To update the Audit and Governance Committee on the financial position to 31 January 2013.  The Treasury Management position is also included.  As part of the Committee’s work programme it receives six monthly updates on the financial position.

The Chief Officer: Finance & Commercial updated the Audit and Governance Committee on the financial position to 31 January 2013.  The report was identical to the one that had been considered by Cabinet the previous day.  The report was also part of the Committee’s agreed work programme, forming the first of two updates planned for the financial year, which would be linked to the budget to provide the optimum amount of information.  The report presented the Council’s financial position to the end of January 2013, and gave projected financial information to the end of the financial year. 

The Chief Officer: Finance & Commercial explained the layout and format of information contained in the report.  The appendices set out the Council’s positions in terms of revenue, capital, and treasury management respectively.  The Treasury Management Report, although not strictly required as frequently as the revenue and capital information, would be included regularly as a measure of good practice, to ensure that members were kept fully informed of the Council’s up-to-date financial position. 

The Committee noted the key points summary on pages 11 and 12 of the agenda, and in particular the projected overspend of £3.9 million, which would need to be met largely from the general funds reserve of £6.1 million.  Referring to the table on pages 12 and 13, outlining the main financial movements from the December 2012 projected spend, members noted in particular the continued increases in expenditure for adult social care, and the significant number of claims under the Bellwin grant scheme in respect of flood damage. 

Members acknowledged that a significant proportion of the movement in adult social care expenditure arose from an increase in backdated packages for residential and nursing placements.  Herefordshire also faced additional challenges caused by a significantly higher than average ageing population, and the rural nature of the county, which sometimes made service provision exceptionally difficult.  In response to a question about the modelling used to calculate future demand for adult social care services, members noted that the Council had worked with an external organisation to make projections, due to the complex nature of the system.  The £354k included emergency/short-term intervention care, which was usually larger than anticipated and difficult to include in the projections. 

The Chief Officer: Finance & Commercial reported that the Council had received the highest number of Bellwin claims of any local authority in England due to the exceptional flooding experienced by the county in recent months.  The allocation of £356k represented a one-off excess charge irrespective of the number of claims made.  However, this was the first year that the Council had been required to pay an excess, and the Committee was advised that the Council had complained to central government about this.  Assurance was given that the increased incidences of flooding had been budgeted for as far as possible in future projections.  In response to a question about the winter gritting budget, he confirmed that the increase of £120k related specifically to gritting runs, and followed a budget-setting model which assumed a certain number of “winter days” based on information available at the time.  It was therefore possible that this figure might change in future projections. 

A Committee Member observed that the number of appeals against decisions made by the Planning Committee was also increasing, and this was incurring additional costs to the Council.  The Chief Officer: Finance & Commercial confirmed that in general, additional costs where appropriate are checked to see if covered by the Council’s insurance policy, although further costs were sometimes incurred through seeking specialist legal advice, and this represented an additional financial pressure.  Due to the unpredictable frequency of appeals, it was sometimes difficult to budget for every eventuality.  The Committee noted that both the practices of the Planning Committee and the scheme of delegation to officers, were clear on the point of including specific policy reasons for all planning decisions, and in particular those that went against officer recommendation. 

The Committee commended the financial team for securing excellent interest rates on its short-term borrowing. 

The Chief Officer: Finance & Commercial reported that he would shortly be chairing financial control meetings for each directorate on the instruction of the new Chief Executive, Mr A Neill, as a measure to increase financial control.  The Committee welcomed the additional measure. 

RESOLVED:  That the report and the forecast position be noted.