Agenda item

(Director of Resources) To consider the attached report (FPM-022-2014/15).

The Director of Resources presented the draft General Fund and Housing Revenue Account (HRA) Budgets for the financial year 2015/16. The budgets were presented on a directorate by directorate basis. The Financial Issues Paper which incorporated the Medium Term Financial Strategy (MTFS) was considered in July 2014 and identified £0.5 million savings target for 2015/16, following the savings from the new waste management contract. Although since then, the Cabinet had agreed to a reduced weekly rent for the North Weald Market to prevent closure and supported a growth in Economic Development team, which had increased the target to nearer £1 million. 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 2015.

 

Chief Executive

 

The Chief Executive reported that the budget was made up of mostly recharges from services for corporate and public accountability activities, subscriptions and an Efficiency Challenge Support. The original estimate for 2014/15 had been an expenditure of £1.196 million, with a probably outturn of £1,211 million. The net increase had been attributed to increased recharges from the Directorate Policy Groups as a result of the changing responsibilities of an Assistant Director post. This included £58,000 for the Local Land and Property Gazetteer for 2015/16 and contributions from HRA of £13,000. The £150,000 DDF for the Council Transformation Programme had been re-phased for £75,000 to be spent in 2014/15 and the other half in 2015/16. The residual funding received from the Improvement East was also expected to be spent in this financial year. An increase in corporate subscriptions for £10,000 from CSB funding was for the London Stansted Cambridge Consortium, which was to promote the economic development of the District.

 

Members were concerned about the transformation project and how it would translate into savings. The Chief Executive advised that detailed businesses cases would be put forward when they had arisen with the suggested savings and this fund would help implement them. 

 

Communities Directorate

 

The Director of Communities reported that the total original estimate for 2014/15 had been expenditure of £3.555 million, with a probable outturn of £3.463 million for 2014/15 and £3.443 million for 2015/16, which resulted in a decrease of £112,000. The main CSB change was the recharge to the Housing Revenue Account (HRA) for the Anti-Social Behaviour team. The main DDF items were slippage from 2013/14, schemes coming to an end in 2014/15 and the costs of the Safeguarding Audit being allocated to the HRA for 2014/15 and 2015/16, which were being offset by the amounts allocated to the Homeless budgets for legal challenges impending.

 

The Director of Housing advised that other areas highlighted were as follows;

 

·         Staff allocations had increased due to the increased administration of Disabled Facilities Grants Scheme, Discretionary Grants and other Private Sector Housing matters;

·         The Homelessness Advice Service had seen an increase in enquiries as a consequence of the new Housing Allocations Scheme for homelessness claimants and the legal challenges and expert advise required;

·         The Welfare Transport Scheme had become independent, in conjunction with approvals of general grants being removed from the budget;

·         The expansion of the museum had seen a rise in NNDR and rent in 2015/16;

·         General Fund savings had been achieved through the reallocation of costs for the usage of the Limes Farm Hall and other staff allocation issues; and

·         The reduction of Support Services owing to the Council reorganisation.

 

Councillor Kane advised that at the last meeting of this Committee, officers were asked to find a more effective use of the existing budgets relating to youth engagement from 2016. However, in view of the important role that young people play in the community, and the valuable contribution they could make; Councillor Kane proposed that the Committee ask the Overview and Scrutiny Committee to establish a Task and Finish Panel. This would consider the most effective use of the existing budgets relating to youth engagement from 2016/17 and include some representatives from the Youth Council, as co-opted members, to provide the Panel with the views of young people and what they feel was the best use of a relatively small financial resource.

 

Housing Revenue Account

 

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

 

The total original estimate for 2014/15 had been expenditure of £27.936 million, with a probable outturn of £26.489 million for 2014/15 and £27.784million for 2015/16. The proposed increase to rents was 2.2% and following the Government’s decision to cease the rent re-structuring from April 2015, the re-letting of Council dwellings would generate additional rental income of £50,000 a year. Furthermore the Council’s New Modern Home Standards had resulted in the depreciation charge increasing substantially and the Council had agreed with External Auditor a revised method of calculating the depreciation charge to £13.2 million in 2014/15 and £13.5 million in 2015/16.

 

The Director of Communities reported that the Housing Related Support (HRS) funding by Essex County Council had been reduced by £133,000 per annum from April 2015 for the Council’s Careline Service and the Scheme Management Service for sheltered housing and area schemes. Following discussion with the Housing Portfolio Holder regarding the HRA not being able to sustain such a large reduction in HRS funding, a review of the lost income was undertaken. This resulted in a combination of increased charges of 27p per week from April 2015, with an intention to increase charges by a similar amount in April 2016 for both Council tenants and private clients subject to no further reductions in HRS funding. The Director Communities pointed out that this would still result in the Council’s charges being the second lowest in the County.

 

The Director of Communities highlighted the changes to the directorate budget as follows;

 

·         The Supervision and Management General net expenditure had increased by £148,000, which was mainly due to changes in staff allocations under the Council restructure;

·         The Supervision and Management Special net expenditure had increased by £26,000;

·         The Bad Debt Provision had reduced since some elements of the Welfare Reforms had not proceeded;

·         The Capital charged to Revenue also remained at a high level to finance the New Build Programme;

·         The surplus HRA cash that had been invested was at a low level because of the low interest rates and the use of fewer counterparties; and

·         The transfer to Self-Financing reserve, which puts aside 10% of the variable rate of debt per annum, in readiness for the debt repayment in March 2022.

 

Councillor Murray commented whether the use of HRA for the Safer Communities Team was just an accounting change. The Director of communities advised that a great deal of the work the Safer Communities Team dealt with was related to Council residents and these had been support costs. Councillor Murray also felt that it was the wrong time to be reducing the Grant to Voluntary Organisations Budget.

 

Councillor Philip questioned the income and costs associated with the Lowewood Museum and the service agreement with Broxbourne Borough Council. The Director of Communities advised that costs for the museum were fully covered and they would look at the service agreement when or if it was renewed.

 

Members also raised concerns on the support charges for office accommodation and the recharges related to the Communities Directorate and Hemnall Street.

 

Councillor Murray advised that pursuant to the Council’s Code of Member Conduct, he declared a personal interest in this item of the agenda, in so far as his mother is in receipt of the Careline service.

 

Governance Directorate

 

The Director of Governance reported that the budget had been complied based on the new structure and included budgets for the Estates and Economic Development. The total original estimate for 2014/15 had been expenditure of £1.717 million, with a Probable Outturn of £864,000 for 2014/15 and £752,000 for 2015/16, which resulted in a decrease of £112,000. The net decrease in the Total CSB from £1.346 million in 2014/15 to £456,000 in 2015/16 was largely due to the increased rental income on the Land and Property, increased Fee income on Development Control, departmental restructures and reallocation of support services. The movement in DDF original estimate was £371,000 in 2014/15 to £155,000 for the probable outturn to £296,000 in 2015/16, which was most probably due to the shared costs for Council Elections in May 2014, increased Development Control and Land charges income and back dated property rental income resulting from rent reviews.

 

The Director of Governance highlighted the changes within the directorate budget as follows;

 

·         Elections – The efficiency savings in the cost of May 2014 elections resulted in a decrease for the 2014/15 probable outturn and would continue into 2015/16 for the May 2015 elections. There were also DDF amounts of £77,000 and £49,000 income and expenditure for Individual Registration in 2014/15 and 2015/16;

·         Governance Support Services – The costs were recharged to direct services across all Directorates and include both General Fund and HRA expenditure. The increase in CSB budget was due to the restructure of Estates, Economic Development Group and creation of Corporate Fraud team in Internal Audit, which was offset by restructures in Legal Services and Governance and Performance Management and resulted in £24,000 CSB savings across two years and £39,000 for the discontinuing of the publication of The Forester;

·         Land and Property – An increased CSB rental income on a commercial property of £282,00 mainly for the re-acquisition of the lease of the property at 2-18 Torrington Drive and DDF amounts of £301,000 in 2014/15 and £217,000 in 2015/16 for Council Asset rationalisation and various Economic Development Projects;

·         Member Activity – A reduction of £125,000 year on year for the reduction of support service recharges to members, which had been picked up by Corporate Management budgets;

·         Compliments and Complaints which was now charged out to the services; and

·         Planning and Development – The reduction of £215,000 from Planning Appeals and Enforcement. Also costs had been diverted to Development Control, which for 2014/15 the probable outturn included £120,000 CSB additional income for fees and charges and £128,000 DDF income that would be used to fund additional resources in development management for three years from 2015/16.

 

Neighbourhoods Directorate

 

The Detailed Directorate Budget for the Neighbourhoods Directorate revealed that the original estimate for 2014/15 had been £11.140 million, with a probably outturn of £11,375 million for 2014/15. The current draft estimate for 2015/16 was £10.774 million which represented a decrease of £366,000. The CSB net expenditure increased from the original 2014/15 to probable outturn due to an increase in Recycling spend and a smaller reduction in Emergency Planning internal charges. The decrease between the probable outturn and original 2015/16 was due to a saving of £541,000 on the waste contract which comprised £335,000 depreciation and a real saving of £232,000. The DDF items had a decreasing spend on the original 2014/15; the Local Plan budget had reduced and in 2015/16 Severance Pay had dropped out.

 

The panel noted the highlighted the changes within the directorate budget as follows;

 

·         Environmental Health - The budget had not changed significantly, despite the detailed staff allocations changing;

·         Hackney Carriage Licences - Net income  had fallen in the original 2015/16;

·         Leisure Management – The fall in net expenditure from original in 2014/15 to the proposed outturn was due to net effects of contribution received from SLM Ltd. And changes in building maintenance costs;

·         North Weald Airfield – The airfield strategic review would conclude in 2014/15 with no net expenditure for 2015/16. The Market rents had a continuing major effect on the operations side of the airfield with a loss of £310,000;

• Land Drainage & Sewerage – Staff allocations accounted for the movements in estimates;
• Parks & Grounds – There had been fluctuations due to changes in staff allocations and reduced public liability insurance with the original 2015/16  increased because of a one off DDF expenditure for a survey in respect of River Roding erosion;
• Technical Services Other – Penalty Charge income for 2015/16 was expected to rise and the Fleet Operations was budgeted to break even in 2015/16;
• Forward Planning and Economic Development – The estimates were affected by fluctuations in the Local Plan enquiry and production phases and the Local Plan DDF items had suffered slippage due to the complex nature of the process which compiles the Local Plan; and

·         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.

 

Resources Directorate

 

The Director of Resources reported that that the original estimate decreased the total spend from £2.645 million in 2014/15 to a probably outturn of £2.334 million for 2014/15. The DDF budgets decreased from £196,000 in the original budget to £120,000 in 2015/16 with a saving of £131,000 in the probable outturn, which was mainly attributable to various Council Tax and Benefits Support grants, inclusion of Housing Benefit overpayments and the claw back of previously granted Council Tax benefit.

 

The Director of Resources highlighted the changes within the directorate budget as follows;

 

·         Housing Benefits – The decreases in 2014/15 of £237,000 related in part to the claw back of Council tax benefit granted in previous years of £78,000, the amount of housing benefit overpayments identified to date for both rent allowances and rent rebates and a reduction in the administration and fraud investigation costs. The 2015/16 budget included restructure saving for the Benefits section including savings for staff to be transferred to the Single Fraud Investigation Service;

·         Local Taxation - The total decrease in budget from £1.16 million to £1.09 million for 2014/15 probable outturn was due to additional new burdens grant funding being made available by the DCLG. The increase in the 2015/16 original budget could be attributed to the increase in salaries and support services and a reduction in the expected technical agreement funding;

·         Other Activities – The vacancy allowance remained unchanged at 1.5% of total salaries for 2015/16. It was inappropriate to make a comparison on Finance Miscellaneous, as the previous year total included savings that had now been allocated to services. The 2014/15 probable outturn and 2015/16 budgets include all unallocated surpluses and deficits arising from changes to allocations resulting from the directorate restructure;

·         Support Services – The costs were recharged to Direct Services across all Directorates and include both General Fund and HRA expenditure;

·         Office Accommodation – The movement in budget between 2014/15 original and probable outturn was due mainly to the increase in depreciation charges of £168,000 and an adjustment on NDR relating to a revaluation of the Civic offices.  The reduction in the 2015/16 budget was due to CSB savings identified for building maintenance, energy savings and duty officers;

·         Finance Support Services - The increase from £2.70 million to £2.78 million was primarily due to Support Service recharges, in particularly the website which was previously charged to services and compliments and complaints previously accounted for as a direct service. These increases were partly offset by reduction in External Audit Fee and restructure of Directorate admin sections;

·         ICT – The combination of all ICT and Communications budgets had resulted in elimination of recharges within the service headings although the costs were still recharged out to the services; and

·         Human Resources - The decrease to £1.40 million from £1.47 million was mostly attributable to restructure reallocations for support services and the 2015/16 budgets include CSB savings of £31,000 from HR and the corporate improvement budget.

 

 

 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;

 

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

 

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

 

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

 

(6)        That the detailed Directorate budget for the HRA be recommended to Cabinet, including the following amendment in respect of the Council’s Careline Service and the Scheme Management Service for sheltered housing and area schemes;

 

(a)        That the loss of £133,000 per annum Housing Related Support (HRS) funding from Essex County Council be noted;

 

(b)        That the charges for the Council’s Careline Service be increased by £0.27 per week, for both Council tenants and private clients, with effect from 6th April 2015 and that the Cabinet’s previous decision to increase the charge for private clients by £0.20 per week from 6th April 2015 be rescinded;

 

(c)        That following a review of the duties undertaken by Scheme Managers, 10% of their time previously attributed to Housing Related Support be re-classified as Intensive Housing Management and charged as a Service Charge accordingly (which was eligible for housing benefit);

 

(d)        That the charges for the Council’s Scheme Management Service (funded from Housing Related Support Charges and Intensive Housing Management Service Charges) be increased by 5% from 6th April 2015;

 

(e)        That the increased charges for the Careline and Scheme Management Services provided to Council tenants in receipt of housing benefit not be met through any increase in compensating Housing Related Support Credit and that, furthermore, the Housing Related Support Credit currently received by such tenants be reduced by 8% with effect from 6th April 2015;

 

(f)        That there was an intention;

 

(i)            For the Careline Service to break-even; and

(ii)           That the loss in HRS funding for the Scheme Management Service would be fully recovered from April 2016, as a result of spreading the required increases in charges over two years; and

(iii)          That the HRA would be subsidising the Careline Service and Scheme Management Service by around £58,000 during 2015/16;

 

(g)        That the potential for further reductions in HRS by Essex County Council in 2015/16 and/or 2016/17 be noted.

 

(6)        That the Overview and Scrutiny Committee be asked to establish a Task and Finish Panel to consider the most effective use of our existing budgets relating to youth engagement from 2016/17 and that the membership includes some representatives from the District’s Youth Council, as non voting co-opted members; and

 

(7)        That the Leisure and Community Services Portfolio Holder develops her proposal in more detail, through the submission of the PICK form.

 

Reasons for Decisions:

 

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.