Agenda item

To consider the Council’s General Fund outturn for 2015/16, the financing of the capital programme and the annual treasury management report and performance, and to approve the transfers to and from earmarked reserves.

1.      That the general fund outturn for 2015/16, the financing of the capital programme and the annual treasury management report and performance be NOTED.

2.      That the transfers to and from earmarked reserves be APPROVED.  

19.1           The report of the Finance and Asset Management Group Manager, circulated at Pages No. 65-90, highlighted the Council’s financial performance for the previous year and asked Members to consider the general fund outturn for 2015/16, the financing of the capital programme and the annual treasury management report and performance as well as to approve the transfers to and from earmarked reserves.

19.2           The Finance and Asset Management Group Manager explained that the report represented the final financial position for 2015/16 and included five parts: the general fund and revenue outturn; the Council reserves; the capital programme; treasury management; and performance indicators.

19.3           The general fund showed a substantial surplus of just over £1.5 million, the main reasons for which were: the employees’ full year budget being overspent - largely as a result of bringing in additional staff to meet service needs and to fulfil the requirements of grant funding received, however, the overspend was offset by additional income from the sale of services and grant funding; premises being underspent for the year as a result of the release of a provision relating to leased assets – the provision had previously been set aside to meet expected requirements but had not been needed during the year and had now been released; supplies and services being overspent in relation to the expenditure associated with central government grants received – this was unbudgeted but corresponding additional income had been received to finance the expenditure. Extra expenditure had been incurred in service areas such as burial services where additional income was generated; transfer payments relating to the Council’s activities with regards to the administration of housing benefit on behalf of central government; income targets exceeding expectations during the year – the primary area of additional income was development management where total income exceeded the target by over £1.58 million. This position had been boosted by the receipt of external grant funding totalling £0.918 million but strong income in planning fees, both plan submissions and pre-planning advice had supported the outturn position. Alongside that other income targets had exceeded expectation, in particular trade waste, garden waste and licensing – the overall position for income had been reduced to a £976,000 surplus by the need to reclaim less from central government for housing benefit expenditure incurred. Members were advised that the full detail was available at Appendix A to the report and was set out on a group by group basis with explanations for significant variances and the contact details of the lead Officers should Members have any specific questions/queries. 

19.4           Referring to the losses reported in respect of the retained business rates scheme, Members were advised that this had resulted in the need for safety net payments, largely due to the Virgin Media appeals, but there had also been a number of other appeals and valuation adjustments that had reduced the Council’s rates retention. Along with this, there had been an increase in the amount of void properties during the year and it had also been necessary to write-off a number of historic debts. As a result of the ongoing risk associated with Virgin Media, the Council had withdrawn from the Gloucestershire Pool for 2016/17; this would protect Gloucestershire residents from the costs of further losses. It was noted that, overall, the Council had benefited from a healthy financial performance in 2015/16 with costs being controlled, significant extra income from fees and charges and additional one-off grants from various bodies being received. The setting of the 2016/17 budget had included an increase in income targets to the levels seen in 2015/16 in order to assist the Council with the deficit in financing it faced. This meant the Council would again require strong income streams and control over expenditure in order to meet the set budget.

19.5           Members were advised that a breakdown of the Council’s reserves as at 31 March 2016 was shown at Appendix B to the report. There had been a net movement in year of around £32,000 and the Appendix showed the significant movements along with explanations. The reserves were grouped under strategic headings so as to provide a better understanding of the actual intended use of the monies set aside. The total revenue reserves of the Council stood at £9.84 million at the end of March and included earmarked reserves, planning obligations and the general fund working balance. Despite gross expenditure totalling £1.29 million during 2015/16, the reserve balances had seen a net decrease of only £732,000 during the year; there were a number of reasons for this including the surplus on the general fund and the unspent new homes bonus monies being carried forward. In terms of the capital programme, Appendix C summarised the programme together with the sources of finance used. Members were advised that the Council had committed to a substantial capital programme in the last few years and this was highlighted in the level of capital expenditure incurred in 2015/16 on items including the new leisure centre and maintenance and improvements to the Council’s asset portfolio. The balance on the capital reserve had reduced to £5.68 million as at 31 March 2016 with commitments totalling £11.9 million over the next three years. The Council’s investment programme, which included the purchase of a vehicle fleet, the regeneration of Tewkesbury Town and the purchase of an investment property, would require the Council to borrow monies from both internal and external sources.

19.6           In terms of treasury management, Members were referred to Appendix D which set out the treasury report. This was a requirement of the CIPFA Code of Practice on Treasury Management in Public Services which the Council had previously adopted. One of the requirements of that Code was the receipt by Members of an annual review report after the end of the financial year. The prudential indicators had been monitored regularly and there were no material departures from the indicators arising during the year. The in-year performance of investments resulted in an average return of 0.82% and total income of £116,500; this was £71,500 below target for the year and reflected the reduced investment portfolio which was available to the Council following the refunds issued to Virgin Media. This was expected and an earmarked reserve had been included in the accounts to equalise the investment returns budget; that reserve had not been required in full which represented a good performance from Treasury Officers under the circumstances. In respect of performance indicators, the Financial Services Section had two: percentage of creditor payments paid within 30 days of receipt; and outstanding sundry debt in excess of 12 months old. The Finance and Asset Management Group Manager advised that he was pleased to report a further performance improvement in the speed of invoice payments which appeared to reflect the service improvements made and the efficient working of the staff involved. The sundry debt position had fallen by over £5,000 across the financial year, although it was disappointing that the position had worsened during the second half of the year. The situation with outstanding sundry debt was the result of one individual debtor who had now paid off the majority of the arrears and had a payment plan in place for the balance.

19.7           Referring to Paragraph 2.11 of the report, a Member offered his congratulations to the teams that had produced a surplus through their income streams. Another Member indicated that the Council seemed to live in hope of the interest rates rising and he felt it might now be time to forget about interest rates and concentrate on what it did have available. In response, the Finance and Asset Management Group Manager explained that, as the Council’s balances were now quite minimal, its investment balances were limited to its income. Officers did try to maximise this but it was considered more important to ensure the Council’s liquidity going forward. In terms of the possibility of the interest rates going down, this would have a minimal impact on the Council due to the fact that its balances were low. A Member questioned whether Officers had any early indications about the usage of the new leisure centre and, in response, the Finance and Asset Management Group Manager advised that he did not have exact figures at this stage but the feedback was that the centre was going well and the membership numbers had exceeded the expectations of the operator in the first couple of months. Another Member advised that this was in line with the feedback that she had received which indicated that the target for the number of new members for September had been increased and Places for People felt this would be achievable. In terms of the income received from the centre by the Council, the Finance and Asset Management Group Manager indicated that the annual contract sum was index linked and, in addition, the Council got 45% of the profit share so, if the centre did well, so did the Council.

19.8           In response to a query about the financing of the Neighbourhood Plan process, Members were advised that government money was available to help fund the process. Accordingly, it was