Finance and Performance Scrutiny Sub-Committee Minutes

Date:
Monday, 20th September, 2010
Time:
7.30pm
Place:
Committee Room 1, Council Offices, Gernon Road, Letchworth Garden City
 
 

Attendance Details

Present:
Councillor Michael Paterson (Chairman), Councillor J.M. Cunningham (Vice-Chairman),A. Bardett,Councillor Lee Downie, Councillor Lawrence Oliver,and Councillor R.L. Shakespeare - Smith.
In attendance:
Andy Cavanagh - Head of Finance,Performance and Asset Management,
Lynn Saville - Head of Community and Cultural Services,
Tim Neil - Accountancy Manager
Fiona Timms - Performance and Risk Manager
Brendan Sullivan - Scrutiny Officer
Nigel Schofield - Committee and Member Services Officer
Item Description/Decision
PART I
12 APOLOGIES FOR ABSENCE
Apologies for absence were received from Councillors Allison Ashley and S. K. Jarvis. The Chairman advised that in accordance with the procedures of North Hertfordshire District Council Councillors Ray Shakespeare - Smith and Lee Downie would be their respective substitutes.
13 MINUTES
RESOLVED: That the Minutes of the Meeting held on 7 June 2010 be approved as a true record of the proceedings and be signed by the Chairman.
14 NOTIFICATION OF OTHER BUSINESS
The Chairman confirmed that there were no other items of business.
15 CHAIRMAN'S ANNOUNCEMENTS
The Chairman reminded Members that, in line with the Code of Conduct, any Declarations of Interest should be declared immediately prior to the item in question.
16 PUBLIC PARTICIPATION
The Chairman confirmed that there was no public participation.
17 TRANSPARENCY OF THE CHALLENGE PROCESS
The Head of Finance, Performance and Asset Management (HF) advised the Committee of the referral from the Overview and Scrutiny Committee that sought the views of this Committee to the proposal for more Member involvement and transparency in the Challenge Process ( 20 July 2010, Minute 27 refers).

The HF referred the Committee to the Medium Term Financial Strategy which gave the role of members in the Corporate Business Planning Process which inter alia allowed for the scrutiny of proposals by Members for funding prioritisation and de- prioritisation as set out by managers. The HF also advised the Committee that the Portfolio Holder for Finance at the meeting of Cabinet on 27 July 2010 (Minute 31 refers) had confirmed that there would be Member involvement via the two rounds of Member Workshops and this should provide ample opportunity for scrutiny.

The Chairman proposed and it was agreed to note the comments from Cabinet and the Committee discussed the need for the opportunity to review outputs from the Challenge Process and in particular whether there was sufficient challenge. Comment was also made as to whether items rejected by the Challenge Board could be made available for scrutiny as it was imperative to ensure that the process was correct and if every possibility for efficiencies and investments had been assessed.

The Chairman advised the Committee that he was one of two Members invited to the Political Liaison Board (PLB) who were not Portfolio Holders and he was able to re assure the Committee that there was a rigorous question and answer session of officers on proposals and was a marked improvement for Member involvement and information. Another Member advised that the PLB was not an official body of NHDC that was constituted to make decisions. Comment was also made as to the need for public scrutiny of decisions as it was the Council Tax payer who would be affected by decisions and should all papers presented at Workshops go to each of the five Area Committees. Although there might only be certain aspect of the budget applicable to each Committee it was agreed that there needed to be consultation with Members outside the workshops.

Whilst the Committee were content to proceed with the Member Consultation at Workshops and Area Committees it was felt that more scrutiny was required of the Challenge Board and the process. With this in mind it was considered appropriate to invite the Chief Executive to address the Finance and Performance Scrutiny Sub - Committee with a report on the process and procedure used by the Challenge Board as part of the Strategic Approach to Budget Setting.

RESOLVED:

(1)That the decision made by Cabinet at its meeting held on 27 July 2010 (Minute 31 refers) concerning the involvement of Members in the challenge process would remain at Member Workshops and the autumn Area Committee Cycle be noted.
Note: Consultation with Area Committees will now take place in the round of meetings held in January 2011 as advised by the Portfolio Holder for Finance.

RECOMMENDED TO THE OVERVIEW AND SCRUTINY COMMITTEE: That the Chief Executive in his role as Chairman of the Challenge Board be invited to attend the meeting of the Finance and Performance Scrutiny Sub - Committee to be held on 17 January 2011 to present a report on the process and procedure used by the Challenge Board as part of the Strategic Approach to Budget Setting.

REASON FOR DECISION:
To respond to the decision made by Cabinet at the meeting held on 27 July 2010.
18 CORPORATE BUSINESS PLANNING - THE STRATEGIC APPROACH TO BUDGET SETTING FOR 2011/12 TO 2015/16
The Accountancy Manager (AM) advised the Committee that the report before them was a draft report for Cabinet to receive at the meeting to be held on 28 September 2010. The AM confirmed that this report gave an early indication of the financial position for 2011 - 2012 and was to inform on the Corporate Business Planning Process. The AM referred the Committee to Appendices A to F and detailed the strategy used to prepare the likely Council Tax requirement. In his report the AM listed seven significant efficiencies in the last two years e.g. Leisure Management Contracts (£600K) and restructure of Senior Management (£250K). The AM confirmed that all supporting Appendices would be presented at the Members Workshops and that appendix A presented the current general fund projected position with an assumption of a 25 per cent reduction in Government funding over four years and a nil increase in Council Tax in the same period

The AM stressed that while the financial situation would be likely to drive the Corporate Business Planning Process it was important to have a broader discussion with Members on core principles on what the Council wanted to achieve and what services should or should not be provided before detailed proposals for reduction in spend were considered. A Member reminded Members that there would have to be a year on year saving of about £1.6M. With this in mind the AM urged caution as there could be many possibilities for savings and efficiencies and there would be a finite availability of officer time to investigate all proposals. However, in a request from the Committee the AM agreed that outline estimated costs could be added to Appendices C,D , and E, but it would not be possible to be 100 per cent accurate at this level. Of specific interest to the Committee were the proposals made at Appendix F (which was reviewed closely) and that some of these broad areas were major expenditures which should be identified by value also. The AM agreed that he would be able to add a broad outline of the amount of spend for each group in Appendix F (with an additional column) but suggested that Members should not concentrate on the accuracy or inaccuracy of any figures included with a revised Appendix F at the expense of a discussion on the broader principles.

Comment was made on the importance and need for a rigorous scoring system as listed for example at Appendix E, Ref. 53 - Museums and Galleries and that the scoring could be subjective and what weighting would be attached to the results of the District Wide Survey.

The Chairman thanked the Accountancy Manager for this Cabinet Report and it was agreed to ask that the thanks of the Committee be passed to all officers who had participated in the budget preparation and explored ways to reduce expenditure.

RESOLVED:

(1)That the information provided in the report to Cabinet on 28 September 2010 which provided an update on the budget pressures and required efficiencies be noted;

(2)That the Head of Finance, Performance and Asset Management be requested to pass on the thanks of the Finance and Performance Scrutiny Sub - Committee to all officers involved with the preparation of this report and supporting Appendices.

RECOMMENDED TO THE OVERVIEW AND SCRUTINY COMMITTEE: That an additional column be added to Appendix F ‘Function Groupings and Strategic Questions’ which would provide outline costs (with a margin of 15 per cent) for each of the 12 broad areas and if possible costs for sub functions within those areas for the guidance of Councillors at the forthcoming Member Workshops.

REASON FOR DECISION:
To allow comment on the report to be presented to Cabinet concerning the Strategic Approach to Budget Setting.
19 FIRST QUARTER 2010-2011 REVENUE MONITORING REPORT
The Accountancy Manager (AM) advised the Committee that this report was the first monitoring report to be presented to Cabinet for 2010-2011 and confirmed that the projected expenditure on the general fund was estimated to be £19.5M which was an increase of £0.915M on the working budget of £18.234M. The AM described to Members the significant variances contained in the report by reference to Table 1, and briefly described the current status of Commercial Rent, Building Control Fees, Planning Application Fees, Land Charges Income, Car Parking Income, Vacancy Control, Investment Interest Income, Benefit Overpayments, Benefit Payments and Debt Provisions and referred the Committee to Appendix A General Fund Summary.

Members asked several questions and in particular queried the robustness of the estimates for parking income as there had been a reduction of some 39,000 parking tickets purchased compared to the same period in 2009-2010. In particular a Member queried if when setting the budget an estimate had been incorporated for a reduction in ticket sales following the increase in charges from 1 April 2010. The AM confirmed that a downturn had been incorporated into the estimates.

Members also enquired about the under-achievement of savings (Estimate was £0.579M against a net total of £0.102M achieved to date) in vacancy control and requested that by the next meeting the AM should if possible provide more information and statistics on the reason for this under-achievement. The AM confirmed that this investigation would be made as part of the budget estimate process as a matter of course. In response to another query the Performance and Risk Manager advised the Committee that turnover had fallen from 16 per cent in 2004-2005 to 10.2 per cent in 2009- 2010.

RESOLVED:

(1)That the information to be presented to Cabinet at the meeting to be held on 28 September concerning the Revenue Monitoring for the first quarter of 2010-2011 be noted;

(2)That the proposed increase in net expenditure of £915K be noted;

(3)That the proposed changes to the 2011-2012 budget as detailed at paragraph 4.1 to the report indicating a net £14K increase in net expenditure be noted.

REASON FOR DECISION:
For the Finance and Performance Scrutiny Sub - Committee to comment as appropriate on the first quarter 2010-2011 Revenue Monitoring Report.
20 FIRST QUARTER 2010-2011 CAPITAL MONITORING REPORT
The Accountancy Manager (AM) advised the Committee that this report which updated the capital programme at 30 June 2010 would be presented to Cabinet at the meeting to be held on 28 September 2010. The AM confirmed that the total programme for 2010 - 2011 to 2013 - 2014 stood at £19.429M which would contribute to the three priorities: Town Centres, Sustainable Development and Green Issues as shown at Chart 1.

The AM referred the Committee to Appendix A which included summaries of the capital programme by priorities and by service, to Appendix B which detailed the revised costs of schemes and a provisional programme for 2010-2011 to 2012-2013 and to Appendix C for the anticipated funding sources for each capital scheme. The AM advised the Committee that the projected expenditure for 2010-2011 stood at £7.4798M an increase of £49K since July 2010. The Committee noted that the increase was partly due to investment of £166K relating to office accommodation and the AM referred the Committee to Table 1 which detailed scheme slippage and to Table 2 which detailed two schemes that had been cancelled.

The AM confirmed that a new capital scheme of £54K to update the Telephony system would be funded from the IT reserve.

In response to an enquiry concerning the receipt of cash from the disposal of land (in particular to North Herts Homes) the Head of Finance, Performance and Asset Management (HF) advised that in the last 12 months there been no significant land sales but it was anticipated that there would be two disposals of land in 2010-2011 and one in 2011-2012. The Chairman enquired whether this was the right time to dispose of assets and the HF confirmed that there would be no concerted effort on land sales.

RESOLVED:

(1)That the information to be presented to Cabinet at the meeting to be held on 28 September concerning the Capital Monitoring for the first quarter of 2010-2011 be noted;

(2)That the specific information concerning scheme slippage and a decrease in expenditure in 2010-2011 of £37,000 be noted;

(3)That the specific information concerning changes to the projected capital programme for 2010-2011 and a decrease in expenditure in 2010-2011 of £80,000 be noted;

(4)That the specific information concerning a total investment of £166,000 for an upgrade to telephony and IT infrastructure as detailed at Paragraph 4.6 be noted.

REASON FOR DECISION:
For the Finance and Performance Scrutiny Sub - Committee to comment as appropriate on the first quarter 2010-2011 Capital Monitoring Report.
21 TREASURY STRATEGY MID YEAR 2010-2011 REPORT
The Accountancy Manager (AM) advised the Committee that this was the first mid year report concerning Treasury Strategy and covered the first five months of the current financial year and was considered to be best practice. The AM confirmed that as an authority NHDC was achieving good returns on investments and that NHDC would continue with UK Building Societies under the Treasury Strategy.

In response to an enquiry the AM confirmed that there was no specific league table of investments by local authorities but it was understood that other councils had only invested in funds with credit ratings thereby eliminating some Building Societies from their investment portfolios. The AM advised that there were several Building Societies in the NHDC portfolio who were not credit rated but NHDC had maintained these investments. A query was raised on the large investment with the Coventry Building Society with a rate of less than 0.5 per cent. The AM confirmed that he would make enquiries on this matter (Note: Post this meeting the AM advised the Committee that this investment had ceased and had been a short term investment with an A credit rating).

The AM advised that credit ratings were checked on a daily basis and that the income from investments in 2010-2011 was forecast at c£0.975M (which was a decrease of £0.578M on the original budget estimate). The forecast for 2011-2012 was currently £1.0M on the assumption of an increase to one per cent of base rate ant that Cash managers would achieve one per cent over base rate.

A Member queried the percentages of the upper and lower limits linked to the maturity structure of borrowing in 2010 - 2011 (120 per cent) and the AM agreed to re-examine these data and report to Members outside of this meeting.

As there were no further comments on the Treasury Strategy Statement for 2010-2011 as listed at Appendix A the Chairman proposed and it was agreed to forward this statement to the Overview and Scrutiny with a recommendation to forward to the next meeting of full Council.

RESOLVED:

(1)That the mid year position on Treasury Management be noted;

(2)That the Accountancy Manager be requested outside of this meeting to provide Members of the Committee with a revised table (3.5.3 in Appendix A) concerning the upper and lower limits for the maturity structure of borrowing and comment on the large investment with Coventry Building Society.

RECOMMENDED TO THE OVERVIEW AND SCRUTINY COMMITTEE: That subject to the agreement of the Overview and Scrutiny Committee the current Treasury Management Strategy be adopted by Council at the meeting to be held on 11 November 2010.

REASON FOR DECISION:
To ensure the continued compliance with CIPFA Code of Practice on Treasury Management and management of exposure to interest and capital risk.
22 RECHARGES
The Head of Finance, Performance and Asset Management (HF) reminded Members that the Overview and Scrutiny Committee at its meeting held on 10 June 2010 (Minute 14 (2) refers) had been requested to examine the way in which Recharges operated within NHDC. The HF referred the Committee to Appendix A describing the approach to recharging and how they are applied together with an explanation of the ‘myths’ attached to recharging and to Appendix B which detailed each recharge. The HF was pleased to advise the Committee that recharging did not add to the overall costs of the Council as they were an internal transfer of costs already incurred. Recharging was made to recover costs and did not involve any element of ‘profit’.

The Chairman thanked the HF for the introduction and clarification of recharging and invited comments or questions from the Committee. There ensued a lengthy discussion on recharging particularly on costs incurred by departments which were not recovered by recharging. In response to an enquiry the HF advised that there was no specific comparison on recharging with neighbouring authorities and that as home working take up increased, then office space recharges would be reworked to allow for the fact that staff from Town Lodge were now being accommodated. The HF confirmed that NHDC were unable to make a 100 per cent recovery but every effort was made to recharge wherever possible. The Accountancy Manager confirmed that NHDC could not raise planning fees as fees were set by other bodies but central government might be giving more guidance on the local setting of planning fees soon.

Following the discussion and clarification of certain issues the Committee agreed that there were checks and balances within the recharge system, accepted that decisions would need to be cost critical and that the system worked well overall.

RESOLVED: That the content of the report be noted.

REASON FOR DECISION:
To allow a review of the performance of NHDC in relation to its policy objectives.
23 PERFORMANCE INDICATOR MONITORING REPORT - APRIL 2010 TO JULY 2010
The Performance and Risk Manager (PM) advised the Committee that the full list of performance indicators for the period April 2010 to July 2010 were presented at Appendix A and grouped according to links with the Council’s priorities.

The PM reminded the Committee that there were 37 indicators for review and that two were provided for information (BV 174 and BV175) leaving 35 indicators. The PM advised that 24 had met or exceeded its target ‘green’, and that ten indicators had exceeded target with a better performance than for the same period in 2009 -2010. Eight were at amber and three were below target at red (compared to 8,5 and 7 in the three previous years). The Committee were pleased to note that two indicators at amber had moved into green (i.e. BV 157c and BV183) and the overall direction of travel of the indicators was good compared to 12 months ago. The three indicators at red were clarified at Paragraph 4.4 with an explanation why there had been a decline in meeting the target.

The Committee reviewed each status of the Performance Indicators presented at Appendix A. In response to an enquiry on BV 12 - Working Days lost to sickness the PM advised that the improvement was a result of several initiatives, e.g. training for all managers or managing absence which included return to work interviews. The PM also considered that home working had a good effect as staff may not be able to attend work but could perform some duties at home. The PM also advised that in respect of LI 026 (red status) there had been a strong response to the vacancies in Commercial, Environmental Protection and Licensing and Enforcement Teams and although recruitment would not solve the inspection backlogs there would be progress towards amber in the long term.

The PM concluded her presentation by confirming that the Department for Communities and Local Government announced on 10 August 2010 that the Place Survey would not be continued and therefore the 16 National Indicators as listed at Paragraph 4.5 would not be reported.

The Chairman thanked the Performance and Risk Manager for the update on the performance indicators and with the deletion of the Place Survey it was agreed that at the next meeting of this Committee it would be appropriate for the Performance Manager to present a tentative list of indicators that could form the overall NHDC listing for 2011-2012.

RESOLVED:

(1)That the progress of Performance Indicators for the period April 2010 to July 2010 as presented at Appendix A be noted;

(2)That the status of indicators at red and amber be noted;

(3)That the Performance and Risk Manager be requested to present to the next meeting to be held on 29 November 2010 a report with proposals for which performance indicators could continue to be monitored in 2011 - 2012.

REASON FOR DECISION:
To allow the Finance and Performance Scrutiny Sub - Committee fulfil its Terms of Reference relative to performance monitoring.
24 THE CORPORATE PLAN - MONITORING REPORT APRIL 2010 TO JULY 2010
The Performance and Risk Manager (PM) advised the Committee that this report covered progress for the period April to July 2010 and that at Appendix A the monitoring report showed progress against each of the actions and milestones. The PM then described each of the completed actions and Members asked several questions on the following: CPAP008.001 and CPAP008.003 (obstruction from tables and chairs on the footway); CPA017.001 (outline Rural Strategy); CPAP021.001 and CPAP021.002 (improvements to Howard Gardens) and CPAP042.001 (new procedures for e - benefits). The PM confirmed that the e - benefits links would be visible to all on Covalent soon. The date for signing the revised agency agreement with HCC for highway enforcement now had a revised date of 1 October 2010.

The Committee thoroughly reviewed the actions listed in the Corporate Plan as presented at Appendix A. The Committee were pleased to note that there were currently no major exceptions to the Corporate Plan and that it was encouraging to note the progress against actions was steady.

The PM next advised the Committee that the dates for the delivery of the main actions in the Corporate Plan had not been amended but the milestone for the report to Council concerning the future of the NHDC Museums Service had been set back due the delay in the announcement from English Heritage about the ‘listing’ of Hitchin Town Hall. The PM confirmed that Cabinet would discuss this matter and the implications of listing at the meeting to be held on 28 September 2010.

The Chairman thanked the Performance and Risk Manager for the report and all present looked forward to a similar or better progress update at the next meeting of the Committee to be held on 29 November 2010.

RESOLVED:

(1)That the progress against the Corporate Plan as presented in the report be noted;

(2)That as there were no major exception reports to the delivery of the Corporate Plan the proposal not to refer this matter to Cabinet be agreed.

REASON FOR DECISION:
To assist the Finance and Performance Scrutiny Sub - Committee in its role to review the performance of NHDC in relation to its policy objectives.

25 BEST VALUE FUNDAMENTAL SERVICE REVIEWS - UPDATE ON SERVICE IMPROVEMENT PLANS
The Performance and Risk Manager (PM) presented a report which provided an further update on the two remaining service improvement plans that arose from Fundamental Service Reviews conducted by NHDC viz. Transport and Efficiency.

The PM advised the Committee that Appendix A contained an update on the Efficiency Service Improvement Plan (SIP). With regard to the Transport Service Improvement Plan the PM confirmed that the Strategic Director of Planning, Housing and Enterprise was currently in the process of reviewing 25 ‘ongoing’ actions and would meet with the Lead Member of the FSR and Portfolio Holder for Planning and Transport to discuss the particular actions and consequently there was no detailed update on the Transport SIP.

The Committee reviewed the Efficiency SIP in depth and noted the four categories of status for each action: Completed, Complete for the purpose of the SIP, No longer proceeding and ongoing. During this review the Committee examined the six ongoing actions and considered very carefully whether to accept the six actions as complete. Concluding the debate the Committee agreed to accept Actions Ref. 4.4.3, 4.6.1 and 4.7.1. The Committee agreed that Action Ref. 4.6.6 should be resolved if possible by the Chairman and Vice - Chairman outside of this meeting.

However, the Committee were not minded to approve completion on Action Ref. 4.5.1 Budget Setting which was part of the Corporate Business Strategy and that the procedures and processes within the Challenge Process were not clear. It was hoped that the Chief Executive would be able to attend the meeting of the Finance and Performance Scrutiny Sub - Committee to clarify the Challenge Process.

RESOLVED:

(1)That the status of the Transport FSR in respect of ongoing actions be noted;

(2)That the Performance and Risk Manager be requested to bring a detailed report on the Transport FSR to this Committee once the ongoing actions had been reviewed;

(3)That with regards to the Efficiency FSR the following improvement plan actions be signed off:
Ref. 4.4.3 Service and Financial Planning
Ref. 4.6.1 The Corporate Plan
Ref. 4.7.1 Performance Management (two parts);

(4)That with regards to the Efficiency FSR the following improvement plan actions be not signed off:
Ref. 4.5.1 Budget Setting
Ref. 4.6.6 Best Value;

(5)That with regards to the Efficiency FSR the following improvement plan action:
Ref. 4.6.6 Best Value
That the Chairman and Vice - Chairman of the Finance and Performance Scrutiny Sub - Committee be delegated to make any appropriate decision on approval of the completion of this action plan outside of this Committee.

REASON FOR DECISION:
The recommendations were made in accordance with the declared policy of North Hertfordshire District Council.
Published on Thursday, 30th September, 2010
10.00 p.m.