Agenda item

(Director of Finance & ICT) To consider the attached report (FPM-007-2013/14).

The Finance and ICT Director presented a report on the revenue and capital financial monitoring for the first quarter of 2013/14. 

The report considered the financial monitoring on key areas of income and expenditure within the first quarter of 2013/14. The salaries schedule showed an underspend of £99,000 or 2.0%, compared to this time last year of 3.4%. Also the investment interest levels in 2013/14 were slightly below expectation and significantly below the previous year, with no sign of rates improving even in the longer term. Investment returns in previous years were also higher due to the longer term deals maturing at better rates than available now. The Council had received £1.940m of the original £2.5m investment placed with Heritable Bank which brought the recovery to 77.28%, with a further payment of £420,161 received in August 2013, bringing the recovery to 94%. Development control was £19,000 below expectations, although pre-applications income had exceeded the full year budget and the income estimated for 2013/14 would be reassessed during the 2014/15 budget process to see whether or not adjustments to budget would be required. Building Control income was also down by £35,000 and expenditure was down by £20,000. This would probably fall into overall deficit during the financial year unless remedial action was taken. Licensing income was also below expectation with fewer renewals on other licensing, which appears to relate to the recession. The income from MOT’s carried out by the fleet operations were below expected and expenditure on salaries was down, which meant the £11,000 expected surplus was unlikely to be achieved unless things improved quickly. Local Land charges was in line with the previous year and above the original estimate which suggested income would exceed the budget for the year. The Housing Repairs Fund was currently showing an underspend of £323,000, but a large proportion of the expenditure was seasonal falling within the winter months. Overall it was too early in the financial year to be certain of the final outcome but income levels were down.

From the 1 April 2013 the Council was entitled to share the business rates collected. Changes in the rating list were important because of the local retention and the overall funds available to the Council would increase or decrease as the total value increased or decreased. The non-domestic rate estimated for 2013, started with a gross yield of £40,208,899 which was reduced by various reliefs for charities and small businesses to £31,897,379. At the end of June 2013 the net rate yield had reduced by £157,824 and whilst the Council retained 40% of the gains and losses, this would mean a reduction in funding of £63,130. The position could be improved over the rest of the year but concerns had been raised as the district was losing businesses to the Enterprise Zone in a neighbouring district. The cash collection was also important as the Council would be required to make payments to the Government and other authorities based on their share of the rating list, even if the Council did not collect any money. It was important that effective collections were made, as this would generate a cash flow advantage to the Council. As of June 2013 the total collected was £10,846,362 and payments out were £10,435,861 which meant that the Council held £410,501 of cash and so the Council’s overall cash position had benefited from the effective collection of non-domestic rates.

The major capital schemes included the House building programme which was primarily aimed at the development of difficult to let garage sites, with the first phase starting in Waltham Abbey early in 2014. At this stage expenditure had been limited to some initial fees. The current Capital Programme had an allocation of around £11.7m for the various schemes, which would be revised in line with the latest cost estimates and cashflow forecasts provided by the development agent, East Thames.

The Cabinet Committee requested that with the likelihood of cash collection becoming a more prominent problem in the financial climate, they would like to have a presentation from Officers on the collection methods.

Resolved:

(1)       That the Quarterly Financial Monitoring report for the period 1 April 2013 to 30 June 2013 regarding the revenue and capital budgets be noted.

Reasons for Proposed Decision:

To note the first quarter financial monitoring report for 2013/14.

Other Options Considered and Rejected:

No other options available.