The Panel heard that there had been a £440k overachievement against income targets in Direct Services and an adverse variance of £300k in the Housing Revenue Account (HRA) related to the tower blocks.  There had previously been one corporate red risk, around company governance, but this had been downgraded to an amber risk.

In discussion the Panel also noted:

·         The additional income would be rolled into the budget in future years.

·         Bad debt provision may need to be increased at year end.

·         The profile of homelessness property investments was quite ‘lumpy’.

·         Performance against the leisure usage target was concerning and the Scrutiny Committee had asked to monitor Fusion Lifestyle’s performance during the year, not just at year end.

·         The Council and its companies had separate auditors and there had been no takers when a single provider had been sought.

The Panel noted that the services budgets are in balance overall but expressed concern about the projected adverse variance in Planning and Regulatory Services due to staffing pressures and underachievement against income targets.  The Panel agreed to return to this in the scrutiny budget review.

The Panel noted the forecast surplus of £125k on the Housing Revenue Account (HRA) and questioned why there had been fewer Right to Buy sales than anticipated, which had contributed to a projected favourable variance of £382k in dwelling rents.  The Panel heard that there were likely to be a range of factors but the proactive work of the Council’s Investigations Team was likely to be having some impact.  The Panel suggested that fewer Right to Buy sales should perhaps be projected in future years.

The Panel noted a forecast capital spend of £42.9m against an original budget of £42.8m and welcomed the impressive progress that has been made over recent years in delivering what is an ambitious programme of capital spending (which is set to be larger still in the coming 2 years).  This showed that where projects had slipped there had been the flexibility in place to bring alternative schemes forward, as previously encouraged by Scrutiny.  The Panel heard that this progress was down to the embedding of the new capital gateway process together with improvements to project management and better internal challenge.  The favourable variance of £1.2m against the latest budget was comprised of underspends as well as slippage.

The Panel considered the recommendation to transfer a projected underspend of £1.5m on corporate contingencies to the Capital Financing Reserve, where it would be used to finance capital projects.  The Panel felt that there may be a case for spending part of this money on different uses, such as one-off revenue projects, as an alternative to putting it all towards capital.

The Panel had previously monitored the impacts of Brexit on the Council’s finances, which included risks to the Council’s investment income, property fund appreciation values (which were now in recovery) and an income target measured in Euros.  The Panel had also highlighted the risks to the wider national and regional economies and the impacts an economic downturn could have on trading and Business Rates income, for example.  The Panel noted that this was not included as a red risk in the report and suggested that this risk should be included in the Council’s Corporate Risk Register.

The Panel agreed to make two recommendations to the City Executive Board:

1.    That consideration is given to spending some of the £1.5m released from unused corporate contingencies on one-off revenue projects.

2.    That the expected and potential financial impacts of Brexit on the City Council and the wider economy should be included as a risk in the Corporate Risk Register.