Apologies for absence were received from Councillor Watkin.

There were no disclosures of interest.

The minutes of the meeting held on 20th July 2010 were submitted and signed.

The Head of Strategic Finance presented a report providing an update of the latest Revenue and Capital Budget forecast out turn for 2010/11 as at 31st August 2010. The Finance Digest was attached as Appendix A to the report.

He specifically drew the Panel's attention to the forecast variations of £291,000 on the General Fund and the options to address the position as outlined in the report. The forecast had been considered by Leadership Team at its meeting on 21st September but it was apparent that, because variations in salaries had not been fully reflected, the position was not completely accurate. Heads of Service were being asked to come back with more meaningful variations. He also explained that the forecast over spend was on factors that, by and large, were not one-offs but would permanently affect base estimates going forward. They therefore needed to be factored into the Medium Term Financial Strategy and would add to the pressures on identifying efficiencies in future years.

In response to questions from Panel members about the impact of staff vacancies on the figures, the Head of Strategic Finance explained that it took a couple of months for the effect of a vacancy to be reflected. Heads of Service were, however, usually able to anticipate vacancies in their services and should advise on the position.

The Panel went on to discuss specific sections of the Digest.

A - General Fund - Revenue

It was noted that the forecast out-turn net expenditure for 2010/11 at the end of period 5 was predicted to be £17,638k and needed to be reconciled back to the net budget requirement, agreed at the start of the year, of £16,532k. The items making up the difference of £1,106k were detailed in the Digest.

In response to questions from the Panel, the Head of Strategic Finance gave an explanation of the funding in respect of the Cassiobury CPZ scheme. He added that the total cost of the scheme could be slightly less than originally anticipated. The Chair asked for more in depth information relating to the funding and actual figures to be made available as soon as possible. It was necessary to be able to explain the position to residents.

ACTION: Head of Strategic Finance.

The Head of Strategic Finance confirmed that the figures included the cost of lines and meters and the consultants used in the drawing up of the scheme. In response to a question regarding the fact that the CPZ was a ring-fenced scheme, he explained that there were certain circumstances when it could be used for other transport related items such as concessionary fares.

It was noted that trade waste income was down due to lower demand and a Member made the point that the anticipated financial contribution from this activity never seemed to happen. The Head of Strategic Finance responded that, despite not increasing charges last year, volume was still decreasing because of the effects of the recession. A £59K surplus had been anticipated but in reality the Council might just break even.

A Member asked about the position in respect of land charges. The Head of Strategic Finance explained that there had been a long running argument over which piece of legislation had primacy. Not charging could result in a potential loss for the Council of £30-£50K per year.

Another Member asked about interest rates and the legality of investing across the sectors. The Head of Strategic Finance responded that the main concern was that of security. To earn more interest it was necessary to invest in less secure bonds. The rate of return on secure bonds was not much more than from Treasury bonds.

The Chair referred to the under-spend in Sports and Arts due to the fact that the utility contingency was no longer required. The Head of Strategic Finance explained that the £80K contingency was left to cover full increases but this had not been required. He was, however, in negotiation with SLM about the level of income which had been expected to be higher.

A Member asked whether the lower rental income from Charter Place was due to the fact that the Woolworth site had only just been occupied. The Head of Strategic Finance confirmed that this was the case and that income had been lost due to the initial rent free period. The full amount would be received in future years.

Capital Programme

The Panel considered the Capital Programme as summarised in the Digest.

In response to a question from the Chair about the cost of re-cycling boxes, the Portfolio Holder said that there was always a need to replenish stock. Some disappeared from the streets whilst others broke or eventually wore out.

A Member referred to the figure relating to the Holywell Centre and whether it included the costs of transferring the CVS. The Head of Strategic Service said that the costs were higher than originally anticipated but that the figure quoted should be final. The Portfolio Holder added that the Centre had been in a poor state of repair.

The Chair asked about the costs of the private stock condition survey and the Portfolio Holder explained that these surveys had to be carried out from time to time as the Council still had responsibility for improvement and disability grants.

In response to a question from the Chair about the figure relating to High Street building refurbishment, the Head of Strategic Finance said that this was the cost of splitting the Woolworth's site in two.

A Member referred to the significant sum in respect of Corporate Service/ Project Management. The Head of Strategic Finance explained that this figure included the costs of officers who worked on large capital projects such as Charter Place, the Civic Quarter, Carbon Management and Climate Change. 90% of their time was being charged to the capital fund. This was acceptable to the auditors but had to be backed up by detailed timesheets.

The Portfolio Holder advised the Panel that these figures would include on-costs which, in local government, were very high. It was, however, important that the situation was monitored. The Member responded that it may be necessary to ensure that this expenditure was identified as part of the budget for a scheme to give the whole picture. The Chair endorsed this view and commented that such a large figure needed to be shown separately.

ACTION: Head of Strategic Finance.
The Chair asked about the £12K in respect of Langley Road. The Head of Strategic Finance agreed to circulated details separately.
ACTION: Head of Strategic Finance.
Performance Indicators
The Head of Strategic Finance commented that the Council Tax collection figures appeared "unnatural" and he would be looking again at Period 6.
The Panel also discussed creditor payment monitoring and debtors. The Head of Strategic Finance commented that the Council was not always very good at collecting debt; there had been problems with systems and knowing where debts were occurring. The Council was moving towards collecting Charter Place rent in advance which should improve the situation. The Portfolio Holder added that efforts were also being made to use BACS or direct debit which provided more certainty and reduced the amount of chasing up of outstanding rents.
The Portfolio Holder drew the Panel's attention to 100% staff appraisals achievement.
There had also been significant achievements in the processing of housing benefits. A Member commented that the performance of Three Rivers District Council had been better in this area and their good practice had raised the standard in Watford. Likewise, there were areas in which Watford was better than Three Rivers, such as the staff appraisal scheme, demonstrating that the relationship between the two authorities resulting from Shared Services brought about improvements in both authorities.

The Department for Communities and Local Government (DCLG) had produced a 408 page consultation paper on options to change the current methodology underpinning the RSG Formula Grant redistribution process. These options were in addition to any general reductions to Formula Grant which would be announced as part of the Government's Comprehensive Spending review, to be announced on 20th October 2010.

The Panel received a summary of the effects of potential proposed changes and an indication of the comments Watford should make to the DCLG by the closing date of 6th October.

The Head of Strategic Finance introduced the report and highlighted the key points. He drew the Panel's attention to the section on concessionary fares and explained that the net cost of concessionary fares was being transferred to the County Council. The current scheme was not fully funded by Central Government and a table in the report illustrated the comparison between Watford, Three Rivers and Hertsmere. As Watford was a transport hub it was picking up the costs of a high level of trips which equated to £15 of the Band D council tax. He intended to raise this with the DCLG as part of this consultation process.

A Member commented on the complexity of the system and endorsed the Head of Strategic Finance's responses to the consultation paper. Another Member commented on Chapter 7 - Environment, Protective and Cultural Services and the need to bear in mind that Watford had a night time economy.

The Council was planning to carry out a programme of community engagement and consultation over the next few months that would provide opportunities for local people and stakeholders to share their views on its budget proposals for 2011/12. This engagement would build on that undertaken in previous years but for 2011/12 would also include opportunities to feed back on emerging service prioritisation options.

The Partnerships & Performance Section Head introduced the report.

A Member noted that the majority of the new Citizens' Panel had email addresses and that surveys could be conducted electronically. He said he was aware that there was generally a difference in views between those who submitted email responses and those who submitted a response in writing. He asked whether an allowance was made for this to avoid the results being skewed. The Partnerships & Performance Section Head accepted that this was the case and that, in the main, it was older people who tended to respond in writing. She explained that it was possible to apply weightings to ensure that answers were representative of local demographics.

A Member asked about representation by people from ethnic minorities. The Partnerships & Performance Section Head agreed to provide figures. She added that there were also problems attracting younger people onto the Panel and they were looking at different communication methods to try to get their interest.

A Member pointed out that the introduction to the survey would have to be revised in light of the Comprehensive Spending Review. The Partnerships & Performance Section Head said they would be making sure that the correct message went out. The level of grant would not be known until 20th October and there may be scope for going out to consultation ahead of this date to obtain more feedback to help the Council in its decision making.

It was agreed that the introduction to the document needed re-visiting.

The Chair advised that the question relating to Council Tax was now academic as Council Tax could not be increased. (The Portfolio holder reminded the Chair that the model presented with the report was last year's.)

The Chair added that it was important to ensure that the questions were relevant to the public. For example, many residents would not understand the difference between capital and revenue. The Portfolio Holder added that it was also important to ensure that the question related to areas which were within a district council's responsibility.

The Panel considered a report and appendices providing essential information for consideration of future years' expenditure and income projections.

The Head of Strategic Finance introduced the report and asked the Panel to have a full and frank discussion about the proposals which they could then revisit at their next meeting on 25th October. Their recommendations would then be fed into the debate at Cabinet in November.

He explained the context of the exercise: the Coalition Government intended to significantly reduce the inherited budget deficit of circa £143 billion per annum, aiming to restore national finances to a more sustainable level. This would be achieved by implementing a broad balance of 80% expenditure reductions and 20% tax increases.

The proposed expenditure reductions would impact severely upon public service expenditure with an anticipation that local authorities would bear the brunt of them. Further information would be known on 20th October 2010 when the Public Expenditure review would be announced. He was anticipating a 10% year-on-year reduction but this was only an assumption - some more pessimistic predictions were anticipating cuts as high as 25%.

A Member asked whether the figure included the usual 2% efficiency savings. The Head of Strategic Finance said that it represented a straight 10% in cash terms; the grant was normally increased in line with inflation which tended to balance out the 2%.

The Panel agreed that the use of earmarked reserves was not a viable option and would only mask the situation and result in an unsustainable budget.

The Panel also discussed increases in fees and charges versus cuts in services and agreed that there was a fine balance to be struck. Any reduction in activities also had to result in cuts in overheads.

The Vice-Chair asked for it be placed on record that he did not support the Government's timetable and proposed cuts.

The Panel then considered the specific options for identifying savings.