Agenda item

To consider the attached report (FPM-004-2018/19).

The Assistant Director (Accountancy) provided the Cabinet Sub-Committee with an overall summary of the revenue outturn for the financial year 2017/18.

The net expenditure for 2017/18 totalled £12,766,000, which was £343,000 (2.7%) below the original estimate agreed in February 2017 and £96,000 (7.5%) below the revised estimate compiled in December 2017. The variance on the revised position was almost entirely due to a change in accounting treatment relating to the rent free periods on the shopping park.

There was an in year surplus on the business rates collection fund of £1,115,000 which had moved the fund into an overall surplus of £1,028,000. There was still a significant amount set aside for Business Rate appeals

The medium term financial strategy had estimated that the Council’s portion of the deficit on the business rates collection fund would be £542,000 and on the council tax collection fund would be a surplus of £192,000. In actuality, the business rates collection fund showed a surplus at the end of March 2018 of £411,000 and the Council Tax collection fund showed a surplus of £119,000 which would be paid into the General Fund in future yearsand provided a combined net position of £880,000 better than anticipated.

The Continuing Services Budget (CSB) expenditure was £343,000 below the original estimate and £830,000 lower than the revised. The variances had arisen on both the opening CSB, which was £252,000 above the revised estimate, and the in-year figures which were £1,082,000 lower than the revised estimate.

Unlike most recent years, when measured against the original budget, salaries were overspent by £99,000. Actual salary spending for the authority in total, including agency costs, was £23,439,000 compared against an original estimate of £23,340,000. When comparing to the revised estimate there was an underspend of £301,000, most of which related to the General Fund, although some salary costs were DDF and showed a small underspend.

The actual opening CSB was £38,000 below the original and £252,000 above the revised position. The main overspend related to Housing Benefits expenditure but this was offset partially by the underspend on salaries.                                                                                                    

The in year CSB movements were rather different to the revised estimate, with the actual CSB in year reduction of £1,763,000 being £1,082,000 lower than the revised estimate. The largest individual item was a change in accounting treatment for the rental income from the shopping park. In effect income relating to the whole period of the leases had been spread over the whole period rather than just the time when income was actually received. The effect was that additional CSB income originally included in later periods had been accounted for in 2017/18 and there would be no change to the overall position once all tenants were paying.  The other two more significant items were a reduction in expected savings from the leisure contract of £106,000 due to some additional maintenance and TUPE related costs and offsetting this, additional interest income of £148,000 as cash balances available for investing did not reduce as quickly as expected.      

A transfer to the DDF of £1,000,000 was included in the Medium Term Financial strategy and revised budget as there would be a significant one off expenditure over the next couple of years as the people strategy was implemented.

The net DDF expenditure was £968,000 which was £922,000 below the original estimate and £1,333,000 below the revised estimate. There were requests for carry forwards totalling £1,470,000 and therefore the variation actually equated to a £137,000 net over spend on the DDF items undertaken. These one-off projects were akin to capital, in that there was regular slippage and carry forward of budgetary provision.

The DDF increased between the Original and Revised position by £411,000, overall this was more significant than the previous year and as always there were some large swings on both income and expenditure. On the Income side additions relating to the technical agreement with major preceptors (£285,000) and various benefit related grants (£111,000). Offsetting this was an amount included for the People Strategy costs (£300,000), reduced Development Control income (£205,000), amounts brought forward from 2016/17 and additional resources provided for the Local Plan (£199,000), and an amount brought forward relating to the Garden Town project of £178,000. As always there were a significant number of other more minor items of both additons and reductions to the programme totalling £75,000.

The £1,333,000 difference against the revised estimate arose largely in the Neighbourhoods Directorate with an underspend of £971,000 showing. The main two items related to £272,000 slippage on Local Plan expenditure and £527,000 relating to additional income and slippage on the Garden Town project. Other significant underspends were Revenues Staffing (£84,000), Building Maintenance (£83,000), unused Flexible Homeless Grant (£83,000) and Smart Places funding (£70,000).

The DDF with the balance as at 31 March 2018 being £4,220,000, was actually a small increase on the previous year. However with the expected spend in 2018/19 particularly relating to the People Strategy, there would be nothing left unallocated in the DDF going forward so any further DDF requirements would need to be met via a transfer from the General Fund. The spending from the Invest to Save fund was expected to be exhausted by the end of 2018/19.

A deficit within the HRA of £1,674,000 and of £1,564,000 was expected within its original and revised revenue budgets respectively; the actual outturn was a deficit of £1,576,000. There was therefore a difference of only £12,000 between the revised estimate and the actual. The major change between the Original and Revised estimates was due to the cessation of the transitional measures regarding depreciation brought in when the Housing Subsidy system had ended. The variance between the actual and revised was due to a lower depreciation charge, which had in turn enabled the Council to increase the contribution to capital by a similar amount. The HRA started the new financial year in a slightly better position than expected at £2,280,000. There was still significant uncertainty facing the HRA going forward with continued 1% rent reductions and the potential high value void levy

Recommended:

(1)          That the provisional 2017/18 revenue outturn for the General Fund and Housing Revenue Account (HRA) be noted;

(2)          That as detailed in Appendix E, the carry forward of £1,470,000 District Development Fund (DDF) and £23,000 Invest to Save Reserve (ITS) expenditure be noted.

Reasons for Decision:

To note the provisional revenue outturn.

Other options Considered and Rejected:

No other options proposed.