Agenda item

(To receive a report by the County Finance Officer which describes the Council's financial performance for 2015/16 and makes proposals for the carry forward of under and over spendings into the current financial year)

Consideration was given to a report by the Chief Finance Officer, which invited the Committee to consider a report on the Review of Financial Performance 2015/16, which would be considered by the Executive at its meeting on 6 September 2016.

The Chief Finance Officer presented the report to the Committee, which described the Council's financial performance for 2015/16; identified and explained the variances from the Council's revenue and capital budgets; made proposals on the carry forward of over and under spendings into the current financial year; and reported prudential and financial performance indicators for 2015/16. It highlighted that the report, and any comments of the Scrutiny Committee, would be presented to the Executive at its meeting on 6 September 2016.

Members were provided with an opportunity to ask questions, where the following points were noted: -

·         The impact of business rate appeals could be a significant risk to councils, but business rate income was a complex topic and would merit consideration in its own right;

·         A councillor commented that prior to the setting of the 2015/16 budget, it was widely reported that it would be a challenging year. However, an underspend of £20 million (County Council budget, net of school budget) had occurred.  The councillor felt that improved budget monitoring during the course of 2015/16 would have enabled the Council to use identified underspends to deliver improved services; 

·          It was felt that if certain information technology systems in the capital programme had been implemented sooner, the County Council could have achieved savings;  

·         With the exception of the items listed in paragraph 1.77 of the report [proposed transfer of funds to reserves], it was noted that no executive directors had submitted any bids to carry forward underspends in excess of 1%, on the basis that executive directors understood the overall financial challenges facing the County Council and they had not identified any special circumstances, other than those items in paragraph 1.77, to merit making a bid for funding over and above the 1% limit; 

·         It was suggested that more information should have been included in the report to the Executive on how the underspends of up to 1%, representing £4.295 million (referred to in paragraph 1.76 of the report) had been allocated;

·         In relation to the allocation of funds from underspends up to 1% (paragraph 1.76 of the report), Members were advised that it was a matter for each executive director, in consultation with the relevant Executive Councillor, to determine how these funds would be allocated; 

·         In relation to the proposal to add £0.498 million to reserves for Civil Parking Enforcement (paragraph 1.77 of the report), it was understood that the reserve funds would be used to provide closed circuit television to support parking enforcement activity, and could not be used for other activities, but further clarification would be required on whether under the relevant legislation, the bid for a street lighting reserve of £100,000 (paragraph 1.77 of the report) could be funded from it; 

·         Approximately £4.5 million had been raised by the Council Tax increase of 1.9% for 2015/16; 

·         It was noted that the Disability Facilities Grant (DFG) had been passed to the County Council as part of the Better Care Fund since 2015/16.  The responsibility for the approval of the Better Care Fund rested with the Lincolnshire Health and Wellbeing Board.  In 2015/16, the full Better Care Fund identification of allocated DFG had been transferred to district councils.  A higher element of DFG had been identified in the Better Care Fund for 2016/17, but no district council had received a lower level of DFG funding than under the previous system;   

·         The capital programme underspend on broadband was a concern and there was a risk that broadband would not be delivered to an adequate level and might require additional funding in the future.  The Overview and Scrutiny Management Committee would consider progress with broadband as part of its next regular update on the topic;

·         A councillor commented that an overall underspend of 3% of the Council's total budget was not excessive, and the Executive and the executive directors should be congratulated for managing the budget in challenging circumstances;

·         Another councillor commented that the overall budgetary position of the County Council was good;

·         The reported underspend of £18.802 million on the schools budgets was a cumulative total, meaning it was inclusive of previous year underspends, and did not solely relate to the 2015/16 financial year; 

·         Executive directors actively monitored budgets.  For example, one executive director had taken action during 2015/16 to manage a potential overspend, by reallocating funds within the directorate. Executive directors continued to monitor budgets, and data from the in-year monitoring of the 2016/17 budget was a factor in setting the budget for 2017/18; 

·         The Committee concluded that it would like to see more information on budget monitoring considered by overview and scrutiny committees during the course of the year, including consideration by the Overview and Scrutiny Management Committee;

·         The Committee also recorded that it would look forward to improved financial information in the current year to enable underspends to be identified sooner, rather than being reported after the end of the financial year;

·         An underspend of £20 million (County Council budget, net of school budget) in 2015/16 might be a relatively small percentage of the County Council's budget.  However, for a district council, this sum would be substantial.  The County Council needed to ensure that appropriate explanations were given to the public for this level of underspend; 

·         The Council's overall budget strategy was on course and there was no need for the County Council to change its approach.

Upon putting the recommendations in the report to the vote it was:

RESOLVED

(1)  That the Committee supports the four recommendations in the report to the Executive.

(2)  That the above comments be passed onto the Executive for its consideration.

Councillors P M Dilks and R B Parker requested that their votes against supporting the recommendations were recorded.