Agenda and minutes

Administration Budget, Overview and Scrutiny Performance and Value for Money Select Committee
Thursday, 24th January, 2019 6.00 pm

Venue: Crompton Suite, Civic Centre, Oldham, West Street, Oldham, OL1 1NL. View directions

Contact: Sian Walter-Browne  0161 770 5151

Items
No. Item

1.

Apologies For Absence

Minutes:

Apologies for absence were received from Councillor Curley.

2.

Urgent Business

Urgent business, if any, introduced by the Chair

Minutes:

There were no items of urgent business received.

3.

Declarations of Interest

To Receive Declarations of Interest in any Contract or matter to be discussed at the meeting.

Minutes:

There were no declarations of interest received.

4.

Public Question Time

To receive Questions from the Public, in accordance with the Council’s Constitution.

Minutes:

There were no public questions received.

5.

Revenue Monitor and Capital Investment Programme 2018/19 Month 8 – November 2018 pdf icon PDF 203 KB

Additional documents:

Minutes:

The Select Committee gave consideration to a report of the Director of Finance which provided them with an update on the Council’s 2018/19 forecast revenue budget position and the financial position of the capital programme as at 30 November 2018 (Month 8), together with the revised capital programme 2018/23.

 

In relation to the Revenue position, the Select Committee were informed that the current forecast outturn position for 2018/19 was a projected favourable variance of £0.145m after allowing for approved and pending transfers to and from reserves.

 

The most significant area of concern was the People and Place Portfolio, in the main due to the transfer of Children’s Social Care into this area. An update on the major issues driving the projections within this Portfolio was provided. Action was being taken and would continue for the remainder of the financial year to address variances and take mitigating action as detailed in the report.

 

The Select Committee noted the overall corporate position was being managed by offsetting favourable variances, most noticeably from Capital, Treasury and Corporate Accounting budgets, in part caused by the anticipated cost of borrowing and capital financing being lower than budgeted and the availability of additional Treasury Management income and unringfenced grants not allocated to service budgets.

 

Information on the Month 8 position of the Dedicated Schools Grant (DSG), Housing Revenue Account (HRA) and Collection Fund was also outlined in the report. There were no significant issues of concern in relation to the HRA and Collection Fund, however, the DSG continued to be an area which was facing a financial challenge with an increase in the projected year-end deficit. Action was being taken with the aim of reducing the cumulative deficit and

bringing the DSG towards a balanced position.

  

With regard to the Capital position, the report outlined the most up to date capital spending position for 2018/23 for approved schemes. The 2018/19 capital programme budget had been revised to £48.952m at the close of Month 8, a net decrease of £40.706m from the original budget of £89.658 and a reduction of £0.571m from the £49.523m reported at Quarter 2. Actual expenditure to 30 November 2018 was £24.637m (50.33% of forecast outturn). The Select Committee were informed that it was probable that the forecast position would continue to change before the year end with

additional re-profiling into future years.

 

The Select Committee RESOLVED that:

 

1.     The forecast revenue outturn for 2018/19 at Month 8, being a £0.145m under spend, be noted.

2.     The forecast positions for the HRA, Collection Fund and the DSG be noted.

3.     The use of ear marked reserves as detailed in Appendix 1 to Annex 1 of the report be noted.

4.     The revised capital programme for 2018/19 to the extended period of 2022/23, as at Month 8, be noted.

 

6.

Revenue Budget 2019/20 and Medium Term Financial Strategy 2019/20 to 2023/24 pdf icon PDF 1 MB

Additional documents:

Minutes:

Consideration was given to a report of the Director of Finance which provided the Select Committee with the forecast budget gap and the Administration’s budget proposals for 2019/20 together with forecast budget gap estimates for the period 2020/21 to 2023/24, having regard to the Provisional Local Government Finance Settlement published on 13 December 2018.

 

The Cabinet Member for Finance and Corporate Resources and the Director of Finance presented the report and addressed the enquiries of the Select Committee.

 

The report set out proposals for the Council’s Revenue Budget for 2019/20 and Medium Term Financial Strategy for 2019/20 to 2021/22. It advised Members of the key financial challenges and issues which would be faced by the Council over the forecast period and set out the Administration’s revenue budget proposals for 2019/20 together with updated budget gap estimates for the period 2020/21 to 2023/24.

 

The report highlighted policy announcements and implications which arose from the Chancellor’s Autumn Budget Statement and the Provisional Local Government Finance Settlement. The report also detailed key budget adjustments and expenditure pressures which underpinned the forecasts that provided the backdrop for the Council’s Medium-Term Financial Strategy.

 

Based on the latest estimates, the budget reduction requirement for 2019/20 had increased from the previously reported figure of £17.986m to £22.696m. This increase was due to a range of changes to the estimates which ware set out in detail in Section 11 of the report. Section 12 of the report detailed the Administration’s budget reduction proposals. There were a total of 35 proposals delivering savings of £7.829m in 2019/20. If approved in full, these proposals further reduced the budget reduction requirement to £14.867m for 2019/20. Section 13 explained the approach to balancing the 2019/20 budget. In order to remove the requirement for further spending reductions, it was proposed to part-finance the 2019/20 budget by using the opportunities provided by the ability to use Capital Receipts to support spending on transformational projects up to a value of £3.000m and from an available Collection Fund Surplus of £2.269m. A number of specific and corporate reserves would be used to address the balance.

 

Approval of the proposals set out in this report in full by Budget Council would deliver a balanced revenue budget for 2019/20. The budget reduction requirement for subsequent years was forecast to be £22.883m for 2020/21, £10.889m for 2021/22, £6.859m for 2022/23 and £4.160m for 2023/24.

 

Members sought and received clarification on the change to the amount of business rates expected. They were advised that this anticipated the expected change in the retention scheme in 2020/2021.

 

The Select Committee examined each of the budget reduction proposals as follows:

 

 

The Cabinet Member for Health and Social Care and the Managing Director, Community Health and Social Care Services (DASS) were in attendance to address the enquiries of the Select Committee on the following items:

 

HAS-BR1-237 Day Care Services

A proposal to re-render the service to a different provider. There would not be a reduction in service to service users.

 

HAS-BR1-238 Community Transport

Members  ...  view the full minutes text for item 6.

7.

Capital Strategy and Capital Programme 2019/20 to 2023/24 pdf icon PDF 287 KB

Additional documents:

Minutes:

Consideration was given to a report of the Director of Finance which set out the Capital Strategy for 2019/20 to 2023/24 and thereby the proposed 2019/20 capital programme, including identified capital investment priorities, together with the indicative capital programme for 2020/21 to 2023/24, having regard to the resources available over the life of the programme.

 

The proposed Capital Strategy and programme for 2019/20 to 2023/24 took the essential elements of the 2018/22 and previous years’ strategies and programmes and moved them forward in the context of the financial and political environment for 2019/20.

 

In accordance with CIPFA guidance, the Strategy was presented so that it provided:

·               A high-level long term overview of how capital expenditure, capital financing and

·               treasury management activity contribute to the provision of services

·               An overview of how the associated risk is managed

·               The implications for future financial sustainability

 

The Cabinet Member for Finance and Corporate Resources, and the Director of Finance presented the report.

 

The Select Committee noted the priorities as set out in the report.

 

RESOLVED that:

 

1.     The Capital Strategy for 2019/20 to 2023/24 at Appendix 1 of this report and summarised at section 2.1 be noted and accepted.

2.     The capital programme for 2019/20 and indicative programmes for 2020/21 to 2023/24 at Annex C of Appendix 1 and summarised at section 2.2 to 2.6 of this report be noted and accepted.

 

8.

Housing Revenue Account Estimates for 2019/20 to 2023/24 and Proposed Outturn for 2018/19 pdf icon PDF 307 KB

Minutes:

Consideration was given to a report of the Director of Finance which set out the latest Housing Revenue Account (HRA) outturn estimate for 2018/19, the detailed budget for 2019/20 and strategic estimates for the four years 2020/21

through to 2023/24. The report also set out the recommended dwelling and non-dwelling rents and service charge increases to be applied from April 2019.

 

The Cabinet Member for Finance and Corporate Resources, the Cabinet Member for Housing and the Director of Finance presented the report.

 

The projected financial position for 2018/19 was estimated to be a £2.506m positive variance when compared to the original budget forecast for 2018/19 approved at the February 2018 Budget Council meeting. The majority

of this variance was attributable to the re-profiling of HRA funded capital schemes into later years due to revisions to planned spending profiles.

 

The financial position for 2019/20 showed an estimated HRA closing balance of £19.477m which was considered to be sufficient to meet future operational commitments and the potential financial pressures identified in the risk assessment.

 

The 2019/20 position has been presented after allowing for an increase in rent of 3.4%.

 

The Government had advised that PFI properties were exempt from Central Government’s 1% Social Rent Reduction Programme. As all Oldham housing stock was contained within two PFI schemes the 2019/20 budget would follow historic rent setting guidance of CPI plus 1%, resulting in an increase of 3.4%.

 

RESOLVED that:

 

1.        The forecast HRA outturn for 2018/19 (as per Appendix A) be noted and accepted.

2.        The proposed HRA budget for 2019/20 (as per Appendix B) be noted and accepted.

3.        The strategic estimates for 2019/20 to 2023/24 (as per Appendix D) be noted and accepted.

4.        The proposed increase to dwelling rents for all properties of 3.4% be noted and accepted.

5.        The proposed increase to non-dwelling rents as per individual contracts be noted and accepted.

6.        The proposal that PFI 2 and 4 service charges are unchanged be noted and accepted.

7.        The proposal to set PFI 2 concierge charges in line with actual costs for full recovery be noted and accepted.

9.

Treasury Management Strategy Statement 2019/20 pdf icon PDF 704 KB

Minutes:

Consideration was given to a report of the Director of Finance which informed members of the strategy for 2019/20 Treasury Management activities including the Minimum Revenue Provision Policy Statement, the Annual Investment Strategy and Prudential Indicators, together with linkages to the Capital Strategy.

 

The Cabinet Member for Finance and Corporate Resources, and the Director of Finance presented the report.

 

The Strategy for 2019/20 covered two main areas.

 

Capital Issues

·       The Capital Strategy and the Prudential Indicators

·       The Minimum Revenue Provision (MRP) Policy Statement

 

Treasury Management Issues:

·       The Current Treasury Position

·       Treasury Indicators which limit the treasury risk and activities of the Council

·       Prospects for Interest Rates

·       The Borrowing Strategy

·       The Policy on Borrowing in Advance of Need

·       Debt Rescheduling

·       The Investment Strategy

·       The Creditworthiness Policy

·       The Policy regarding the use of external service providers.

 

The report outlined the implications and key factors in relation to each of the above Capital and Treasury Management issues and made recommendations with regard to the Treasury Management Strategy for 2019/20.

 

RESOLVED that:

 

1.        The Capital Expenditure Estimates as per paragraph 2.1.2 were considered and accepted.

2.        The MRP policy and method of calculation as per Appendix 1 was considered and accepted.

3.        The Capital Financing Requirement (CFR) Projections as per paragraph 2.2.4 were considered and accepted.

4.        The projected treasury position as at 31/03/2018 as per paragraph 2.4.4 was considered and accepted.

5.        The Treasury Limit’s as per section 2.4 was considered and accepted.

6.        The Borrowing Strategy for 2019/20 as per section 2.6 was considered and accepted.

7.        The Annual Investment Strategy as per section 2.10 including risk management and the creditworthiness policy at section 2.11 was considered and accepted.

8.        The level of investment in specified and non-specified investments detailed at Appendix 5 was considered and accepted.

10.

Council Tax Reduction Scheme 2019/20 pdf icon PDF 1 MB

Additional documents:

Minutes:

Consideration was given to a report of the Director of Finance which set out the proposed Council Tax Reduction Scheme for 2019/20.

 

The Cabinet Member for Finance and Corporate Resources, and the Director of Finance presented the report.

 

Members were informed that there was a requirement to have a Council Tax Reduction (CTR) scheme to support residents who qualified for assistance in paying Council Tax. The Local Government Finance Act 2012 placed a requirement that each year a billing authority must consider whether to

revise its Council Tax Reduction scheme or to replace it with another scheme. Any change to the 2019/20 scheme must be agreed by full Council in line with budget setting and no later than 10 March 2019. For Oldham, this would require the Council to agree a revised 2019/20 scheme at the 27 February 2019 Council meeting.

 

Members asked for and received clarification in relation to information as to entitlement to Universal Credit being taken as an automatic application for a Council Tax Reduction.

 

RESOLVED that:

 

1.        The continuation to limit support to a maximum of 85% of Council Tax of a Band A property be agreed.

2.        The treatment of information received from the Department for Work and Pensions (DWP) about Universal Credit entitlement as a claim for Council Tax Reduction be agreed.

3.        The application of earnings disregards for Universal Credit/Council Tax Reduction (UC/CTR) claims as set out below-

a.           Single claimant £5 per week

b.           Couple £10 per week

c.            Disabled/Carer £20 per week

d.           Lone Parent £25 per week

be agreed

4.        The incorporation of housing costs into the UC/CTR calculation be agreed.

5.        The application of disregards for Bereavement Support Allowance and post graduate master’s degree loan and special support payments in the assessment of Council Tax Reduction be agreed.