Agenda item

(Directorate of Finance & ICT) To consider the attached report (FPM-021-2012/13).

The Assistant Director (Accountancy) presented the draft General Fund and Housing Revenue Account (HRA) Budgets for the financial year 2013/14. The budgets had been presented on a Directorate-by-Directorate basis with accompanying notes where significant changes had occurred. It was highlighted that £803,000 of savings in the Continuing Services Budget (CSB) had now been identified, and the reduction of £313,000 in Government support should not now impact upon services. The Directorate budgets were presented to the Cabinet Committee (and Scrutiny Panel) to consider and make recommendations prior to the budget being formerly set during February 2013.

 

Office of the Chief Executive

 

The Chief Executive reported that the original estimate for 2012/13 had been expenditure of £2.939million, with a probable outturn of £2.942million. The current draft estimate for 2013/14 was £2.809million, which represented a saving of £133,000 mainly due to there being no District Council elections planned for May 2013.

 

The Chief Executive stated that the CSB budget showed planned savings of £31,000 for 2013/14, of which the largest item was £22,000 in relation to salary savings for the Chief Executive’s post. The District Development Fund (DDF) budget for 2013/14 showed an anticipated income of £89,000, of which the largest item was the reduction in expenditure from no District Councils elections planned for May 2013. An item had been included for the County Council elections planned for May 2013, but a reimbursement of costs was expected from Essex County Council. There was a small additional expenditure included within the Internal Audit budget relating to staffing costs from increased  audit activities.

 

The Chief Executive highlighted the position for the individual cost centres within the Office of the Chief Executive, in comparison to 2012/13:

·     Corporate Activities                 £52,000 reduction in expenditure;

·     Elections                                 £112,000 reduction in expenditure;

·     Member Activities                    £16,000 increase in expenditure;

·     Voluntary Sector Support        £15,000 increase in expenditure;

·     Other Activities                        £1,000 increase in expenditure; and

·     Support Services                    £10,000 increase in expenditure.

 

The Assistant Director clarified that the planned expenditure of £261,000 for Elections comprised of £163,000 for Electoral Registration and £98,000 for any potential District Council bye-elections during the year. The increase in expenditure of £16,000 for the Civic & Member budget heading had been caused by a number of items being moved from Corporate Policy Making to Civic & Member.

 

The income of £69,000 for Members Allowances was queried by the Portfolio Holder for Safer, Greener & Highways; it was explained that this related to the recharge of Members’ Allowances to the Housing Revenue Account, and therefore showed as income in the General Fund. For both the Civic & Member and Members Allowances budget headings, 22% of the expenditure was charged to the Housing Revenue Account as this related to the Housing items discussed at the Council, Cabinet and Scrutiny Panels.

 

The Members considered that the level of recharges made it difficult to analyse whether the service was providing value for money and whether it should be retained in-house or out-sourced. The Finance & Performance Management Scrutiny Panel was requested to investigate recharges as Members found the current system was confusing.

 

The £18,000 grant to the Essex Women’s Refuge was also queried, as it was felt that this was a service run by the County Council and should not be funded by the District Council. The Chief Executive undertook to study the situation and report back to Members.

 

Corporate Support Services

 

The Assistant Director of Corporate Support Services (Facilities Management & Emergency Planning) reported that the original estimate for 2012/13 had been for net income of £1.534million, with a probable outturn of £1.988million. The current draft estimate for 2013/14 was net income of £1.843million, which represented a reduction of £145,000.

 

The Assistant Director stated that the CSB budget showed increased income from the Council-owned Industrial Estates for 2013/14, of which the largest item was £70,000 in relation to Brooker Road. The District Development Fund (DDF) budget for 2013/14 showed anticipated expenditure of £223,000, of which the largest item was the expenditure of £154,000 for the Planned Building Maintenance Programme. The Fleet Operations section was showing a small surplus of £5,000 for the coming year. It had lost the business from a franchise dealer in Langston Road but the Council was looking to increase its business by advertising the services available.

 

The Assistant Director highlighted the position for the individual cost centres within Corporate Support Services, in comparison to 2012/13:

·     Land & Property                      £207,000 reduction in income;

·     Other Activities                        £60,000 reduction in expenditure;

·     Regulatory Services               £2,000 increase in income;

·     Legal & Administration            £11,000 increase in expenditure;

·     Accommodation Services      £33,000 reduction in expenditure; and

·     Support Services                    £91,000 increase in expenditure.

 

The Assistant Director advised the meeting that the Home Office provided guidance that had to be followed by the Council in respect of setting fees for Hackney Carriage licences, although the Council was supposed to break even rather than make a profit. It was acknowledged that the licensing of Premises (for the sale of alcohol) was costing the Council £40,000 per annum to provide; the Assistant Director undertook to investigate whether the Council had any scope to increase these fees to cover the Council’s costs and report back to Members.

 

Office of the Deputy Chief Executive

 

The Deputy Chief Executive reported that the original estimate for 2012/13 had been expenditure of £1.6million, with a probable outturn of £1.761million. The current draft estimate for 2013/14 was for expenditure of £1.689million, which represented a saving of £72,000. The largest proportion of this expenditure was £76,000 of District Development Funding for the North Weald Airfield Consultancy exercise.

 

The Deputy Chief Executive stated that the CSB budget showed planned savings of £28,000 for 2013/14, of which the largest item was an additional £32,000 of income from the All Weather pitch at Townmead. The District Development Fund (DDF) budget for 2013/14 showed an anticipated expenditure of £73,000. Youth Council expenditure had been transferred from DDF to CSB, in line with Member wishes, and would remain there until a decision was made to remove the funding. However, the Youth Council would still be expected to report annually to the Overview and Scrutiny on their activities.

 

The Deputy Chief Executive highlighted the position for the individual cost centres within the Office of the Deputy Chief Executive, in comparison to 2012/13:

·     Arts & Museum                       £8,000 reduction in expenditure;

·     Sports Development etc         £70,000 reduction in expenditure;

·     Other Activities                        £6,000 increase in expenditure; and

·     Support Services                    £6,000 increase in expenditure.

 

The Deputy Chief Executive added that the shared museum service with Broxbourne Borough Council was increasing attendance and volunteering at the Council’s own museum in Waltham Abbey, as well as reducing overheads. The County Library Service was also now providing information services at Waltham Abbey and Loughton through a Service Level Agreement, reducing the Council’s direct salary costs. The section was looking to share some Health Development work with Harlow District Council during the coming year.

 

Environment & Street Scene

 

The Director for Environment & Street Scene reported that the original estimate for 2012/13 had been for expenditure of £9.384million, with a probable outturn of £9.512million. The current draft estimate for 2013/14 was for expenditure of £9.982million, which represented an increase of £470,000.

 

The Director stated that the CSB budget showed planned growth of £17,000 for 2013/14, which was predominantly caused by the anticipated loss of rents from North Weald Market. The District Development Fund (DDF) budget for 2013/14 showed an anticipated expenditure of £20,000. The Director highlighted the projected loss of rental income from North Weald Airfield, depreciation charges within Waste Management and Leisure Facilities, and the contribution to the Housing Revenue Account (HRA) within Parks and Grounds as significant items of expenditure for the Directorate budget.

 

The Director highlighted the position for the individual cost centres within Environment & Street Scene, in comparison to 2012/13:

·     Environmental Health              £32,000 increase in expenditure;

·     Waste Management               £176,000 increase in expenditure;

·     Highways                                £42,000 increase in expenditure;

·     Car Parking                             £14,000 reduction in expenditure;

·     Land Drainage & Sewerage   £17,000 reduction in expenditure;

·     Safer Communities                 £34,000 increase in expenditure;

·     Leisure Facilities                     £40,000 reduction in expenditure;

·     Parks & Grounds                    £33,000 increase in expenditure;

·     North Weald Centre                £196,000 reduction in income; and

·     Support & Trading Services   £117,000 increase in expenditure.

 

The Director advised the Cabinet Committee that the County Council refunded the District Council for some of the work it performed on highways Trees, some of the bus shelters within the District were actually owned by the Council and therefore had to be maintained. It was acknowledged that verge maintenance was a County Council function, but the District Council performed additional verge maintenance works to keep them in good order. In respect of Fly Tipping, the Council endeavoured to deal with the problem within existing budgets and looked to recoup its costs from successful prosecutions. It was confirmed that Fly Tipping cost the Council approximately £15,000 per annum.

 

The Assistant Director of Finance confirmed that the £40,000 spent on Eton Manor Prosecution Costs in 2012/13 related to the Council’s external legal costs for the case. The reduction in income for the market at North Weald Airfield was split between the CSB and the DDF. The lower income from the Airfield related in the main to problems being experienced with the Market. Members highlighted the Highways cost centre as an area for potential savings in 2014/15, but the Assistant Director warned that this cost centre contained significant depreciation charges.

 

The Deputy Chief Executive reminded the Cabinet Committee that a recent external benchmarking exercise had indicated the Council’s Grounds Maintenance section provided good value for money. The Members present queried the high depreciation charges being levied against Refuse Collection and Recycling within the Waste Management cost centre. The Assistant Director undertook to provide Members with more detail on this in the near future.

 

Finance & ICT

 

The Assistant Director for Finance & ICT (Accountancy) reported that the original estimate for 2012/13 had been for expenditure of £1.759million, with a probable outturn of £2.052million. The current draft estimate for 2013/14 was for expenditure of £2.038million, which represented a saving of £14,000.

 

The Assistant Director stated that the CSB budget showed planned growth of £24,000 for 2013/14, which was predominantly caused by the anticipated loss of subsidy for Housing Benefit Administration. The District Development Fund (DDF) budget for 2013/14 showed anticipated expenditure of £17,000, of which the largest item was the proposed expenditure in respect of Local Council Tax Support. The Assistant Director highlighted that Council Tax Benefit had been abolished in favour of Local Council Tax Support.

 

The Assistant Director highlighted the position for the individual cost centres within Finance & ICT, in comparison to 2012/13:

·     Housing Benefits                     £273,000 increase in expenditure;

·     Local Taxation                         £49,000 increase in expenditure;

·     Other Activities                        £336,000 reduction in income;

·     Finance Support Services      £103,000 increase in expenditure; and

·     ICT Support Services             £35,000 reduction in expenditure.

 

The Assistant Director informed the Cabinet Committee that there had been no further indication from the Government as to when the Council’s Fraud Officers would be transferring to the Department of Work & Pensions as part of the Government’s Welfare Reforms. It was also highlighted that a portion of the anticipated £24,000 saving on the car leasing scheme would be attributed to the Housing Revenue Account.

 

Housing General Fund

 

The Director for Housing reported that the original estimate for 2012/13 had been for expenditure of £2.253million, with a probable outturn of £1.262million. The current draft estimate for 2013/14 was for expenditure of £1.679million, which represented an increase of £417,000.

 

The Director stated that the CSB budget showed an increase of £23,000 for 2013/14 although this was due to inflation, with no growth items listed. The District Development Fund (DDF) budget for 2013/14 showed an anticipated expenditure of £14,000.

 

The Director highlighted the position for the individual cost centres within the Housing General Fund, in comparison to 2012/13:

·     Private Sector Housing           £57,000 increase in expenditure;

·     Homelessness                        £7,000 increase in expenditure; and

·     Other Activities                        £353,000 increase in expenditure.

 

The Director informed the Cabinet Committee that there was already some Section 106 monies currently available, but there was the potential for more to be available in the future to fund the Council’s Housebuilding Programme.

 

Planning & Economic Development

 

The Assistant Director for Planning & Economic Development (Development Control) reported that the original estimate for 2012/13 had been for expenditure of £3.331million, with a probable outturn of £3.446million. The current draft estimate for 2013/14 was for expenditure of £3.078million, which represented a saving of £368,000.

 

The Assistant Director stated that the CSB budget showed income of £50,000 for 2013/14, mainly due to an anticipated increase in Planning Fees income. The District Development Fund (DDF) budget for 2013/14 showed a planned expenditure of £376,000.

 

The Assistant Director highlighted the position for the individual cost centres within Planning & Economic Development, in comparison to 2012/13:

·     Direct Services                       £357,000 reduction in expenditure;

·     Regulatory Services               £11,000 reduction in expenditure; and

·     Support & Trading Services   £8,000 reduction in expenditure.

 

The Assistant Director commented that Planning Fees had been increased by 15% in November 2012, and the decrease in the Local Plan budget was due to additional resources being utilised from within the Policy & Conservation section. Income from Building Control had been reducing, but as this was a ring-fenced account then there would be no effect on the General Fund.

 

The proposed £219,000 of expenditure for Town Centre Enhancement schemes was questioned. The Assistant Director (Accountancy) stated that £198,000 of this expenditure was depreciation charges relating mainly to infrastructure works, and the Council used 25 years as a depreciation period. The Assistant Director undertook to discover if this heading included the Buckhurst Hill Town Centre Enhancement scheme from the 1990’s. It was suggested that this budget heading should be renamed to reflect better the nature of the expenditure.

 

It was highlighted that the costs of Planning Appeals was still not being split between costs where the Council was at fault during the process, or cases where the Council simply lost the appeal, even though this had been previously agreed when a report on supplementary finance for such costs had been considered by the Cabinet. The Planning Portfolio Holder undertook to provide the Member with the required information as a report on this subject had been considered by the Planning Scrutiny Panel. The Assistant Director (Development Control) cautioned the Cabinet Committee that the Council was liable to incur more costs from Planning Appeals in the future, including possibly the cost of the Planning Inspector.

 

The Assistant Director acknowledged that it was frustrating the Council could not charge for a second planning application on a site if this application was received within one year of the initial refusal. This was very expensive for major applications within the District as these tended to take more Officer time than smaller applications.

 

Housing Revenue Account

 

The Director for Housing reported that the original estimate for 2012/13 had been for a deficit of £301,000, with a probable deficit of £938,000. The current draft estimate for 2013/14 was for a surplus of £127,000, which represented an improvement of £1.065million. The original estimate for the Housing Repairs Fund for 2012/13 had been for a deficit of £461,000, with a probable surplus of £589,000. The current draft estimate for 2013/14 was for a surplus of £79,000, which represented a reduction in the surplus of £510,000. The original estimate for the Major Repairs Reserve for 2012/13 had been for s deficit of £681,000, with a probable outturn of a surplus of £1.714million. The current draft estimate for 2013/14 was for a deficit of £1.787million, which represented a change of £3.501million.

 

The Director reported that there had been an increase in the provision for bad debts due to the implementation of the Government’s Welfare Reforms. It was thought that rent arrears could double due to the direct payment of Housing Benefit to claimants, instead of being used to directly pay off the applicant’s rent arrears. An extra £2million of income had been budgeted in 2013/14 due to it being a 53 week year and the proposed rent increase averaging at 4.36%. The item entitled Transfer to Debt Repayment Reserve, with £3.18million allocated for 2013/14, was to pay one of the loans taken out to facilitate the move to self-financing of the HRA. The majority of the loans had been taken out with the Public Works Loan Board and were due to mature in 25 years time. However, one loan of £31.8million had been taken out at a variable rate of interest and would mature in ten years time. The Housing Portfolio Holder had thought it prudent to put aside 10% of the loan principal each year so that the Council would have the full amount available to pay off the loan when it matured.

 

The Director highlighted the position for the individual cost centres within the Housing Revenue Account, in comparison to 2012/13:

·     Supervision & Mgmt (General)           £42,000 increase in expenditure;

·     Supervision & Mgmt (Special)            £25,000 increase in expenditure;

·     Rents, Rates, Taxes etc                     £15,000 increase in expenditure;

·     Other Expenditure                               £84,000 increase in expenditure;

·     Capital Charges                                  £587,000 reduction in expenditure;

·     Property Related Income                    £1.896million increase in income;

·     Interest Income                                   £67,000 reduction in income;

·     Interest Payable                                  £24,000 increase in expenditure;

·     Support & Trading Services               £18,000 increase in expenditure; and

·     Housing Repairs Programme             £79,000 increase in surplus.

 

When questioned by Members, the Director of Housing stated that the proposed rent increase for 2013/14 would be discussed with the Tenants & Leaseholders Federation at their next meeting, but the Federation was aware of the rent increases due to the policy of rent convergence. The Housing Portfolio Holder added that the money raised by the rent increases would be used to invest in the Council’s housing stock, which was why a lower increase was not recommended for 2013/14. The Director informed the Cabinet Committee that, as the HRA subsidy system had been disbanded, the Council would not suffer any penalty from 20% of its properties not achieving rent convergence by April 2017.

 

The Director reported that the HRA was receiving a contribution from the General Fund relating to the Grounds Maintenance work undertaken on estates which contained council-owned property, and that there was provision in the HRA 30-year plan to repay the other loans from the Public Works Loan Board when they mature in 25 years time.

 

General Comments

 

There was concern expressed about the level of reserves that the Council currently had. At the end of 2016/17, the reserves were predicted to stand at 57% of the Council’s net budget requirement, which was more than double the stated aim of 25%. It was felt that this level of reserves was not needed and that the Council should start to use these funds for the benefit of its residents.

 

Recommended:

 

(1)               That the detailed Directorate budget for the Office of the Chief Executive be recommended to the Cabinet for approval;

 

(2)               That the detailed Directorate budget for Corporate Support Services be recommended to the Cabinet for approval;

 

(3)               That the detailed Directorate budget for the Office of the Deputy Chief Executive be recommended to the Cabinet for approval;

 

(4)               That the detailed Directorate budget for Environment and Street Scene be recommended to the Cabinet for approval;

 

(5)               That the detailed Directorate budget for Finance & ICT be recommended to the Cabinet for approval;

 

(6)               That the detailed Directorate budget for the Housing General Fund be recommended to the Cabinet for approval;

 

(7)               That the detailed Directorate budget for Planning & Economic Development be recommended to the Cabinet for approval;

 

(8)               That the detailed Directorate budget for the Housing Revenue Account be recommended to the Cabinet for approval; and

 

(9)               That the Finance & Performance Management Scrutiny Panel be requested to investigate the issue of recharging within the Council’s budgets and make any recommendations accordingly.

 

Reasons for Decision:

 

To give Members an opportunity to review and provide recommendations on the detailed budget prior to adoption by the Cabinet and the Council.

 

Other Options Considered and Rejected:

 

Other than deciding not to review the budget there were no other options.