stated that the Council’s partner in the scheme, Linc would be submitting a bid for social housing grant.  The Head of Finance and Section 151 Officer confirmed that there was a shortfall with the Extra Scheme which the Council’s partner will bridge. 

The Cabinet Member Social Services and Early Help questioned the reason for the under spend in Housing Options and Homelessness where there was a budget variance of 47.1%.  The Corporate Director Operational and Partnership Services stated that the under spend was attributed to difficulties in recruitment.  He stated that grant money would be utilised fully rather than the Council using its own resources. 

The Leader questioned requested an explanation of the reserves for Service Reconfiguration and the MTFS Budget Contingency.  The Head of Finance and Section 151 Officer informed Cabinet that £1 million had been added to Service Reconfiguration for redundancy costs and the MTFS Budget Contingency had been topped up.               

RESOLVED:           That Cabinet noted the projected revenue and capital outturn position for 2016-17.