Apologies for absence were received from Councillor Mortimer.

There were no disclosures of interest.

The minutes of the meeting held on 23 June 2010 were submitted and signed.

The Head of Strategic Finance presented his report and explained its salient points.

He advised that, although the Government Emergency Budget had indicated a spending reduction of 25%, this was likely to be closer to 33% over a four year period. He added that Specific Grant Funding for 2010/2011 would also be cut back.

The Panel considered the General Fund Budget Projections for 2010/11 as detailed within the revised Medium Term Financial Strategy in Appendix 2 of the report.

The Head of Strategic Finance noted the projected £243,000 overspend in the 2010/11 figures and advised that this could be reduced through close budget monitoring. He noted that the extent of savings in 2011/12 indicated that £1,068,000 should be taken from current budgets; this equated to 6.2% of current expenditure. A number of options were available to identify expenditure efficiencies including a review of income charging. It was considered, however, that the most appropriate method would be by Service Prioritisation.

One Member asked whether the figure for Cohesion Fund (£18,000) within the Specific Grant Fund had been ring-fenced and whether, if this were not used, it would have to be returned to the Government.

The Head of Strategic Finance advised that this money had not actually been received. All unspent balances of specific/ area based grant would not have to be repaid but could be added to the general reserves.

The Member noted that the Employers' Federation had advocated no wage increases for employees but that a sum had been provided for salary increases.

The Head of Strategic Finance explained that £160,000 had been provided for a 1% pay award and would probably not be required in full. This resulted in a potential £90,000 over provision which, if it materialised, could reduce the £243,000 overspend. He advised that the salaries and wages budget could be further controlled through delay in filling vacancies.

The Partnership and Performance Section Head summarised methods of Service Prioritisation which could be used to achieve the required results. This would be led by Heads of Service and include input from Leadership Team. Heads of Service would investigate all areas and determine costs against value of each activity within their particular service area.

The Financial Adviser (VFM) advised that meetings with Heads of Service were proposed in order to look at the outcome of these investigations.

Replying to questions from Members, the Finance Manager stated that initial investigations would determine the extent of activity within each Service.

One Member asked how the exercise would ensure a complete capture of activities undertaken by Watford Borough Council, given that Heads of Service or Section Heads might not recall the totality of their service provision on interview.

The Financial Adviser (VFM) responded that this information would very likely become clear when data had been analysed because the costs of any ‘missing' services would end up included within the cost of other services thereby artificially inflating their unit cost. He added that forms requesting data on staff costs had been supplied to each Service and that this information would have an ultimate end date by the end of August 2010. He said that Heads of Service would be helped to fill in the forms and guidance would be offered.

The Partnership and Performance Section Head advised that there was considerable pressure to balance budget requirements and service needs. She added that there was an opportunity for Heads of Service to provide innovative solutions. She added that benchmarking would be important and that the impact of reductions in service should be quantified. She explained that each Head of Service would be assigned three members of a ‘Challenge Team' who would help with providing fresh ideas and would be a positive influence on decision making. Challenge Teams would then report to the Executive in September 2010. The Partnership and Performance Section Head informed the meeting that she had attended a meeting on 15 July 2010 with Shared Services and confirmed that a similar approach would be employed at Three Rivers Council.

The Chair noted that work would be ongoing throughout the Summer and the results presented at the next meeting of the Budget Panel in September 2010.

The Head of Strategic Finance affirmed that it would be necessary to compare with other authorities and such comparators would support all decisions and actions.

The Partnership and Performance Section Head advised that the Prioritisation approach should be largely quantitative rather than including full scoring, though still backed up by meaningful benchmarking. The Financial Advisor (VfM) would be working with the Services to establish and analyse appropriate benchmarking data. She stressed that it was imperative that data was analytical rather than anecdotal.

A Member asked whether a target had been determined.

The Head of Strategic Finance replied that £1,068,000, or 6.2% of the net budget had been provisionally set for identifying efficiencies. He advised, however, that savings across the various services would not necessarily be of equal amounts as each service had differing requirements and savings potential.

The Member noted that communication with Council staff was vital and that this would not be an easy process.

The Chair referred to the document produced by the Northern Ireland Audit Office which stated that consultation with staff was important.

The Head of Strategic Finance advised that he had spoken with the Head of Human Resources, Shared Services, and confirmed that staff representatives would be consulted early in the process.

Responding to a question from the Chair, the Partnership and Performance Section Head advised that the Managing Director would involve staff through the Core Brief and that all discussion and decisions would be open and available to all staff.

The Panel received a report of the Head of Finance Shared Services.

The Head of Strategic Finance advised that no minor variations had been identified at this time due to problems in evaluating information caused by the change of financial software systems. He explained, however, that he had examined approx 16 of the highest risk areas and that six areas had been forecast to be likely to be overspent unless corrective action were taken. He said that further information would be available at the September meeting of the Panel.

A Member asked for clarification on the difference between figures in the summary on page 3 of the report and the Capital Investment Programme on page 6 of the Finance Digest.

The Head of Strategic Finance replied that this was due to a slight difference in terminology but that essentially it was carry forward ‘slippage' and that this would be reviewed in the Autumn.

The Panel noted that Collection rates for Council Tax, and specifically N.N.D.R., were lower than in previous years.

The Head of Strategic Finance advised that this reflected the current economic climate.

An update would be provided at the September meeting.

Action:Head of Strategic Finance

•Wednesday 1 September 2010
•Monday 30 September 2010
•Monday 25 October 2010