To consider the financial performance information for the third quarter of 2016/17.

That the financial performance information for the third quarter of 2016/17 be NOTED.

80.1           The report of the Head of Finance and Asset Management, circulated at Pages No. 84-92, provided monitoring information of the Council’s financial performance for the third quarter of the 2016/17 financial year. Members were asked to scrutinise the information provided.

80.2           The Head of Finance and Asset Management explained that Paragraph 2 of the report detailed the third quarter position which showed a deficit of £163,749 against the profiled budget. The main areas of underspend related to employees, housing benefit payments and increased income including licensing and recycling credits. The overspends were on supplies and services and payments to third parties. A recent investigation in respect of the building control service had resulted in a £30,000 refund so this would help the quarter four position. Appendix 1 to the report showed a summary of the position for each Head of Service and set out the current variances against their budget; where the main types of expenditure headings had a variance of over £10,000 a short explanation for the variance had been provided. Although the Head of Service 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 targets were currently held on the corporate budget codes on the ledger and no savings were recognised against those plans as they accumulated through the year within the service groupings. The corporate ledger also detailed the retained income from the business rates scheme which was showing a deficit of £365,000 and would put the Council in the safety net position for another year. Taking into account the deficits on the corporate accounts, the overall position of the Council at the end of quarter three was a deficit of £163,749; if that position did not improve before the end of the financial year, the Council would have to use its reserves to cover that deficit. The management team had been briefed on the financial position and was seeking to limit expenditure in the final quarter of the year to reduce the deficit. Appendix 2 showed the capital position as at quarter three which detailed a significant underspend against the profiled budget and Appendix 3 provided a summary of the current use of available reserves.

80.3           In respect of the Ubico deficit, a Member indicated that one of the reasons the Council had joined Ubico was the promise of savings. The Joint Waste Committee had indicated that there were financial savings to be gained and he questioned whether these were being delivered in reality. In response, the Head of Finance and Asset Management explained that the overspend this year related to the additional capacity which had been required to meet the growth in the Borough so this would have needed to be addressed regardless of whether or not the Council had joined Ubico. Currently the partners were operating as individual services within Ubico as there had not been an opportunity to bring the services together as had originally been envisaged but that work was likely to be undertaken within the next phase. It was considered that the position reported was no worse than if the Council had not joined Ubico which was of some comfort. The Head of Finance and Asset Management indicated that it should be borne in mind that, when the Council’s waste service had initially been handed over to Ubico, it had been a very low cost service which made it difficult to make vast savings. The Chief Executive explained that, before the Council had agreed to join Ubico, six options had been considered and each of them had shown increased costs; joining Ubico had been the best option. In the time it had been in existence, Ubico had grown rapidly and this was good in terms of economies of scale but there had not been time to shape the company to align with the growth seen; a new Managing Director had recently been appointed and one of his tasks would be to look at the way Ubico had grown and how this could be properly managed. The Chief Executive felt that, once the new Managing Director had settled into his position, it would be a good idea to organise a seminar for all Members which would provide information on how Ubico ran, how its performance was monitored and what Members should expect from it etc. He was of the view that it was important to also focus on things that had gone well such as the growth of the business and its potential to earn money. In response to a Member’s query as to whether it would be possible to provide a comparison of where the waste service was now against where it would have been if it had not joined Ubico, the Chief Executive did not feel that this would be possible to do accurately. In terms of the other authorities that had joined Ubico, the Head of Finance and Asset Management indicated that, as far as he was aware, most were reporting overspends for different reasons.

80.4           In terms of a personal experience, a Member indicated that the hedges in his area had been cut by Ubico recently and it had been done really well. He also felt the litter pickers were concentrating more on the area which had made a huge difference. The Chief Executive welcomed this feedback; he understood that Members had concerns about the service and felt it was right to monitor it closely but, as long as the contractual agreement remained in place, Ubico would continue to provide the service that the Council specified.

80.5           Accordingly, it was