Agenda item

-      Introduction of new Director of Resources, Kevin Hanlon.

5:05pm

The Deputy Leader and Cabinet Member for Planning and the newly appointed Director of Resources attended to provide members with an update on the Council’s budget position.

The Deputy Leader began by highlighting the funding reductions detailed in the Efficiency Plan for 2016/17 to 2019/20 and noted that there was an expectation that further funding reductions would be made over the next 3 years. The Director of Resources added that the Efficiency Plan included a request for a 4 year funding settlement from the government in order to provide certainty, a settlement that 85% of other local authorities also requested. Predictions had shown that the budget was expected to run deficits for the next 4 years and plans were being put into place to make savings early on in order to remove pressure in future years where there was a need for greater savings to be made.

Members were presented with a table providing a summary of where the key variances to the budget were occurring. Increases in income had been generated from the renewal of leases, rental income and Queens Park Sports Centre. Areas where budget savings were being made included energy budgets, vacancy savings and grants to voluntary organisations. Income from car parking, market rents, the community infrastructure levy and commission from collection of fees had reduced. There had been an increased expenditure on housing benefits, the old Queen’s Park Sports Centre and pensions. The updated forecast showed a deficit of £326k. The Director of Resources added that though there was a challenge to meet the deficit, the Council was in a good position to achieve the savings.

The Director of Resources provided an update on the General Fund Capital Programme. The original forecast for capital receipts for the year was £1.8m however this had been revised down to £1,029k. There had since been the repayment of the loan by Chesterfield Football Club and re-phasing of capital receipts for the former fire station and 87 New Square which had increased the capital receipts to £2.6m. The capital spend on the general fund had been increased from £2.3m to £6.2m due to increased costs from the Waterside infrastructure scheme, Disabled Facilities Grants, old Queen’s Park Sports Centre, Town Hall alterations and new schemes for the Northern Gateway, Winding Wheel lifts, Museum store and the Market Hall café. The Director of Resources added that a break even position was still expected for the General Fund Capital Programme.

The Director of Resources advised that a general working balance of £1.5m was being maintained in the reserves. The Budget Risk Reserve had a balance of £1m at the start of the year; a large proportion of this had been used to fund severance costs of £405k arising from the voluntary redundancy and voluntary early retirement schemes. The Invest to Save reserve contained £274k at the beginning of the year however only £1k remained uncommitted. The opening balance of the Service Improvement Reserve was £1m at the start of the year. Investment from this reserve had been spent on the innovation centres, Northern Gateway and other transformation projects. At the end of the year the balance was predicted to go down to £280k. In total, these three major reserves had seen a total drop from £2.3m at the start of the year to £0.79m predicted at year end. Consideration was being given to find ways of replenishing these reserves.

Members commented that there were fewer houses being built with developers gaining planning permission but then sitting on land; members asked what impact this was having on the New Homes Bonus (NHB). The Director of Resources replied that the NHB had been recalculated as part of the budget setting process and though there were some unknowns around changes to government policy, the worst case scenario was built into the calculations. Members requested that the revised NHB be circulated to members. Concerns were raised that the act of Britain leaving the European Union (EU) could raise the costs of building new houses as many of the building materials were imported from countries in the EU. The Director of Resources replied that it was expected to take up to 5 years for Britain to leave the EU and the Chair added that Britain leaving the EU would be included on the risk register. Derbyshire County Council had launched a private development company to help provide homes and create employment opportunities for apprentices; Staveley corridor was one of the sites earmarked for development.

The Director of Resources reported that the Housing Revenue Account had seen an under spend of £284k on housing repairs however there had been an over spend of £336k on responsive works. The Housing Capital Programme budget had increased to £24m however at September 2016 it was £3m below the budget profile therefore approval may be needed to carry forward some of the budget into 2017/18. The estimated cost of the 1% reduction in rents for 4 years from 2016/17 stood at £10m which also presented a challenge.

Members asked if the 1% reduction on housing rents was expected to continue beyond the 4 years already announced. The Director of Resources replied that the Government had not made any announcements on whether it would continue and it was expected that new plans would be announced after the next parliamentary election.

The Autumn Statement was due to be published on the 24 November, 2016 and members asked if an update on its impact to Chesterfield would be available. The Director of Resources informed members that the Local Government Association website published a summary soon after the statement was released, this would then be used to analyse the factors which would affect Chesterfield. The Chair requested that any report following the Autumn Statement be circulated to Scrutiny members before going to Cabinet.

Members asked how the savings identified in the Efficiency Plan would be achieved. The Director of Resources replied that income from the sports centres and theatres would be maximised, there would be reductions in spending and the pooling of business rates would continue. The Great Place, Great Service (GPGS) transformation programme planned to deliver several projects to achieve savings; an update on GPGS would be received at the Overview and Performance Scrutiny Forum meeting on 10January, 2017.

The Chair noted that the feedback from the Corporate Cabinet/Corporate Management Team Away Day on 8 November, 2016, suggested that scrutiny should aim to get ahead of the budget setting process. The Chair asked if the Director of Resources had knowledge of other local authorities that scrutinised the budget setting process however he was not aware of any other local authorities where scrutiny was involved in this.

Members thanked the Deputy Leader and Director of Resources for attending and providing the update.

RESOLVED –

1.   That the new Director of Resources be welcomed to the Council and that the Overview and Performance Scrutiny Forum looks forward to them working together.

2.   That the report be noted.

3.   That the request for the revised New Homes Bonus projection be noted and that the information be circulated to scrutiny members.

4.   That the link to the Local Government Association website for the Autumn Statement summary be circulated to scrutiny members.