This report asks the City Executive Board on 18 September 2018 to:

·         Note the projected financial outturn, the current position on risk and performance as at the 30^th June 2018;

·         Recommend to Council to approve the increase of the HRA capital budget for Social Rented Housing Acquisitions by £0.444 million to a total of £1.479 million.  This will be fully funded by Retained Right to Buy capital receipts.  More details are included in paragraph 10; and

·         Recommend to Council to approve the additional capital budget for the Replacement of the Housing Computer System of £0.450 million as per the details in paragraphs 11-12.

Finance Panel has a role in monitoring the Council’s budgetary performance.  The Panel is asked to note and discuss the report and may wish to agree recommendations to the City Executive Board.

Nigel Kennedy, Head of Financial Services, has been invited to present the report and answer questions.

The Management and Accountancy Manager, Anna Winship, introduced the report which updated the Panel on the financial, corporate performance and corporate risk positions of the Council as at 30th June 2018. This report would go to the City Executive Board on 18 September, where they would be asked to recommend to Council:

·         to approve the increase of the Housing Revenue Account capital budget for Social Rented Housing Acquisitions by £0.444 million to a total of £1.479 million.

·         to approve the additional capital budget for the replacement of the Housing Computer System of £0.450m.

The Management and Accountancy Manager explained that There was a forecasted adverse variance of £94,000. This was due to a reduction of £494,000 in car parking revenue (owing to competition from the Westgate Shopping Centre car park) and an underestimation in business rates from the Westgate leading to an additional £400,000. It was clarified that this would be a recurring stream of income for the Council.

An overview of the council’s financial position was given, as set out below:

·         General Fund: The outturn position was forecast to be an adverse variance of £0.094 million against the latest net budget of £22.098m.

·         Housing Revenue Account: The outturn position was forecasting a nil variance against the budgeted deficit of £1.440m.

·         Capital Programme: The outturn position was forecasting a favourable variance of £2.350 million against the latest budget of £114.373m.

The Panel questioned the projected overspend of £0.450m on the Housing System replacement. It was explained that a budget of £1.15m was initially allocated to the project after a soft market testing exercise was undertaken. Having progressed this further, it became apparent that current market products had more to offer and additional functionality, which would enable greater efficiencies across the organisation. The scope has now been revised to include this additional functionality, and as a result, more money was needed.

In response to questions, it was clarified that Oxford Direct Services could be charged to use the new system, but a charging schedule had not yet bee established. The Panel agreed that it wanted to see the revised business case for this system before it went to Full Council for approval.

The Panel requested that the Head of Financial Services provide more information on opportunities to renegotiate the car parking arrangements to ensure a suitable return to the Council. The Panel also asked for further information on the diversity of investment properties by property type, and the strategy for property investment.

The Management Accountancy Manager introduced the report and highlighted the main variances.

In discussion the Panel noted that:

·    There  is  one  red  risk  on  the  corporate  risk  register  which  related  to governancearrangements for thenew CouncilCompanies.  Auditand Governance would be considering a report from the Council’s internal auditors on company governance.

·    Arecent Councildecision tocommit £1mof fundingto replacethe rain screencladding ontwo towerblocks wouldshow inthe Q2report.  This expenditurewas beingfunded fromthe reserveset up tomitigate the impacts ofthe higher value council homes levy, which has been delayed.

·    ThePanel wouldbe ableto considerhow theCapital Gatewayprocess is working when considering the Capital Strategyfor 2018/19.

·    Officersaimed toprovide clarityin reportswhere decisionswould be takento recommit anyunderspends, andopposition groupshad the opportunity challenge or support those decisions.

·    The  Direction  of  Travel  indicators  didn’t  clearly  relate  to  specific performancemeasures andas somemeasures werenew for thisyear there was no comparison.

·    Trainingand monitoringwas takingplace totry toensure thatthe Council would not breach the Housing Benefit subsidy threshold this year.

The Management Accountancy Manager introduced the report and highlighted the adverse variances in the General Fund and Capital Programme as well as the positive variance on the Housing Revenue Account.  She also provided an overview of transfers from reserves and virements. 

The Panel expressed concern about the £389k adverse variance in the General Fund, which was largely due to a staff restructure (£126k) and unmet income targets (£150k) in the Planning and Regulatory Service.  The Panel heard that part of the restructure cost was due to consultant support but that there was an ongoing pressure of £70k which would need to be picked up in the coming budget round.  The Panel agreed that this service should be subject to further scrutiny during the Budget Review.

The Panel welcomed ring-fenced capital grant funding for Super Connected Cities and Disabled Facilities Grants.  The Panel noted that £328k of capital slippage related to a Research and Development Feasibility Fund and questioned what this fund related to.  The Panel heard that this was a feasibility fund for new schemes that comprised of a £200k base budget plus carry forwards from previous years.  The Panel agreed to revisit this budget during the Budget Review.