To report on the Council’s performance against revenue and capital budgets as at 31 August 2008 and provide an indication of the estimated outturn for the 2008/09 financial year. 

The Committee was informed of the position on the revenue and capital budgets and the estimated outturn for the 2008/09 financial year. 

The report to Cabinet on 2 October was appended.

The Head of Financial Services presented the report.   He said that the current projected overspend on the revenue budget at £1.671 million was a lower forecast of overspend at this point in the year than in previous years.  This was attributed to a more vigorous approach to financial management at Directorate level.  He added that the Chief Executive had set an expectation that Directorates produce management proposals to bring expenditure back to balance at the end of the financial year.

This was particularly important because the level of interest on investments achieved in previous years, which in the past had been used to offset directorate overspends, could not be guaranteed in the present financial climate.  This had an implication for the level of the general reserves, which based on current projections could see the level at the year end being close to the recommended level of minimum general reserves of £4.5 million if the projected overspend of £1.671m was not managed.

He drew the Committee’s particular attention to the assumption that the Primary Care Trust would meet the costs of individuals meeting the continuing health criteria; the position on the winter maintenance budget; and the overspend on the HALO job evaluation payment issue and the drop in income for Planning Services.

In relation to the Capital Programme the Head of Financial Services reported some slippage on the Capital Programme.  He also drew attention to an overspend on the Ross flood alleviation scheme which he advised would be met by the Government as it was their scheme.

He informed the Committee that the opportunity had been taken to provide additional scope in the Capital Programme by taking out a loan of £5 million (for 50 years) at what was considered a very favourable rate (4.36%).

In the ensuing discussion the following principal points were made:

·         It was proposed that the Executive should review the level of contributions developers were required to make in accordance with the Planning Obligations Supplementary Planning Document adopted by Council in February 2008.  This proposal was not agreed on the understanding that the Executive had already agreed to review this issue after one year.

·         Asked about the management of the projected overspend the Head of Financial Services reiterated that the current projection was lower than in previous years and the Chief Executive had issued a clear instruction that a balanced budget must be achieved.

·         In reply to a question about payment of overspend on the HALO job evaluation payment issue the Chief Executive confirmed that the overspend would be dealt with in accordance with the agreed policy.  He understood this to mean that it would be met centrally rather than from the Service budget.

·         In response to questions the Head of Financial Services agreed to write to Members with information on whether the Wyebridge Academy Scheme was wholly grant funded; the extent of the cost to the Council of compensation events still to be agreed relating to the Rotherwas Access Road and clarification of the reference in the report to a whole scheme cost of £5 million for the Cattle Market.

·         An assurance was sought that the Council’s level of borrowing was prudent.  The Head of Financial Services replied that he had written to Members showing that the level of borrowing was near the median level for authorities and was not near the upper limits. 

·         Members registered concern at the reduction in income from car parking, noting that this was contrary to expectation, charges having been increased.

·         In response to a question the Head of Financial Services explained the process by which the Masters House, Ledbury had been included in the Capital Programme.

·         It was suggested that the presentation of the level of capital expenditure for individual schemes did not provide sufficient clarity. In reply the Head of Financial Services acknowledged that the presentation of the figures assumed slippage and agreed to consider revising the presentation.

RESOLVED:  that the Executive be asked to confirm that it was intended to review the Planning Obligations Supplementary Planning Document by February 2009.