To note the general fund outturn for 2014/15, 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 2014/15, 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.  

18.1           The report of the Finance and Asset Management Group Manager, circulated at Pages No. 71-93, highlighted the Council’s financial performance for the previous year, setting out the general fund and capital outturn positions, as well as providing detail on both the positive and negative variances against the budget. Members were asked to note the general fund outturn for 2014/15; the financing of the capital programme and the annual treasury management report and performance; and to approve the transfers to and from earmarked reserves.

18.2           Members were advised that the report was brought to the Committee in recognition that the Executive Committee had not previously received a comprehensive report like this which provided an overview of performance against the general fund revenue budget for 2014/15 with an explanation of the significant variances. The report also addressed the movement on reserves and requested Member approval for the creation of new reserves or additions to existing reserves that fell outside of a previously approved sum. It also sought to confirm the full year progress against the capital programme and the sources, if finance was used in delivering that programme, as well as reporting the performance in 2014/15 of the treasury management function in line with the requirements of the Code of Practice. All of the information contained within the report would be included in the Council’s Statement of Accounts which would be approved by the Audit Committee at its meeting on 30 September 2015.

18.3           The Finance and Asset Management Group Manager explained that the general fund revenue outturn position for the full year could now be reported at a surplus of £207,742 which represented a positive variance of 2.4% and was within the tolerance of the Medium Term Financial Strategy. It was pleasing to report a surplus for the Council within the financial year; particularly given the financial climate for local government and the squeeze on service budgets. The surplus would now be utilised to finance the reserve and carry forward requests of the Council. The outturn position was mainly attributable to major items such as the development management income exceeding target by over £152,000 as a result of planning and land charges income; other income targets exceeding expectation, in particular trade and garden waste and car parking; and expenditure on employee costs being in excess of the budgeted position as the use of agency staff to cover both vacancies and sickness absence had a substantial impact. In addition, vacant posts were being filled quicker than in previous years which prevented any savings accruing from vacant posts. Pages No. 80 and 81 set out the notes to explain the variances and also identified the responsible Group Managers for Members’ information. In contrast to the excellent position reported for the general fund, the financing of the fund had been substantially impacted by the performance of the retained business rates scheme in 2014/15. The scheme allowed the Council to retain a percentage of the growth in the local business rate base above a calculated baseline. Tewkesbury Borough had budgeted for retained income of £250,000 from the scheme and was also a member of the Gloucestershire business rates pool which maximised the retention within Gloucestershire. Whilst Councils could benefit from growth in business rates, they must also share in the risk of businesses successfully challenging their business rate valuation. The Council had allowed for substantial provisions against successful appeals within the scheme but, as previously documented, had suffered from a number of successful appeals by Virgin Media. This had meant that Tewkesbury Borough Council had lost all of the £250,000 it envisaged it would have had to finance its services and had also needed to utilise the reserve it had previously set aside for business rates. In addition, the position had been supported by a safety net payment of £3.95 million from the Gloucestershire pool which, in turn, had placed the pool into deficit. The governance arrangements of the pool meant that any deficits needed to be met by the members of the pool in proportion to their baseline funding targets. The deficit to be met by Tewkesbury Borough was approximately £225,000 and could be met from previous surplus distributions of the pool and balances within the business rates reserve for the Council.

18.4           A Member indicated that she had recently read an article in the Gloucestershire Echo which had stated that Tewkesbury Borough’s uncollected Council Tax amounted to over £1 million. The article indicated that the Council disputed that figure but did not state what it should be. In response, the Deputy Chief Executive advised that the Council did dispute the article as it actually had a high collection rate and Officers were investigating where the Echo had got its information from. The correct information would be supplied once Officers had put it all together but she believed the actual figure was substantially lower.  In terms of the use of agency staff, the Finance and Asset Management Group Manager indicated that there were a number of reasons for their use i.e. the inability to recruit permanent staff or the inability to recruit staff quickly enough; to cover temporary absences; to bring in additional income through the use of additional staff; or when restructures were ongoing etc.

18.5           Referring to Paragraph 2.4 of the report, a Member indicated that the fact that planning income was exceeding target seemed to explain the problems in meeting performance targets as there were a large number of applications being submitted. In terms of the car parking income, he felt it was important to note that this was not due to the parking strategy at this stage as that had only been introduced in April; he felt it would be interesting to see the results at the end of the year. The Chief Executive advised that an increase in income tended to be an indicator of an improving economy in the Borough; this had knock-on effects in terms of resources but was a good sign for the area. A Member indicated that she was aware of issues with service in the Planning Department. She understood that a review was underway and that agency staff had been employed on a temporary basis until permanent staff could be appointed. She felt that the use of agency staff could cause extra work for permanent staff as they did not know the background etc. of the Borough and she questioned why the Council could not advertise permanently for Planning Officers as this may ensure quicker employment in the long term. She also questioned what was involved for Officers in a review of the scope that was proposed as she felt it could add pressure to a department that was already finding it difficult to cope. In response, the Deputy Chief Executive advised that recruitment of Planning Officers was a national problem as local authorities struggled to compete with the private sector. She felt that the Council needed to look at different ways of recruiting. In terms of the expectation of staff while the review was underway, she explained that this review would be carried out in a similar way to the recent Revenues and Benefits review. The reality was that the Council was facing more cuts and it had to consider doing things differently even if there was an increase in workload for staff whilst the review was ongoing. In Revenues and Benefits the review had resulted in staff being less pressurised having also had the opportunity to look at their service and assess how efficient it was which had proven to be a successful way forward. There may be a drop in performance whilst the review was being undertaken but the longer term solutions to be gained were of great benefit. She further reiterated that Development Management was within the scope of the review but Planning Policy was not. In terms of the number of new staff within the Planning Department, the Deputy Chief Executive agreed that it would be helpful for Members to be offered the opportunity to meet them and she undertook to arrange this in due course.

18.6           The Finance and Asset Management Group Manager explained that a breakdown of the Council’s reserves as at 31 March 2015 was attached at Appendix B to the report. The reserves had been grouped under strategic headings with the aim of providing Members with a better understanding of the actual intended use of the monies that were set aside. There were notes included to explain any significant movement within the year; in terms of Note 2 – reserve established to allow for timing differences in accounting for retained business rates and the cash flow associated with the scheme, Members were reassured that this did not relate to the Virgin Media appeals, it was purely an anomaly of the process. In continuing his presentation of the report, the Finance and Asset Management Group Manager explained 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 2014/15. Over £819,000 of capital had been expended during the year on the office refurbishment project which had been completed ahead of schedule and had been £28,870 under the total budget allocation for the project. The new leisure facility build project had commenced in February 2015 with the initial groundworks and had seen expenditure of £1.25 million by 31 March. Monies set aside for investment purposes were held back in the second half of the year resulting in a substantial underspend against the capital investment programme. Within the total expenditure on housing and business grants was expenditure on flood relief grants for properties and businesses affected by flooding in winter 2014. £315,000 had been spent on that programme in the 2014/15 financial year and had been financed from the Council’s capital balances. However, the scheme was backed by central government and capital grants to cover the expenditure incurred would be received by the Council in 2015/16. A summary of the capital programme was attached at Appendix C to the report. The detailed treasury report was attached at Appendix D to the report for information. The Finance and Asset Management Group Manager indicated that he was obliged to report this twice a year and he was relatively pleased with the treasury activities that had taken place during the previous year. The two performance indicators for the financial services section had shown significantly improved performance in 2014/15 compared to the previous year which was also good news.

18.7           The Vice-Chairman felt that the format of the report was helpful and accordingly, it was