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 2014/15.The budgets were presented on a directorate by directorate basis in line with the new directorate structure coming into force on 1 April 2014. In September 2013 it had been identified that a saving target for 2014/15, of £0.7 million had been set, which had been achieved through £354,000 savings from the Directorate restructure and additional income from the purchase of the lease of 2-18 Torrington Drive, which should bring in an additional income of £224,000 and a number of more minor items. 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 2014.

 

Chief Executive

 

The Director of Finance and ICT reported that the directorate restructure had resulted in the chief executives budget now only consisting of charges defined as corporate activities by the CIPFA accounting code of practice and service reporting code of practice. The original estimate for 2013/14 CSB had been an expenditure of £1.048 million, with a probably outturn of 0.994million. The current draft estimate for 2014/15 was 0.956million, which followed a more detailed analysis of activity of Democratic Services and the on costs being allocated into the Governance Directorate.

 

The Director of Finance and ICT advised that the CSB budget showed planned savings of £22,000 in relation to salary savings from the directorate restructure. The District Development Fund (DDF) budget included £61,000 for Local Land & Property Gazetteer (LLPG) works, including the remainder of the £100,000 for LLPG funds previously allocated and a £150,000 for the transformation programme.

 

Councillor Knapman enquired whether the transformation programme would translate into savings. The Director of Finance and ICT advised that the funding would include ICT usages, head to desk ratio, the one-stop shop idea and a amalgamation of the reception areas and that the Chief Executive would produce business cases, prior to any spending.

 

Communities Directorate

 

The Director of Housing reported that the total original estimate for 2013/14 had been expenditure of £3.857 million, with a probable outturn of £3.458million. The current draft estimate for 2014/15 was £3.525million, which represented a year on year decrease of £332,000.

 

The Director of Housing advised that the main CSB change between periods was the slippage of commissioning the Town Mead All Weather Pitch. Other areas highlighted were as follows;

 

·         The way Public Sector Housing Grants were accounted for had altered.

·         Officers in the Housing Options Team had spent more time on homelessness issues in the current year, leading to an increased allocation of staffing costs.

·         Slippage in Voluntary Sector Support items within the Welfare Transport Scheme had seen £16,000 carried forward to 2014/15 and a fall in income on the museum budget due to it’s closure for refurbishments meant that net expenditure was expected to  increase by £19,000.

·         Within Sports Development and Other Miscellaneous Activities there was an increase  due to the new Safeguarding team being set up. Also the Sports Development service had increased by £41,000 due to external funding being received in earlier periods.

 

 Housing Revenue Account

 

The Director of Housing reported that the types of expenditure and income that were allocated to the HRA were governed by legislation.  The general premise used to assess the legitimacy of a charge to the HRA was whether it was ‘directly related to, or in support of, the management and maintenance of HRA property.’

 

The Director of Housing reported that the total original estimate for 2013/14 had been expenditure of £32.5 million, with a probable outturn of £26.9million. The current draft estimate for 2014/15 was £27.4million, which represented a decrease of £5.1million.

 

The depreciation due to the introduction of the new component replacement cycles had increased significantly year on year. However, the Council had agreed with the External Auditor a revised method of calculating the depreciation charge lowering it to £13.2m in 2014/15.

 

The income estimated for 2013/14 was £34million, with a probable outturn of £33.9million and current draft estimate for 2014/15 was £34.6million.  It was proposed to increase rents by 4.91% and the Government’s Rent Convergence Policy was currently being consulted upon, with a proposal to cease its rent convergence  regime from April 2015. There was also additional income in 2013/14 as it was a 53 week year. There was a proposal put forward at the meeting that  Council Dwellings should be let at “target rents”, instead of the same rent charged to the previous tenant.  It thus was accepted, there would be additional rental income of £0.25million.

 

 

The Supervision and Management General original estimate expenditure had increased year on year by £383,000.  The costs were predominately employee related and the services were provided to all tenants or the HRA as a whole.  The main reason for the increase was due to increased Sales of Council Houses and New Build Costs, which was a new heading for revenue costs that could not be charged to capital and was recognised as an asset.

 

The Supervision and Management Special original estimate expenditure had increased year on year by £330,000. Reasons were that some enhancement expenditure had been allocated here, the Grant for Supporting People had been lost and that Employee costs had increased.

 

The Rents, Rates Taxes original estimate expenditure had increased year on year by £21,000.  The expenditure related to the types of costs borne by the HRA and the main reason for the increase was due to a 9% increase in Public Liability Insurance for HRA Land and empty property relief on Rates and Council tax which had been greatly restricted.

 

The transfer to Self Financing Reserve included an amount of 10% of the variable rate debt per annum which would be set aside and available when the debt was due to be repaid in March  2022.

 

Governance Directorate

 

The Director of Corporate Support Services reported that directorate restructure had resulted in services from the Corporate Support Services Directorate being amalgamated with services previously in Planning & Economic Development, the Office of the Chief Executives and Deputy Chief Executives Offices. The net decrease in total CSB from £3.2million in 2013/14 to £3.09million in 2014/15 was largely due to salary saving from the restructure. The total DDF moves from a probable outturn saving in 2013/14 of £104,000, which was mostly due to the ‘break‘ in Council elections, to net expenditure in 2014/15 of £211,000. The DDF expenditure identified in 2014/15 was the rephrased claims for Land Charge Searches, additional Document scanning for Planning, costs for severance and a new Assistant Director post identified in the restructure.

 

The Director of Corporate Support Services highlightedthe changes within the directorate budget as follows;

 

·         Elections - The costs were previously in OCE directorate and the increase in net expenditure in 2014/15, was attributable to one third of the district elections scheduled for May 2014 (DDF saving in 2013/14) and incremental cost of European Elections which would be only 75% reimbursed by central government. Also included in 2013/14 and 2014/15 were DDF amounts of £7,000 and £33,000 income and expenditure for Individual Registration.

·         Member Activities – The costs were previously in OCE directorate and the total increase in CSB budget were due to re-allocation of charges of Democratic Services (savings identified on Chief Executive Budgets).

·         Planning Services – The costs were previously in PED directorate. There was no net change in the total budget which remained at £1.56million. The most significant change was the increase in the cost of specialist conservation advice from Essex CC. Other decreases in service costs were offset by additional conservation staffing funded from Section 106 monies.

·         Other Activities – The costs were previously in OCE, DCE and CSS directorates. The total original estimate decreased in CSB from £273,000 to £228,000, with the most notable change being the cessation of depreciation to Local Land charges for IT systems, and an increase in income for search charges.

·         A net saving of £27,000 was included in 2014/15 as a result of the Directorate restructure, which was made up of salary savings less any severance pay due.

 

Neighbourhoods

 

The Deputy Chief executive reported that the total original estimate for 2013/14 had been £9.327million, with probable outturn for 2013/14 at £9.508million. The current draft estimate for 2014/15 was £9.369million, which represented a decrease of £139,000 on the probable outturn.  The CSB net expenditure increased from original estimate 2013/14 to the probable outturn due to further strain on market rental income and a fall in other forms of income, which had been offset slightly by an increase in the rents on industrial estates. The increase between probable outturn and the original outturn for 2014/15 was due to a further rental increase on other Industrial Estates, an increase in Pay & Display income and savings generated from the recent restructure of Council Services. The DDF items included the additional works, which needed to be carried out in relation to the Local Plan and severance payments due to the restructure of services and given rise to the increase of spend from original estimate for 2013/14 to the probable outturn.

 

The Deputy Chief Executive highlightedthe changes within the directorate budget as follows;

 

·         Environmental Health – The main reason for the decrease from original estimate 2013/14 to the probable outturn was due to costs from a recent court case being awarded to the Council. The increase between years related to an increase in   employee costs and staff allocations to the various services.

·         Hackney Carriage Licences – New regulations had increased costs over the period of the estimate to £86,000.

·         Leisure Management – The fall in net expenditure from original in 2013/14 to proposed outturn was due to staff allocations and a lower than expected inflationary increase on the contract. The contract inflation and Building Maintenance recharges brought the original for 2014/15 back in line with original 2013/14 levels.

·         North Weald Airfield – The airfield strategic review was due to conclude in 2013/14 which would be a reduction in net expenditure for 2014/15 and the market rents had continued to have a major effect on the operations side of the airfield.

·         Waste Management – A fall in net expenditure from original 2013/14 to the proposed outturn arose due to contract inflation not being as large as expected.

·         Land Drainage & Sewerage – Staff allocations accounted for the movements in estimates.

·         Parks & Grounds – The major reason for increases in the budget was the new procedures in the way in which the Council accounted for commuted sums, which could no longer class the sum as income to reduce net expenditure. There was also a DDF amount included for service level agreements in place for the Countrycare service.

·         Technical Services Other – Between the original 2013/14 and probable outturn, the income levels had decreased, mainly for Penalty Charge Notices in car parks, and MOT income in Fleet Operations. These had been off-set slightly by fluctuations in staff allocations. For 2014/15 budgets, the first rise in Pay and Display for 5 years had helped to negate the fall in income from the previous year.

·         Forward Planning and Economic Development – The estimates were affected by fluctuations in the Local Plan enquiry and production phases, which were dependant upon items raised by the public. From the original estimate to the probable outturn for 2013/14, there was a DDF item in Highways Infrastructure for Waltham Abbey Regeneration Projects.

·         Land & Property – This was higher than expected, due to the void units at Oakwood Hill Industrial Estate and Workshop units, which had seen a fall in income, placing strain on the net income receivable. This had been off-set by increase from rent reviews at Brooker Road and the increased income from the David Lloyd centre. Additional purchases of business units were also assisting in keeping the net income higher than original 2013/14 estimates.

·         Support and Trading Services – The various elements of employee costs due to the restructure were the main cause of fluctuations in estimates in this area and from 2015/16 onwards, the fluctuations should settle down.

 

The Directorate of Environment and Street Scene advised that a report would be presented shortly to the Cabinet Committee concerning the Parking charges and the generation of £150,000 that would be required.

 

Resources Directorate

 

The Director of Finance and ICT reported that the directorate restructure had resulted in services from the Finance and ICT Directorate being amalgamated with services previously in Corporate Support Services. The original estimate increased the total CSB from £1.87million in 2013/14 to 2.22miliion in 2014/15, of which £135,000 was attributable to salary & pension cost increases across the services. The DDF budgets increase from £171,000 to £218,000 across the two years, with a reversal in the 2013/14 probable outturn, which was mainly attributable to the NNDR reassessment of the Civic Offices building, various Council Tax & Benefits Support grants and increased Technical Agreement Contributions.

 

The Director of Finance and ICT highlightedthe changes within the directorate budget as follows;

·         Housing Benefits – The decrease in 2014/15 of £155,000 related to the change in the subsidy to total cost ratio, resulting in an increase in the amount of subsidy paid by the DWP for both rent allowances and rent rebates.

·         Local Taxation – The total increase in the CSB budget from £1.18million to £1.25million was due in part to a reduction in court cost income on council tax collection and salary and pension cost increases.

·         Other Activities – The decrease in vacancy allowance of £136,000, as this had been dropped to 1.5% of total salaries (previously 2.5%).

·         Finance Support Services - It would have been inappropriate to make a comparison on Finance Miscellaneous, as the prior year total included savings that had now been allocated to services. The 2014/15 budget included all unallocated surpluses and deficits arising from changes to the first draft of the budgets including movements resulting from the directorate restructure.

 

Recommended:

 

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

 

(2)          That the detailed Directorate budget for Communities be recommended to the Cabinet for approval, including:

 

(a)  An Average Rent Increase for Council Dwellings of 4.91%; and

 

(b)  From 7^th April 2014, vacant Council properties be re-let at their Target (Formula) Rent, and not the rent necessarily charged to the previous tenant;

(3)           

 

(4)          That the detailed Directorate budget for Governance be recommended to the Cabinet for approval;

 

(5)          That the detailed Directorate budget for Neighbourhoods be recommended to the Cabinet for approval; and

 

(6)          That the detailed Directorate budget for Resources be recommended to the Cabinet for approval.

 

Reasons for Decision:

 

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

 

Other Options Considered and Rejected:

 

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