Invitees:

Cabinet and CMB;
All Scrutiny Chairpersons;
Randal Hemingway, Head of Finance.

The Scrutiny Officer introduced the report of the Head of Finance which updated on the Council’s financial position as at 31 December 2016.

The Committee requested an explanation of the under spend of £1.98m in the Operational and Partnership Services Directorate and questioned the pressures on carrying out back office functions and delays to processing transactions in Legal Services due to staff reductions / shortages.  The Corporate Director Operational and Partnership Services explained that the under spend was attributed to a number of reasons, in part, due to budget planning for next year to account for the devaluation of Sterling.  He also explained that problems had been experienced in recruiting legal staff and a bid had also been made top recruit senior staff to support the transformation agenda but again had been unable to recruit.  He stated that if he cut the number of staff it would impact on the functioning of services elsewhere in the Council and he did not believe there had been a serious problem in the delivery of services.  He also informed the Committee that the Directorate had maximised the use of grant funding in Housing Options and Homelessness which had also contributed to the savings in the Directorate.  The Cabinet Member Wellbeing and Future Generations commented that the Cabinet Secretary was looking at bringing together the funding of anti-poverty schemes together, namely, the Supporting People Programme; Families First and Communities First and that an announcement was anticipated soon.          

The Committee questioned whether the under spend of £1.98m was after the drawdown of £699k had been made from earmarked reserves.  The Head of Finance explained that the Operational and Partnership Services Directorate had received support of £699k which would then be released back to the General Fund and without which the under spend would be £1.4m.     

The Committee questioned whether the application of vacancy management in the Operational and Partnership Services Directorate was not detrimental to processing work and service delivery.  The Corporate Director Operational and Partnership Services stated that he was satisfied with some elements of vacancy management but not with all of it.  He informed the Committee that the ICT service had countered difficulties in recruitment by introducing an apprenticeship scheme.  He had also experienced difficulties in recruiting Solicitors and to this end had embarked on a grow our own strategy and had recruited Paralegals and Trainee Solicitors.  He intended to roll this strategy out across the Directorate but was not yet in a position to do so in Housing.  The Committee asked whether difficulties could be encountered in retaining staff after they had been trained.  The Corporate Director Operational and Partnership Services stated that he had to be prepared for the eventuality of staff leaving to pursue opportunities with other public bodies and which did happen. 

In response to a question from the Committee, the Corporate Director Operational and Partnership Services requested that he be provided examples of where there were perceived to be delays in the processing of Traffic Orders and Community Asset Transfers. 

The Committee questioned whether the over spend of £836k was after the drawdown of £925k had been made from earmarked reserves.  The Corporate Director Social Services and Wellbeing confirmed that the over spend at year end was £836k.  The Head of Finance informed the Committee that the drawdown of £925k was for a range of items or one off expenditure. 

The Committee referred to continued pressure from the Welsh Government and new legislative requirements being placed on local authorities and questioned what the authority and WLGA were doing to pressure the Welsh Government in relation to funding as the pressures were unsustainable.  The Corporate Director Social Services and Wellbeing informed the Committee that all local authorities across Wales face the same pressures in delivering social services.  She stated that changes were being to remodel adult social care services, however the numbers of looked after children were increasing.  She also stated that the Association of Directors of Social Services collects information from all 22 local authorities and lobbies the Welsh Government Minister to allocate more resources due to demographic pressures.  The three Western Bay local authorities and health board lobby the Welsh Government in relation to the Intermediate Care Fund.  The authority also showcases its work with the Welsh Government and it was about delivering services differently which can take time to take effect. 

The Cabinet Member Social Services and Early Help informed the Committee that services had been delivered with budgets which had been year on year and there had been a need to deliver those services within the budget available.  He stated that efficiencies had been looked at but the authority faced so many statutory requirements within which to deliver services.  He commented that the Directorate works hard to deliver services, despite £10m having been taken out of the budget over the last 4 years.  The Cabinet Member Wellbeing and Future Generations commented that the authority is well represented on a national basis and in positions to influence policy as she sits on the All Wales Policy Group and the Leader is the WLGA spokesperson on Social Services. 

The Committee commented that the budget cuts were the lowest net cuts compared to the other Directorates and requested an explanation of the over spend on looked after children and other child and family services and the drawdown of £518k.  The Committee also questioned the costs of out of county placements.  The Corporate Director Social Services and Wellbeing informed the Committee that the over spend of £730k on looked after children was due to money being taken out of the budget and that it had not been possible to make savings yet on looked after children.  £400k had been taken out of the budget across two year for the implementation of a new model for residential services.  She stated that money had been drawn down for adoptions which had enabled more adoptions to have taken place than projected.  The Corporate Director Social Services and Wellbeing also informed the Committee that it had not been possible to make savings on looked after children as numbers had not reduced as much as hoped.  She stated that the numbers of looked after children fluctuate between 380 and 385.  The Corporate Director Social Services and Wellbeing informed the Committee that there are currently 13 out of county placements, with 2 placed in secure units at a cost of £2k per week.  She stated that the Directorate has a tracking tool to monitor expenditure.  The Cabinet Member Social Services and Early Help informed the Committee that the looked after children budget was particularly volatile and a small increase in the number of looked after children could have a significant impact on the budget due to their needs.  He stated that promotional had been done to increase the number of fostering placements and adoptions and it was aimed to increase in-house adoption.  The Corporate Director Social Services and Wellbeing informed the Committee that there is a strategy in place which has not affected the budget as yet which relates to the implementation of new legislation.  She stated that £200k had been drawn down for the implementation of the When I’m Ready scheme and also to increase in-house fostering.

The Committee asked when would the savings on Home to School / College Transport be realised and were they realistic.  The Chief Executive believed that the savings were not realistic, however elements of the strategy had worked, particularly the re-tendering.  However, what had impacted changes from being fully realised were changes to routes which required consultation and had slowed down implementation.  The Head of Finance stated that there is a reserve of £200k for new safe routes to school. 

The Committee requested further information on how long it would take to implement the Home to School / College Transport policy. 

The Committee questioned the reason for the delay in implementing staffing restructures and the non-achievement of overtime savings in Highways Services which had resulted in over spends.  The Corporate Director Communities informed the Committee that there had been savings on overtime payments and that it was not a non-achievement but attributed to double counting.  He stated that what was of concern was that a number of savings were due to the salami slicing effect on the budget which compromised service delivery.  He informed the Committee that the authority is collaborating with neighbouring authorities and exploring partnering with Capita and there is also a profitable arrangement in place with SWTRA for work undertaken by the Highways Department on the trunk road network.  He stated that progress is being made on making cultural changes to Highways services but significant budget changes have to be made.

The Committee referred to the over spend of £445k on Highways Services and questioned how much of the structure had changed in comparison to Highways Services in other local authorities.  The Corporate Director Communities stated that he would provide an analysis on the changes made to Highways Services, but commented that there are challenges ahead.  The Cabinet Member Communities commented that staff had to be incentivised in order to work throughout difficult conditions in an emergency in order to deal with recent flooding.                            

The Committee questioned whether funding could be realised in respect of MREC, the Innovation Centre and Raven’s Court as the Council has a great deal of capital tied up.  The Corporate Director Communities informed the Committee that the Council is in a long term contract with Neath Port Talbot Council for MREC and in the process of negotiating a new contract and realising the savings remained a risk to the authority.  He stated that the leasing of Raven’s Court was dependent on the recovery in the property market.  Approaches to lease the building had fallen through which had resulted in a one-off allocation of £195k from the MTFS Budget Reduction Contingency to meet the non-achievement of the budget reduction.  He stated that savings on MREC would continue to be looked at and opportunities for the lease of Raven’s Court.  The Head of Finance informed the Cabinet that the lease of Raven’s Court would not derive a capital receipt and in the event of the lease being completed would have brought new jobs to the Town Centre which would have been in excess of the savings and would have also paid for the cost of agile working and infrastructure requirements needed.  He stated that there had been an under spend by the Directorate of £300k on Property Services and Highways Maintenance had delivered savings of £90k.  Overtime payments had been used to cover the cost of employing agency staff due to staff sickness. 

The Committee referred to the over spend of £210k which related to the under occupancy of the Innovation Centre and requested details of the ownership of this property.  The Committee also questioned how much was owed as a result of the purchase of Raven’s Court and the reason for the payment of £2.35m.  The Corporate Director Communities informed the Committee that the Innovation Centre was held on a head lease and there was an under achievement of income on the property.  He stated that consideration would need to be given on whether to invest in the facilities at the Innovation Centre or whether to invest elsewhere.  The Head of Finance informed the Committee that the Council owns Raven’s Court and had been funded through prudential borrowing.  He stated that there had been an opportunity to make a one-off payment of £2.35m of prudential borrowing on Raven’s Court in order to reduce future capital financing costs, which he had authorised.  This took the form of an internal transfer from the Directorate to the corporate centre with no money being paid out.  He explained that the funding could not have been used elsewhere.  He referred to the comparison of budget against projected outturn at 31 December 2016 which showed the appropriation to / from earmarked reserves of £6.470m which had been presented in line with the requirements of the Wales Audit Office.  He also outlined the movement of earmarked reserves where £4.272m had been drawn down.  Reserves had been reviewed by the Finance Team over the year and the reporting of Reserves was now consistent to that of other Councils. 

The Committee questioned the reason for the significant variation between Quarter 2 and Quarter 3.  The Head of Finance informed the Committee that this was attributed to the availability of capital funding in order to fund City Deal, Band B of the School Modernisation Programme and Highway Improvements which explained the additional of £2.7m of reserves.  He stated that the Major Claims Reserve had been reduced and Service Reconfiguration had been increased to meet the cost of redundancies.  The Committee questioned the number of redundancies being planned.  The Head of Finance informed the Committee that £30m required to be saved over the course of the MTFS and two thirds of the Council’s budget was made up of staffing costs. 

Conclusions           

The Committee requested the following information:

Education

1. The Committee requested that they receive further information on the current status and plans for School Transport for clarification, for example timescales, what savings were committed to and what now are the achievable savings.

Communities

2. The Committee asked for a further breakdown of the savings for Highways Services.

3. The Committee asked to receive, for information, the report on Highways that is being sent to the next Community, Environment and Leisure Overview and Scrutiny Committee.

Operational & Partnership Services

4. The Committee expressed concern over the impact of vacancy management, both for the LA overall and particularly for the OPS Directorate who provide legal support for the whole Authority but are unable to recruit to posts.  Members welcomed the initiative being undertaken to ‘grow your own’ but commented on the fact that there was still no security in this as there was no guarantee that these staff would remain with the LA.  This led to apprehension amongst the Committee that the lack of legal support and knowledge could potentially have impact elsewhere in the Authority.  The Committee agreed that this was an area to revisit and keep a close eye on for the future FWP to ensure that this did not occur.

General Comments

Reserves

5. The Committee expressed concern over the extra £2m being added to ‘Service Reconfiguration’ as illustrated in Appendix 5, with particular concern over public perception.  The Committee asked for further detail and clarification as to what the £7,571m is being put aside for and how this decision was debated and made; in order to evidence and justify why this money is being held and not being used for services now.

6. The Committee asked for clarification over the process for approving additional reserve funding and detail as to why extra reserves are being added, such as £200,000 for the Public Realm Reserve.