Agenda item

Report of Head of Strategic Finance

To consider the attached report to Cabinet on 8^th July 2013.

Appendix 2 is also printed separately

The Panel received a report of the Head of Strategic Finance and Shared Services which included the report and its appendices to Cabinet on 8 July 2013. 

The Head of Strategic Finance and Shared Services highlighted paragraphs 6.2.2 and 6.2.3 of the report which set out the major favourable and adverse variances.  Too many of these variances had not been highlighted in the Finance Digest.  The Head of Strategic Finance and Shared Services confirmed that monitoring procedures had been tightened up for 2013/2014.  He suggested that the Panel might wish to review the financial performance of revenues and benefits and the commercial rent portfolio during 2013/2014 as they were both significant cost centres.  He advised that before he retired from the Council he would be reviewing the Medium Term Financial Strategy (MTFS) and an updated version would be presented to the Panel in September. 

Pension Fund

Following a question from Councillor Turmaine, the Head of Strategic Finance and Shared Services provided the Panel with the distant background to the pensions history and how people on leaving the Council had been given enhancements and the pensions fund had been expected to fund the cost.  This process had been changed four years ago and services were required to ensure that any pension strain was paid during the year it had occurred.  The ad hoc payment in 2012/2013 was a necessary action to reduce the inherited shortfalls.  The Council always followed the Actuary’s advice which aimed to eliminate any shortfalls over a 20 year perspective.

It was noted that there were other factors that had contributed to the shortfall in the pension fund, such as people living longer and poor investment returns due to the current low interest rate environment.

Budget Estimates

The Chair asked whether the estimates were realistic and if the budgets should be amended at the start of the year.  This could mean that the Council would not have to consider cutting budgets.

The Head of Strategic Finance and Shared Services replied that across Hertfordshire many authorities had an underspend.  Due to the austerity environment Heads of Service were being prudent with their spending but agreed that any slack in budgets should be identified. 

Revenues and Benefits Service

The Chair referred to the comments in the report about the Revenues and Benefits services’ costs.  He questioned whether it would not have been better to employ permanent staff rather than using agency staff.

The Head of Strategic Finance and Shared Services responded that he felt it would be useful to find out the new Director of Finance’s views about the service.  It had become apparent that initially the Benefits service had not measured how many cases staff could process.  It was only recently that individual performances had been measured and had shown variances.

Councillor Derbyshire informed the Panel that he was a Member of the Shared Services Joint Committee.  The Joint Committee had followed the performance of Revenues and Benefits very closely.  It had been noted that the Watford Borough Council was third from bottom on the Government issued performance figures.  The only way to resolve the matter quickly had been to use an outside agency to carry out the change of circumstance work.  These performance figures now showed that new claims had moved up to average.  The change of circumstance applications had not improved in the same way.  The Joint Committee asked officers to provide regular updates on the Department for Works and Pensions’ statistics.  The Joint Committee had also asked officers to review the level of resources.  It was felt that initially the service had been too optimistic and there had not been a sufficient number of staff employed to carry out the work.

Members agreed that the Panel should look at this matter at a future meeting.  The Head of Strategic Finance and Shared Services advised that a report containing the financial performance would be presented to the Panel at its September meeting.

Court Costs

The Head of Strategic Finance and Shared Services explained that when the Head of Revenues and Benefits was preparing his budget estimates, he had to make an assessment on the number of cases that would be taken to court and therefore how many court charges were likely to be charged.  The costs were charged for non-payment of Council Tax and National Non-Domestic Rates.  The original estimate had been set, however, as soon as the Head of Revenues and Benefits had realised that there would not be as many costs charged, it should have been reported through the Finance Digest.

Reserves

The Chair noted that the Car Parking Zones Reserve had increased.  At a previous meeting the Panel had been informed that the reserve would run out, however, it had increased.  He added that he had asked for a report on the income from the CPZ areas and a breakdown of each zone; this had not yet been produced.

Councillor Counter commented that she had been informed that the reserve paid for new schemes to be put in place.  She was aware that a proposed scheme in Oxhey would not be proceeding following consultation with residents.  The funds which had originally been set aside for this scheme had not been used.

It was agreed that the report needed to show the expenditure related to schemes as well as the income. 

Charter Place overspend

Following a question from the Chair, the Head of Strategic Finance and Shared Services explained how the overspend had arisen and how it was being more than offset from other income.

RESOLVED –

1.      that the reports discussed at the meeting be added to Budget Panel’s work programme for 2013/14.

2.      that Budget Panel’s comments be forwarded to the Cabinet meeting in September.