The Strategic Director of Finance, Governance and Support submitted a report, the purpose of which was to advise the Overview and Scrutiny Board of expenditure against the Council's revenue and capital budgets, and its performance overall at Quarter Two 2017/18, and provide a position statement in respect of Treasury Management and General Reserves.
The Accounting Team Leader and the Corporate Performance Manager were in attendance at the meeting to present the report.
The Accounting Team Leader advised that Quarter Two monitoring continued to project a very strong set of performance results for the Council in 2017/18.
The overall revenue position at Quarter Two 2017/18 after approved transfers to Reserves and Provisions showed that there was a projected budget underspend of £42,000 (or 0.04%), which continued the trend of minimal variance and demonstrated that the revised financial management processes introduced during 2016/17 were working effectively.
In line with good practice, the Council had reviewed and updated its Investment Strategy for the period to 2020/21, and projected capital expenditure at Quarter Two was £36.552m against the revised budget of £34.881m in 2017/18 (or 105% of the budget), reflecting early delivery and some minor re-profiling across the strategy period, with an increase in externally funded and revenue funded projects.
The Councils borrowing stood at £142.2m at 30 September 2017, increasing from £120.4m at Quarter One to fund both the general cash flow position of the Council and capital programme borrowing requirements, in line with expectations.
The Councils projected Reserves at 31 March 2018 were £40.2m comprising of £13.1m of General reserves, £20.5m of reserves earmarked for specific purposes, and £6.6m of school reserves. This was in line with the agreed approach of the Council to reduce reserves in a planned manner in order to smooth out savings requirements across the Medium-Term Financial Plan period, and to fund investment.
The Corporate Performance Manager advised that service performance had improved from Quarter One, with eight of the nine Directorates, and the Council overall, exceeding the corporate standard of meeting 75% or more of targets, reflecting developing plans to promote social regeneration, and the impact of plans to address longer-term performance issues, showing that the Council was taking clear action to tackle performance issues. Economic Development and Infrastructure was currently achieving 65-70% of targets. Further information with regard to the breakdown of the targets would be forwarded to members of the Board.
A key risk to the Council at present remained the potential impact on of Brexit on the national economy and economic growth locally. It was anticipated that the implementation of Councils Investment Prospectus and associated initiatives would positively impact on the probability of Middlesbrough being disproportionately affected by an economic downturn.
A new risk had emerged in Quarter Two relating to the impact of funding reductions on the Councils principal statutory partners impacting on delivery of shared services. Discussions with partners would continue throughout 2017/18 to mitigate this risk, and would be a key driver of the Partnerships and Integration theme of Phase 3 of the Councils Change Programme.
A member referred to a case in the Evening Gazette regarding Centre North East and a decision by the Supreme Court in respect of the exemption from paying business rates on a property while working on making the building safe. The Council had sent a number of summons to the developer totalling £434k. The developer working on Centre North East had argued that for all intents and purposes, whilst they were working to remove asbestos, the building was not usefully occupied and as a result of the Supreme Court decision regarding a similar case, the summons for business rates from Middlesbrough Council was withdrawn.
The member queried with regard to the knock on effect of the decision to withdraw the summons and he also requested details of the costs involved in trying to pursue the case. The Chair of Overview and Scrutiny Board requested that the information be forwarded to the Principal Democratic Services Officer for distribution to the Board.
The member also referred to the recent employment tribunal relating to Legal and Democratic Services and he queried whether the cost incurred as a result of the tribunal had been accounted for in the projected overspend and whether any compensation would be in addition to the projected overspend. The Chair advised that it would be prudent to wait until the final judgement before providing the information.
ORDERED as follows:
1. That the approval by the Executive to reduce the transfer of project savings into the Social Care Demand Risk reserve from £712,000 to £501,000, and to transfer £640,000 of projected savings within Public Health and Public Protection into the Public Health Reserve; and the resulting projected revenue position at Quarter Two 2017/18, i.e. a budget underspend of £42,000 (or 0.04%), be noted.
2. That the approval by the Executive of a revised Investment Strategy for the period to 2020/21 (at Appendix 1), and projected capital expenditure of £36.552m against the revised budget of £34.881m in 2017/18 (or 105% of the budget), be noted.
3. That the Councils borrowing at 30 September 2017 of £142.2m, and its forecast Reserves at 31 March 2018 of £40.2m, of which £13.1m were General Reserves, be noted.
4. That the performance of Directorates at Quarter Two 2017/18 (Appendix 2), the consolidated action plan responding to all issues identified in the report (Appendix 3), and the Councils updated strategic risk register (Appendix 4), be noted.
5. That the Accounting Team Leader compile the additional information in respect of the Balanced Scorecard report, requested by members of the Board and forward it to the Principal Democratic Services Officer for circulation to all members of the Overview and Scrutiny Board.