Agenda item

Agenda item

Integrated Performance Report Q1

For the Panel to receive an update on the Council’s Finance, Risk and Performance as at 30 June 2020. Anna Winship, Management Accountancy Manager, will be available to present the report and answer questions, and Nigel Kennedy, Head of Financial Services, will also be available to answer any further questions. The Panel is recommended to consider the report and note it, having made any recommendations to Cabinet arising from it.


At the previous meeting of the Finance Panel it was agreed that Nigel Kennedy would provide an update on the Council’s financial position in light of Covid. Nigel Kennedy will provide a verbal update based on the figures presented in this report.


NB This item was considered by Cabinet in August, meaning there is no opportunity for pre-decision scrutiny.




Anna Winship, Management Accountancy Manager presented the Integrated Performance Report Q1 to the Panel, detailing the main financial, performance and risk issues faced by the Council.

The financial position was presented as an update to the estimates of the impact of Covid previously made and considered by the Panel in July. The outturn position of the General Fund was forecast to be an adverse variance of £8.991 million, an adverse variance in the Housing Revenue Account of £2.272 million, and slippage on the capital programme of with slippage of £24.369 million leaving a total outturn of £96.270 million.

The major causes of the adverse variance within the General Fund included:

-       Business Improvement: an adverse variance of £0.280 million relating to additional cost for telephony services due to most staff working from home and a higher usage of telephones for call and use of data heavy applications such as Teams and Zoom, a notable cost for data usage and storage over and above the contract price with the data centre provider and costs associated with the purchase of new phones and laptops to enable staff to work at home more effectively. 

-       Community Services: a net loss of £0.850 million arising from reduced income and additional costs relating to leisure services and the setting up and running of the locality hubs. 

-       Regeneration and Economy: a fall in the collection of commercial property income from 73% to 55% over the course of one quarter, reflecting the impact of Covid on tenants

-       Housing Services: an adverse variance of £0.940 million, £0.532 million relating to the cost of providing accommodation and food to rough sleepers for the 3 months to June 2020, and £0.408 million relating to health and safety and compliance works required across the property portfolio

-       ODS Client: an adverse variance of £4.005 million, £2.800 million relating to projected loss of car parking income for the year, and £1.155 million relating to the reduction of expected dividend payment to be received from Oxford Direct Services (ODS) due to them unable to carry out much of their repairs work during lockdown.

Following questioning, it was confirmed to the Panel the expected amount from lost income the Council expected to reclaim from government was in the order of approximately £3 million.

Forecasts regarding the HRA position were presented as being an adverse variance of £2.272 million, consisting mainly through increases in void periods between lettings, support for tenants during lockdown, and bad debt provision on rental income. The Panel questioned the necessity of making bad provision at the current time; whilst it was accepted that there was uncertainty in the overall figure, it was deemed prudent to make allowance due to concern over rental arrears. The likelihood was that debts would not be recovered in-year, which would mean bad debts being chased in the next financial year.

For the Capital Programme, the budget, as approved by the Council at its meeting in February 2020, had been set at £142.567 million. Since that date the budget was increased by £20.747 million to take account of unspent balances rolled forward from 2019-20, giving a budget of £163.314 million as reported to the Cabinet in June 2020 as part of the April update. Further adjustments since then were made which reduced the budget by £42.285 million to £121.028 million.  Further net slippage of £24.369 million since last reported resulted in a forecast outturn of £96.270 million. The main causes of the variance were identified as Covid-related overspends at the Museum of Oxford, pausing of work at East Oxford Community Centre and the Covered Market due to Covid, the rescheduling of loans to OCHL due to Covid, weather and Covid-related delays at Seacourt Park and Ride, overspends on the new Housing Management system, the removal of replacing grey fleet vehicles from the budget, and re-timetabling of the Oxford and Abingdon flood alleviation scheme.

In addition to the variances, an optimism bias to balance the challenges of project delivery had been applied to the capital budget, reducing it by £15 million. The Panel questioned the need for applying an optimism bias, suggesting that it made understanding the outturn figures more difficult to understand. An alternative means of presenting the same information would be through the application of a risk-rating for non-delivery, which would not require adjusting the capital budget outturn.

A further issue where the presented figures were not clear, was with the aggregation of the two opposing impacts of slippage, resulting in a positive variance, and increases in capital costs, resulting in a negative slippage. The ability of these to net one another off meant it was harder to identify problems with delivery through the information available.

Panel members raised further questions regarding support for traffic schemes such as Low Traffic Neighbourhoods, which would need to be paid out before the end of year. It was not possible to confirm this but would be raised with the relevant Director.

Finally, the Panel questioned the cancellation of the grey fleet replacement vehicles. It was explained that with the reduction in work being undertaken requiring vehicles by ODS, the business case for replacing £1.8 million worth of vehicles was no longer viable.

The Panel AGREED to make the following recommendations to Cabinet:

1)    That the Council ceases to net off uncertainty over its capital programme through the use of an optimism bias, and instead uses an aggregation of the level of risks given to each project in the budget to present the proportion of that figure over which the Council is uncertain of delivery.

2)    That in its treatment of variance from budgeted capital spends the Council delineates the impact of increased costs and slippage.

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