Agenda item

To consider a report by Councillor Julian Thompson-Hill, Lead Member for Finance and Assets (copy enclosed) detailing the latest financial position and progress against the agreed budget strategy.

Councillor J. Thompson Hill presented the report which detailed the Council’s revenue budget and savings as agreed for 2012/13, as at the end of January 2013.  It provided a summary update of the Capital Plan, the current financial position of the Council and sought approval for recommendations made by the Strategic Investment Group.

RESOLVED - that Cabinet:-

(a)          notes the budgets and savings targets for the year, as specified in the report, and progress against the agreed budget strategy, and

(b)          agrees to the funding of feasibility works in relation to Rhyl High School and Bodnant Community School, Prestatyn in the sum of £1.8 million

Councillor J. Thompson Hill presented the report which detailed the Council’s revenue budget and savings as agreed for 2012/13, as at the end of January 2013.  It provided a summary update of the Capital Plan, the current financial position of the Council and sought approval for recommendations made by the Strategic Investment Group.

He explained that the latest revenue budget forecast had been included as Appendix 1 and indicated an under spend across service and corporate budgets of £631k (£435k last month), which represents a variance of 0.55% across the total net budget.  The position for schools forecasts positive net movement on balances of £286k on delegated budgets and £161k on non-delegated school budgets.  The Housing Revenue Account summary had been included in Appendix 1 for information but this was a separate fund and not part of the Council’s main revenue budget.      

            Appendix 2 provided an update on progress against the savings and pressures agreed as part of the 2012/13 budget setting process.  In total, net savings of £3.443m had been agreed and £3.102m (90%) have been achieved with £316k (9%) classed as in progress and £25k (1%) had been deferred to next year.  The deferral related to savings due to printer rationalisation.  The remaining items still classed as ‘in progress’ were all considered achievable, but in most required analysis of a full year’s activity to properly assess whether the saving measure listed had actually been achieved.

Cllr Thompson Hill provided a summary of the following Service Budgets which had been detailed in the report:-

·                     Business Planning and Performance.

·                     Adult & Business Services.

·                     Highways & Environmental Services.

·                     Children & Family Services.

·                     Communications, Marketing & Leisure.

·                     Customers & Education Support.

·                     School Improvement & Inclusion.

·                     Schools.

·                     Corporate Budgets.

He explained that the additional cost of the immediate response to the recent flooding events had fallen short of the Emergency Financial Assistance Scheme threshold, and there had been an assumption that the Council would fund the cost.  The Head of Finance and Assets (HFA) confirmed that a claim for all eligible costs had been submitted to Welsh Government for discretionary funding.  There were on-going costs in relation to exemptions from Council Tax and a further emerging pressure had arisen from the winding up of the Mutual Municipal Insurance Company in 1992, as Local Authority Members would be responsible for liabilities still arising relating to events prior to 1992.  The HFA explained that Denbighshire would meet a proportion of the liability claims, based on population figures, which would amount to approximately 20% of the costs.  He informed Members that a contingency fund would be built into the budget and details of the costs would be included in the next finance report to Cabinet. 

There were potential liabilities in respect of the former Rhuddlan Borough Council, and additional liabilities were now arising in respect of the former Clwyd County Council.  The amount of the potential Clwyd liability was uncertain and the Council’s total exposure to the Clwyd claims was approximately £2.5m, but it was unlikely that the liability would be triggered at this level.

            Council Tax collection rates had exceeded assumptions and it had been presumed that any benefit would be utilised to contribute to the funding of the Council’s strategic investment priorities as part of the Corporate Plan, Councillor J. Thompson-Hill confirmed that full details would be included in the yearend report.  Expenditure to the end of January, 2013 had been £19.4m against an agreed Plan of £31.4m.  Last year the final quarter accounted for 43% of the total expenditure for the year.  Appendix 3 provided a summary of the current plan and how it had been financed.  Appendix 4 provided an overview of major capital projects and details of the two schemes proposed for approval by the Strategic Investment Group had been outlined in Appendix 5.  The proposed latest Housing Revenue Account had been included as a separate item on the Cabinet agenda.

The Chief Accountant provided confirmation that the financial markets remained quite volatile which continued to limit investment opportunities.  The Treasury Management Strategy Statement and Investment Strategy 2013/14-2015/16 would be presented to Council for approval on the 26^th February, 2013.  Total borrowing remained at £134.08m and total investments were £19.2m, and details of risks and measures to reduce them had been outlined in the report.

Councillor E.W. Williams provided a brief summary of the major changes to education finance with schools being funded directly, through fair funding for schools, based on the requirements to deliver education and not on historical basis.  He felt consideration should be afforded to arranging a social event to discuss the implications of the new system and to provide clarification.

In response to questions from the Leader regarding the funding provision for the initial feasibility works/detailed design and pre-construction stages to enable formal grant approval to be offered by the Welsh Government in respect of Rhyl High school and Bodnant Community School, Prestatyn, the HFA explained that the design works would be undertaken at risk on the assumption that that funding would be provided.  Councillor E.W. Williams highlighted the importance of being proactive and having strategic plans in place to proceed with identified projects.  The Chief Executive expressed the view that Denbighshire had adopted the correct approach to the 21^st Century Schools Programme.  However, he confirmed that there were risks in proceeding with the design works as there were no guarantees and only verbal assurances had been received with regard to the provision of funding.  Members were informed that the approach had been reviewed by the Strategic Investment Group in January, 2013, when approval had been recommend for the design works to commence at an estimated cost of £1.8m.

During the ensuing discussion, it was:-

RESOLVED - that Cabinet:-

(a)          notes the budgets and savings targets for the year, as specified in the report, and progress against the agreed budget strategy, and

(b)          agrees to the funding of feasibility works in relation to Rhyl High School and Bodnant Community School, Prestatyn in the sum of £1.8 million