To consider and scrutinise the Council’s financial performance information for the third quarter of 2017/18. 

1.      That the financial performance information for the third quarter of 2017/18 be NOTED.

2.      That £100,000 be set aside from accumulated surpluses to support the development of the A40 infrastructure business case.  

87.1           The report of the Head of Finance and Asset Management, circulated at Pages No. 12-20, highlighted the Council’s financial performance for the third quarter of 2017/18. Members were asked to consider the performance and approve the setting aside of £100,000 from accumulated surpluses to support the development of the A40 infrastructure business case.

87.2           The Head of Finance and Asset Management explained that income had not performed as well as expected, mostly due to planning income and garden waste not meeting their targets; however, it was also noted that the reduction in garden waste income had been expected due to the annual renewals being standardised to renew in April each year. Attention was drawn to the summary position for each Head of Service showing the variance against budget and this was attached to the report at Appendix A. Although that position was underspent, the budget report also recognised the need to achieve savings from the base budget in terms of salaries and procurement savings. Those savings were held on the ledger and no savings were recognised against those plans as they accumulated through the year within service groupings; this had the effect of reducing the underspend on services by £45,000. Also detailed under corporate budgets was the retained income from the business rates scheme; this was showing a surplus of £240,000 and was a prediction of the year-end position, although it was noted that there had been little activity with regards to processing appeals against the 2017 list. The Council had set aside a significant provision to cover appeals which it was hoped would be sufficient therefore allowing the Council to benefit from wider increases in business rates income. Treasury management activity had produced a positive variance of £116,968 against budget and access to low borrowing rates, along with the use of more lucrative funds for cash investments, had resulted in the Council’s treasury management activity providing a much better return than expected. Taking into account the positive position on the corporate accounts, the overall position of the Council at the end of quarter three was a surplus of £590,640.

87.3           Members were advised that the Council had successfully bid for £4.53 million from the growth deal fund via the Local Enterprise Partnership (LEP) to improve the existing Longford roundabout and to add a new roundabout to the east along the A40 to access the new development site at Innsworth. In order to access the funds, a business case needed to be put forward to the LEP Board for approval. That business case would include modelling, designs, financial justification, risks etc. all of which were revenue activities. This work would be contracted to transport consultants to undertake with a delivery timescale of Autumn 2018. The LEP Board would be presented with the business case in early 2019 which, upon acceptance, would allow the drawdown of grant monies. It was anticipated the production of the business case would cost approximately £100,000. The LEP Board would not finance the development of the business case but the money invested could be recovered from the overall grant once awarded; it was therefore suggested that the Council forward fund the development of the business case with a loan which was available from accumulated in-year surpluses.

87.4           The capital position was shown within Appendix B to the report and this was showing a significant underspend against the profiled budget due to the fact that not all of the agreed funding for the purchase of commercial investment had been utilised. The revenue position was shown at Appendix C to the report and, whilst the quarter 3 position showed a significant balance on the reserves, the expectation was that they would be spent in the future. Updates had been requested from all departments about their plans to ensure the earmarked reserves were either used for their intended purpose or released back to the general fund.

87.5           In response to a query regarding the business case, Members were advised that the funding from the growth deal was to deliver infrastructure improvements on the A40 to access the Innsworth strategic allocation and for improvements to the current roundabout. The funding would be loaned by the Council up front and then, assuming the project went ahead, the money would be clawed back by the Council through the project. Another Member questioned why Highways England and/or Gloucestershire Highways were not putting in some of the funding given that they were the agencies responsible for road infrastructure. In response, she was advised by the Deputy Chief Executive that Tewkesbury Borough Council was the project sponsor and had submitted the bid and, in addition, the project was aligned to the Joint Core Strategy (JCS) and the site was within Tewkesbury Borough. It was comforting to know that Section 106 did apply and any cost overruns would be picked up by the developer so this reduced the risk to the Council. The business case did need forward funding and it was felt that to do this through the Council would be the best route as it would have control over the process and, therefore, over the release of the funding. Gloucestershire Highways would be contributing through support and in the project costs but not to the initial loan. The Chief Executive advised that the production of the business case to develop the initial plan was really important and not too dissimilar to the Short Term Access Strategy which had been done in partnership with the County Council and funded by the Homes and Communities Agency. On this occasion there was no money available from the Homes and Communities Agency which was the reason the Council needed to pump prime the project. He would be speaking to the County Council about how it would support the project going forward, particularly the delivery of the scheme but also some of the work to unlock the funding. All JCS authorities would need to speak to County Highways at a senior level and he would be setting up a high-level meeting to move the project forward in that regard. In terms of risk, the main one was in the project not going forward; however, the road improvements were essential to the development of the strategic allocation so it was in everyone’s interest to make sure it worked and was successful. Members were advised that one of the main issues was the approval of the design but that had already happened and was a big step in the process. In addition, the mitigation proposals had been approved which was another step forward. A Member expressed the view that the road improvements were essential in the area, both for the housing and for the business land, as they needed direct access onto the A40.

87.6           In response to a query regarding the repayment of the loan, Members were advised that the growth deal offer from the government’s perspective was that, subject to approval of the business case, the first release of the funding - approximately £2 million - would be in April 2019 and the Council’s loan of £100,000 would be repaid within that.

87.7           Having considered the information received, it was