Agenda item

This report presents the results of the second round of the Council’s revenue

budget monitoring for 2019/20.

Discussion:

Members considered a report which presented the results of the second round of the Council’s revenue budget monitoring for 2019/20.

The Chief Finance Officer commented that the forecast outturn for 2019/20 represented a forecast pressure of £6.695 million. However, following a moratorium on spending and management of vacancies across the Council, he expected the situation to improve significantly by Quarter 3.

Members discussed the following issues:

·         The Housing Infrastructure Bid (HIF) – the Chief Finance Officer advised that the £1.1m original investment by the Council to prepare the Bid had been met from reserves. Due to a delay in the Government making a decision, the Council had proceeded at risk and allocated a further £850,000 from reserves. The Bid had been successful and the Council would receive £170m, with the £850,000 sum charged against that.

·         Use of agency staff in Children’s Services – in response to a question whether the use of expensive agency staff was sustainable, the Assistant Director – Transformation advised that the Council was very much aware of the significant costs of employing agency staff. There could also be an impact on children and families given agency staff did not always have the same background knowledge that experienced staff had. The Council was encouraging agency staff to become a permanent member of staff by making them aware of the overall package of benefits and training available to permanent employees. Efforts were being made to attract new members of staff, including an active recruitment campaign overseas.

·         The Castle Concerts – regarding the overall losses incurred by the concerts and the action plan to prevent further losses, Members were advised that the concerts had lost £333,000 this year and a report would be considered by Cabinet soon on options for the future.

·         Aut Even – a Member queried why the home was still open when a decision had been made to close it and re-provide the service at Parklands. The Chief Finance Officer replied that the delay had been due to obtaining registration from the Care Quality Commission on the Parklands site.

·         Parking Services shortfall – regarding why this shortfall was so large, Members were advised that the budget had been set on the basis of stretching the income targets. However, these targets had not been achieved due to a range of issues including new Controlled Parking Zones not being implemented, the closure of a number of Council car parks as a result of the Council’s regeneration agenda, and a reduction in parking charge penalties as more people used the RingGo app to pay, which meant they were less likely to overstay. 

·         Gillingham Business Park – as to whether this was a one off or an annual pressure, the Chief Finance Officer advised this overspend was due to an increase in the charge from the new managing agent and he would clarify whether this was a permanent budget pressure.

·         Deangate Ridge - a Member queried why there was a pressure of £86,000 (the full year business rates charge for the site) when the site was occupied by Medway Norse. In response the Committee was advised that Medway Norse partly occupied the site for use as a depot which in turn affected the site’s rateable value.

·         Job losses and vacancies - a Member made the point that in order to balance the budget there would be a need for redundancies and the deletion of vacant posts which would have an impact on staff. He asked if further information on the extent of this could be reported in the Quarter 3 monitoring report, including actions taken by Medway Commercial Group and Medway Norse. Officers advised that the number of posts would reduce but actual job losses would be kept to a minimum. The Council was effective in redeploying people at risk of being made redundant but could not guarantee there would be no compulsory redundancies. 

·         Risks – a Member suggested that the full extent of the financial risks facing the Council were not adequately described in the risk section of the report and also the significant overspend showed that the mitigation processes had failed. The Chief Finance Officer advised that the budget monitoring process was designed to give early notice of problems but did not in itself resolve any overspends. In that sense the monitoring process had worked. The Chancellor’s Spending round had allocated more money to local government and he considered that the risk of not setting a balanced budget, which in the summer had been high, was now not as great.

A Member queried how sustainable it was for the Council to have to rely on one-off government grants to set a balanced budget. The Chief Finance Officer agreed that the lack of certainty around how local government was funded was unhelpful, commenting that one off grants represented a recognition from the Government that councils had not received sufficient funding. The Government had allocated more for adult social care and SEN services but did not fully recognise the pressures in children’s services.

·         Reserves – in response to what the current levels of reserves were, the Chief Finance Officer acknowledged they were at the lower end of the spectrum but he was seeking to protect reserves and add to them.

Decision:

The Committee agreed to note the results of the second round of revenue monitoring for 2019/2020 and that Portfolio Holders will work with senior officers to identify a range of measures to reduce expenditure within their portfolio areas.