To consider the final revenue and capital budget outturn for 2006/07.

(Councillors PA Andrews, SPA Daniels and PJ Edwards, declared a personal interest in agenda item 6: Final Revenue and Capital Outturn 2006/07 in relation to Hereford City Council’s stated intention not to pay their contribution towards parks and countryside services.)

The Committee considered the final revenue and capital budget outturn for 2006/07.

The report to Cabinet on 7 June 2007 was appended to the report.

The Head of Financial Services presented the report.  He highlighted that the overall position was an underspend of £3.197m on the Council’s 2006/07 revenue account.  This was good news, improving the Council’s financial standing, one of the themes in the Audit Commission’s Use of Resources Assessment. 

He commented on some of the key variations between outturn and budget for each Directorate and the carry forwards approved by Cabinet in support of corporate priorities. 

He also commented on the level of the Council’s reserves and the establishment of new specific reserves.

The significant amount of slippage on the Capital Programme was also highlighted.

In the ensuing discussion the following principal points were made:

·         In reply to a question the Head of Financial Services confirmed that the £274,000 underspend on the Environment revenue budget had not been ringfenced.  The Director of Environment had decided that the whole sum should be added to the waste reserve.

·         Asked about the adequacy of the Adult and Community Services budget the Head of Financial Services commented on the significant pressures associated with residential placements as well as the service redesign work being undertaken from 2007/08 using the additional £2.7m budget allocation.  There would be a need to determine the overall position especially around the pooled budget arrangements with the Primary Care Trust under the Section 31 arrangements.

·         The underspending on school transport was discussed.  The Head of Financial Services said that savings had been achieved as a result of a review of school routes.  Further savings, although not as significant, were expected in 2007/08.  A Member expressed some concern about arrangements in North Herefordshire.

·         The Leader of the Council commented on the failure of the Government’s Comprehensive Spending Review to recognise the pressures on social care funding in contrast to its increased expenditure on the health service.  He suggested Members should encourage local Parish Councils to lobby MPs.

·         In presenting the report the Head of Financial Services had referred to the significant level of balances held by schools.  He had also noted that whilst revenue balances showed a reduction over the year, capital balances had increased significantly.  He had a concern that one reason for this might be because schools were seeking to avoid the revenue clawback rules the Council had indicated it would use if balances did not reduce.  It had also to be borne in mind that national funding rules did not permit balances transferred to capital to revert to revenue.  Some concern was expressed about the Council’s ability to clawback money from schools.  It was requested that it be established whether any other authorities were pursuing or had pursued this course.

·         A question was asked about the expenditure on ICT Services noting the deficit on the trading account, activity related to Herefordshire Connects and that some capital expenditure had been incorrectly included in the revenue budget.

The Cabinet Member (Corporate and Customer Services) said that similar programmes to the Herefordshire Connects Programme had already been delivered successfully in other areas.  The Council was drawing on external expertise to ensure the processes being followed were challenged.  There were some transitional issues regarding the ICT budgets which needed to be addressed.

The Director of Corporate and Customer Services emphasised the distinction between the Herefordshire Connects Project, which was a business transformation project with its own budget, albeit underpinned by technology, and the ICT budget.  The Strategic Monitoring Committee’s Review of ICT Services had identified the need to change the way ICT Services finances were accounted for and this had been accepted by the Executive.  An update on progress in response to the Committee’s Review was scheduled in the Work Programme. In response to a further question she gave Waltham Forest and Trafford as examples of Schemes where transformation projects had been successfully implemented.

·         A question was asked about the improved performance in benefit processing times which had generated increased subsidy from the Department of Work and Pensions (DWP).  The Head of Financial Services clarified that the reference to local authority error in the report reflected the DWP’s terminology and in fact referred to processing time rather than inaccuracy in benefit calculation.  The improvement was reflected in performance against the targets set out in the Integrated Performance Report.  One of the approved revenue budget carry forwards was to support further improvement in performance.

·         The overspend on administrative buildings and the underspend on industrial estates and retail properties was queried and it was agreed that a written answer would be provided.

·         It was asked whether capital receipts were sufficient to cover the Council’s commitments.  The Head of Financial Services said that he considered the position to be favourable but that future allocations would be required to support capital commitments and referred to further receipts expected from the disposal of Smallholdings in future.  He added that the capital programme would be reviewed if receipts overall were not secured as expected.  Members suggested that consideration might be given to Smallholdings as part of the work programme.

·         The overspend on Weobley High School sports hall was challenged.  Members suggested that this indicated systemic problems in managing the project.  It was considered that this issue needed to be examined as part of the scrutiny work programme.

·         Funding of the overspending on the Info by Phone Capital Scheme was clarified.

·         It was confirmed that additional expenditure on the Rotherwas Access Road under the Capital Programme to purchase land had been funded by Advantage West Midlands and had no bearing on the Council’s provision for the scheme.

·         It was requested that Herefordshire Council and Hereford City Council work together to resolve issues associated with the loss of income from parks services.

RESOLVED:

That       (a) the final outturn for 2006/07, the carry forward of unspent budgets into 2007/08 and the movements to reserves as approved by Cabinet be noted;

               and

               (b)               consideration be given to issues identified for consideration as                       part of developing future work programmes.