Agenda and draft minutes

Agenda and draft minutes

Contact: Alan Garside/Jodie Kloss  Email: democraticservices@watford.gov.uk

Media

Items
No. Item

8.

Apologies for absence

    Minutes:

    There were no apologies for absence.

9.

Disclosure of interests

    Minutes:

    There were no disclosures of interest.

10.

Minutes

    The minutes of the meeting held on 29 June 2020 to be agreed. They will be signed once officers and members return to the Town Hall.

    Minutes:

    The minutes of the meeting of Finance Scrutiny Committee held on 29 June 2020 were approved. They would be signed at the Town Hall at a later date.

     

11.

Finance Digest - Period 4 July pdf icon PDF 478 KB

    • View the background to item 11.

    Additional documents:

    Minutes:

    The committee received the report of the Section Head – Financial Planning and Analysis.  The report informed the Finance Scrutiny Committee of the Council’s 2020/21 financial position at the end of July 2020 (Period 4).  The Section Head – Financial Planning and Analysis introduced the report and advised that this was the first financial digest in the current financial year.  He advised how the digest compared the latest budget for 2020/21 approved by Council on 14 July, which took account of the impact the Covid-19 pandemic had on finances, with the forecast outturn.

     

    The Section Head – Financial Planning and Analysis highlighted the key areas, in particular he explained:

    ·        That the 2020/21 forecast outturn was estimated to be £17.452m. This gave a favourable variance of £0.057m, when compared to the latest budget of £17.509m.

    ·        How the Covid-19 pandemic had resulted in a significant loss of income to the council from the leisure provider SLM and of the financial support being provided to them by WBC; which would be recovered in due course.  This position reflected similar circumstances with other councils across the country.

    ·        The impact of the national pay award of 2.75% for council staff as compared to an award of 2.00% that had been anticipated.

    ·        The government’s income guarantee scheme with estimated funding of £1m being provided to the Council; and to be received in three instalments.

    ·        That the figure of 11% of staff vacancies may seem a little high.  However, some positions were being filled by consultants and temporary staff.  In other instances positions were being left open so as to make savings.

    ·        That Council reserves were in a healthy position with only £3.5m being utilised out of the total reserves of £22m.

    ·        In terms of capital, services were forecasting an outturn position of £125.293m resulting in a variance of £1.005m which would be funded from the enterprise grant.

    ·        The financial risks appertaining to the Covid-19 pandemic including issues relating to temporary accommodation, council tax revenues, business rates and commercial rents.  The impact of interest rates being reduced from 0.25% to 0.10% on short term investments was also explained. 

     

    The Section Head – Financial Planning and Analysis concluded that the council was able to meet the Covid-19 commitments but with further variances possible dependent on how the pandemic developed.

     

    The committee thanked the Section Head – Financial Planning and Analysis for the comprehensive report and discussed issues in relation to commercial income, capital investments and temporary housing.  In response to a question from members, the Section Head – Financial Planning and Analysis advised that monies being provided to Hart Homes would be repaid and with interest being charged.

     

    Members discussed the impact of unemployment on the economy and how council tax revenues may be effected.  In response to a related question from members, the Section Head – Financial Planning and Analysis provided reassurance that the council’s recovery fund could be used to help mitigate any negative consequences.  The Interim Head of Finance added that government  ...  view the full minutes text for item 11.

12.

Financial Planning - budget setting process pdf icon PDF 671 KB

    • View the background to item 12.

    Minutes:

    The committee received a report of the Section Head – Financial Planning and Analysis to inform the Committee of the process of how the Council would determine its three-year medium-term financial strategy (MTFS) for 2021-2024, the related service plans, and the allocation of financial resources to achieve them.  The Section Head – Financial Planning and Analysis introduced the report explaining that this was the first time the budget setting process had been outlined to the committee. 

     

    The Section Head – Financial Planning and Analysis highlighted the key areas in the report and in particular he advised members of:

    ·        The timeline in preparing the MTFS and how this supported the council’s strategic aims.

    ·        How the Council plan fed in to the development of costed and sustainable service plans and the staff appraisal process.

    ·        The role of the Director of Finance and the new income streams coming in to the council.

    ·        How financial impacts, such as inflation, staff costs, growth in services and savings were included.

    ·        How service fees and charges were determined.

    ·        The establishments and salary build spreadsheets and budget responsibilities.

    ·        How the government’s spending review would inform funding arrangements for next year; with the Covid-19 pandemic potentially leading to a requirement for further savings.

     

    The Chair thanked the Section Head Financial Planning and Analysis for the very helpful and informative report.

     

    RESOLVED –

     

           to consider and note the 2020/21 financial planning - budget setting process as

           shown in Appendix 1.

     

     

13.

Croxley Park Update pdf icon PDF 407 KB

    • View the background to item 13.

    Minutes:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    The committee received the report of the Interim Head of Property providing an update on performance of the Croxley Business Park over the past year.  The Interim Head of Property introduced the report explaining that this had gone before Cabinet on 7 September.

     

    The Interim Property Manager highlighted key areas and in particular explained:

    ·        The history of the council acquiring a 40 year head lease in the park; with the Council having the option to acquire the park at the end of the term.

    ·        That the council received the full passing rental income from occupational tenants in return for paying a rent of £9.2m per annum index linked annually to RPI.  As the RPI was currently at 1% as opposed to an anticipated 2.5% this created headroom for rental for tenants.

    ·        That Columbia Threadneedle Investments, the vendors of the park, made a payment of £92m to the Council to cover rent top ups and planned and preventative maintenance.

    ·        That despite Covid-19, the Park had had a success in attracting three new tenants (the businesses all new to Watford) in the last four months.  This reduced the vacancy rate from 17% to 12% and was an encouraging sign.

    ·        That the impact of Covid-19 had resulted in requests for rental concessions; and with two companies at the Park going in to administration.  There was an expectation to negotiate packages to defer rental payments albeit monies had to be paid in the financial year.

    ·        That Grant Thornton had prepared a new financial model to enable accurate forecasting and scenario planning of the Park; which would be operational in Q3 of this financial year.

    ·        That the property managers Workman, and the Councils financial advisors Lambert Smith Hampton Investment Management (LSHIM), monitored aged debt at the Park.  This had reduced to £500k with an expectation that it would reduce further.

    ·        The quarterly monitoring process of the Park by the Council’s Property Investment Board; with LSHIM being a member.  This process had indicated that the Park was on track in relation to the financial assumptions made during acquisition; with the levels of rent in the original model still accurate.

    ·        That the main risk around the Park was the level of rental income to be achieved following the development of Building 1; this was unknown at present.  Marketing would take place towards the end of the year.  However, the £92m payment did allow for a level of vacancies.

    ·        That the performance of the Park in the last year had been encouraging and the Grant Thornton model would be of great assistance going forward in producing additional metrics and reports to the Council.

     

    Members thanked the Interim Property Manager for the report and were reassured that matters were on track in the Park.  They discussed vacancy rates, debt issues and matters in relation to maintenance. 

     

    In response to a related question, the Interim Property Manager clarified that £68m of the monies provided by Columbia Threadneedle was for maintenance in order to keep properties in a lettable condition over  ...  view the full minutes text for item 13.

 

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