Invitees:

All Members of Cabinet and Corporate Management Board

The purpose of this report is to provide the Committee with an update on the Council’s financial position as at 31st December 2018.

By way of background, the Interim Head of Finance advised, that on 28 February 2018, Council approved a net revenue budget of £265.984 million for 2018-19, along with a capital programme for the year of £33.693 million, which has since been updated to take into account new approvals and slippage between financial years. As part of the Performance Management Framework, budget projections are reviewed regularly and reported to Cabinet on a quarterly basis. The delivery of agreed budget reductions is also kept under review and reported to Cabinet as part of this process.

Paragraph 4.1.1. of the report confirmed the Council’s net revenue budget and projected outturn for 2018-19, with Table 1 in this section of the report reflecting a comparison of budget against projected outturn at 31 December 2018.

The Interim Head of Finance then expanded upon some of the financial detail included in the Table for the benefit of Members.

Table 2 on page 6 of the report reflected once more in tabular format, some outstanding Prior Year Budget Reductions on a Directorate by Directorate basis.

Paragraph 4.2.5 of the report then showed the Budget Reductions for 2018-19, and these totalled £6.123m, broken down in Appendix 2 (of the report) and summarised in Table 3. The current position was a projected shortfall on the savings target of £379k, or 6.2% of the overall budget target.

Paragraph 4.3 of the report then gave some commentary on the financial position as at 31 December 2018, in the form of a summary for each main service area (Appendix 3 to the report) with comments on the most significant variances shown in this part of the report. This also gave a summary on Council Wide budgets.

The Interim Head of Finance then shared information with Members regarding the monitoring of the Capital Programme and the Review of Earmarked Reserves, with Table 4 in paragraph 4.5.2 showing movement on the latter to the end of Quarter 3.

Finally, she concluded her submission, by referring Members to data in Table 5 of the report, which showed the Net Appropriations to/from Earmarked Reserves to Quarter 3.

A Member felt that good progress had been made with regard to budget reductions in Quarter 3, particularly as the Communities Directorate had shown an improvement in savings from previously, of around 8%.

The Interim Head of Finance referred the Committee to the narrative that followed Table 2 in the report, areas where savings had been targeted but not met and these included Reductions to the Materials Recovery and Energy Centre (MREC) where there was a shortfall of £200k which was not likely to be met by year end.

The Interim Chief Executive advised that in terms of the saving earmarked, but not yet achieved with regards to Permitting Scheme for Road Works (£100k), this was due to delays in the approval process with Welsh Government (WG). These deliberations were ongoing however he added, so he was hopeful that the saving would be made in the not too distant future.

With regard to there being no shortfall in terms of savings earmarked for the Chief Executives Directorate, the Interim Chief Executive explained that some cautiousness needed to be given there, as there were staffing restructure and transformation proposals taking place/proposed in this Directorate.

The Head of Legal and Regulatory Services added to this, by stating that there were no plans for reductions in staff in the Legal Department this year, and that there had been some added capacity in order to support the Lawyers, through the recruitment of Paralegal staff.

In relation to the shortfall of savings in the Social Services and Wellbeing Directorate which presently amounted to around £783k, a Member felt that as this was a significant amount of savings yet to be achieved, there should be some narrative (in the report) explaining how this was going to be met, including timescales etc. He acknowledged that there was a Delivery Plan in place directing this, but he felt that some explanation should be given also as this was a significant amount of shortfall.

The Corporate Director – Social Services and Wellbeing explained that the Delivery Plan had been in existence for two years and was on target in terms of the shortfall being met as per the timetable included in the Plan. The over spend would take some time to be delivered, and was being met through a number of ways, including more innovative ways of working, as well as changing the way certain services were being delivered. She added that the over spend had reduced from £1.2m to where it presently stood. The difficulty was a historical one, in that the numbers of Looked After Children/Out of County placements were difficult to predict or control, and though the numbers of these cases were reducing. There was some good work also being undertake in fostering more in-house and improved working arrangements for those individuals receiving Residential Care, which was also making in-roads into the overspend she added.

Members noted that savings were still having to be made in the Communities Directorate, not just as earmarked savings that the Directorate was required to make in its own right, but also in order to support certain statutory services within the Directorates of Education and Family Support and Social Services and Wellbeing, and that in some areas of the Authority job vacancies were being held in order to negate possibly further future savings that may require to be made under the Medium Term Financial Strategy (MTFS).

A Member noted from page 13 of the report, that there was a projected over spend of £140k across the service of Fleet Services, similar to the 2017-18 outturn, due to a downturn in income arising from reduced spend by Directorates, and that the Directorate planned to undertake a review of the service in the near future. He asked when this review would take place and would the service then work more effectively.

The Interim Chief Executive confirmed that presently Fleet Services re-charged Directorates for the purchase and maintenance of fleet. He was unsure presently if the mechanism of re-charging would be subject to any significant change (the Policy here would be the subject of further examination), until the review was completed and the productivity and effectiveness of the service was gauged going forward. The importance of this particular service was that it at least breaks-even or makes money as opposed to the service being in deficit in terms of business productivity.

Recommendations:

•            Members noted the outstanding prior year budget reductions by the Communities and Education & Family Support Directorates, as presented in table 2. Members recommend that future reports provide more detailed narrative in terms of shortfalls, particularly in relation to the Social Services & Wellbeing Directorate.

•            Members also noted again that further narrative is also needed in respect of the variances to Fleet Services under 4.3.3, to show what needs to be done and how it is going to be done. Members recommend that the narrative include details as to the timescales for the Fleet Services review.