Verbal report.
5:05pm to 5:20pm
Minutes:
The Deputy Chief Accountant attended to provide members with an update on the outturn of the General Fund and Housing Revenue Account (HRA) at the end of 2018/19, and the forecast for 2019/20 onwards.
At the end of 2018/19, the General Fund had returned a surplus of £395k, which was an increase of £233k from the original predicted surplus reported to Cabinet in May, 2019. The favourable variances which had resulted in the increased surplus included:
· reduced expenditure due to carry forward requests in relation to training, survey fees and advertising;
· increased income from Operational Services Division, SpirePride service and grants.
There had also been some adverse variances to the budget which included:
· increased expenditure at the leisure centres;
· reduced rental income from business rates in the Pavements;
· deficit on the building cleaning contract.
The £395k surplus had been transferred to the Budget Risk Reserve which would enable it to be used to support the General Fund budget in future years and fund the one off costs of recurring saving initiatives.
The General Fund Capital Programme outturn was £8m, which was an underspend of £3.1m from the revised budget. The material underspends were:
· Northern Gateway Multi-Storey Car Park (MSCP)
· Disabled Facilities Grants
· ICT Digital Innovation Project
These underspends would be rolled forward into the 2019/20 Capital Programme.
The General Fund budget forecast had been approved by full Council in February, 2019 and reported a deficit of £202k for 2019/20, rising to a deficit of £803k in 2020/21. By 2023/24 the deficit would rise to £1.3m. The increase was largely due to the reduction in the Revenue Support Grant and New Homes bonus which, by 2023/24, would reduce to £0. It was highlighted that the budget forecast for 2019/20 included savings of £227k from the ICT Digital Innovation project; at quarter 1 savings of £207k had already been achieved. The Deputy Chief Accountant advised members of the current challenges to the revenue position which included:
· reduced income from retail;
· more competition from private sector in terms of leisure provision;
· business rates appeals.
The Capital Programme for 2019/20 had been approved by Council in February, 2019 and included the following schemes:
· Northern Gateway Enterprise Centre
· ICT Digital Innovation project
· Northern Gateway MSCP
· Northern Gateway public realm
· Artificial sport pitch in Queen’s Park
· Disabled Facilities Grants
· Beetwell Street Car Park repairs
The challenge for the Capital Programme would be generating the capital receipts in the current economic climate.
The HRA had returned a surplus of £8.9m at the end of 2018/19, a rise of £4.4m from the original budget forecast. The favourable variance was predominately due to a transfer back from the bad debts provision. In addition, the HRA Capital Programme had been underspent by £5.6m due to procurement issues and delayed starts on sites at some schemes.
The HRA budget for 2019/20 forecast a surplus of £3.4m. The HRA Capital Programme budget for 2019/20 was £26.5m; £9.8m of the work would be completed by the Council’s Operational Services Division with £16.8m completed by other contractors. The current challenges to the HRA were the continued roll out of Universal Credit and achieving the capital programme, in particular the new build element.
In response to members’ questions, the Deputy Chief Accountant advised that Chesterfield had submitted a bid to take part in a Business Rates Pilot for 2019/20 however had been unsuccessful. The Council is not in control of setting the business rates; the valuation office assesses every property and place a rateable value on each property, the rates are then set on a multiplier.
Members asked how shop occupancy rates in Chesterfield compared to similar towns and were advised that Chesterfield had less vacant units than other towns however the current challenges were the lower rents and incentives given to tenants. Some vacant units on Vicar Lane were still receiving rent until the lease ran out; a new company were in charge of lettings on Vicar Lane and were working to bring the vacant units back into use. In addition, a modular unit design would be adopted where people could move straight into the units with little set up costs.
With regard to the underspend of Disabled Facilities Grants, the Deputy Chief Accountant explained that this was due to spending less during 2018/19 than was planned however the funding could still be used in future years.
Members thanked the Deputy Chief Accountant for providing the update and answering their questions.
RESOLVED –
1. That the update be noted.
2. That a further update be scheduled for the Overview and Performance Scrutiny Forum meeting on 21 November, 2019.