Finance and Performance Scrutiny Sub-Committee Minutes

Date:
Monday, 29th November, 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), Councillor Mrs A.G. Ashley, Councillor A. Bardett, Councillor S.K. Jarvis, Councillor David Kearns and Councillor Lawrence Oliver.
In attendance:
Andy Cavanagh - Head of Finance, Performance and Asset Management.
Tim Neill - Accountancy Manager
Fiona Timms - Performance and Risk Manager
Jodie Penfold - Group Accountant
Nigel Schofield - Committee and Member Services Officer
Item Description/Decision
PART I
26 APOLOGIES FOR ABSENCE
There were no apologies for absence.
27 MINUTES
RESOLVED: That the Minutes of the Meeting held on 20 September 2010 be approved as a true record of the proceedings and be signed by the Chairman.
28 NOTIFICATION OF OTHER BUSINESS
The Chairman confirmed that there were no other items of business.
29 CHAIRMAN'S ANNOUNCEMENTS
The Chairman welcomed Jodie Penfold, NHDC Group Accountant to her first meeting of the Finance and Performance Scrutiny Sub - Committee and would present Agenda Item 6. 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.
30 PUBLIC PARTICIPATION
The Chairman confirmed that there was no public participation.
31 SECOND QUARTER REVENUE BUDGET MONITORING 2010/11
The Group Accountant (GA) presented the report of the Strategic Director of Finance, Policy and Governance which would be presented to Cabinet on 7 December 2010.

The GA referred the Sub-Committee to Paragraph 4, Table 1 which showed a decrease of £0.325M on a working budget of £19.150M and the significant changes to the General Fund. The GA advised that not all of the £325,000 under-spend was on going and consequently the overall effect on the 2011-2012 budget was a net increase of £111,000.

The Sub - Committee reviewed the significant changes to the General Fund at Table 1 and in particular two items: Reduction in Car Parking Revenue and Careline. It was clear from the ensuing debate that Members were disappointed that the estimated income in the original budget, following the increase in car parking charges had not proven to be accurate (a reduction of £140,000 income against a forecast income of £280,000) and that this had happened previously with this service and whether there was a robust business plan that projected income. The GA advised that the number of Penalty Charge Notices issued had fallen by some 1,500, parking tickets had fallen by just over 73,000 leaving income down by £16,000 at the end of September. The Accountancy Manager confirmed that estimates were always the best that could be made by officers and that there was very little information to use to estimate the effect on demand of an increase in charges. The Sub-Committee noted the disappointing ticket sales in Letchworth compared to Hitchin and Royston. Members also expressed concern at the slow recruitment of civil enforcement officers who would issue Penalty Charge Notices.

Also, the non - renewal of a large service contract (£145,000) to Careline was significant and Members also agreed that a business plan should be in operation with a strategy on how to replace this lost income. The GA advised that the loss of income had been partly offset from maintaining and increasing work on other contracts. However, in keeping with the fees and charges policy for 2010-2011 the Careline fees had not been increased.

A Member enquired why there had not previously been an ongoing entry in the budget for £200,000 from HCC in respect of initiatives to increase recycling. The Accountancy Manager confirmed that it would not be prudent in the present economic conditions to record this income until the money was actually transferred to NHDC from HCC.

The Sub-Committee next reviewed the Progress of Carry Forward projects at Table 2 and the Efficiency Budgets at Amber or Red Status at Table 3, and the Investment Budgets at Amber or Red Status at Table 4.

The GA then provided an update on Vacancy Control (net total of £209,000 achieved to date), Investment Interest Income (forecast of £988,000), Benefit payments and over payments, debt provisions, General fund Balances for 2010-2011 (reduced to £1.453M) and the special reserve (set at £240,000) and that the balances available at a higher level than expected. The GA advised the Sub - Committee that a total of £1.130M was estimated to be drawn down from reserves but cautioned that this practice was not sustainable.

The Chairman thanked the officer for the comprehensive updating on the report that would be presented to Cabinet on 7 December and that the information given on various aspects of budget monitoring had been very useful. Of most concern was the problems associated with estimating income from various sources and the effect that lower incomes had on budget forecasting. It was clear from comments made that further clarification of procedures and business plans was necessary to clarify how the figures were forecast and the reasons why forecasts were not reached.

RESOLVED:

(1)That the proposed changes to the 2010-2011 General Fund Budget as detailed at Paragraph 4.1, Table 1 with a £325,0000 decrease in net expenditure be noted;

(2)That the proposed changes to the 2010-2011 General Fund Budget as detailed at Paragraph 4.1, Table 1 with a £111,000 increase in expenditure be noted;

RECOMMENDED TO THE OVERVIEW AND SCRUTINY COMMITTEE:

(1)That the Portfolio Holder for Housing and Environmental Health be requested to attend the next meeting of the Finance and Performance Scrutiny Sub - Committee to be held on 17 January 2011 to clarify the current operational status of Careline, its contribution to the General Fund for 2011-2012 and beyond and details of the Careline Business Plan for the next four years;

(2)That the Portfolio Holder for Planning, Transport and Economic Development be requested to attend the next meeting of the Finance and Performance Scrutiny Sub - Committee to be held on 17 January 2011 to clarify the background to the calculation of estimated income following the increase in car parking charges in North Hertfordshire, the reasons for the shortfall in income and details of the Parking Services Business Plan for the next four years.

REASON FOR DECISION:
To allow the Finance and Performance Scrutiny Sub - Committee to request action from Directorates who do not meet the budget targets set as part of the Corporate Business Planning Process and to monitor the changes to the Council’s balances.
32 SECOND QUARTER CAPITAL PROGRAMME MONITORING 2010/11
The Accountancy Manager (AM) presented the report of the Strategic Director of Finance, Policy and Governance which would be presented to Cabinet on 7 December.

The AM referred the Sub-Committee to Appendix A - Capital Programme Summary 2010-2011, Appendix B - Capital Programme Detail 2010-2011 and Appendix C Capital Scheme Funding and advised the Sub-Committee that the projected expenditure for 2010-2011 was now £5.802M and that the decrease of £1.340M was partly due to a revision in the timetable for completion of schemes, which in turn resulted in a projected slippage into 2011-2012 of £1.111M and partly due to an increase of spend on schemes of £229,000. The AM described the schemes that would slip into 2011-2012 as detailed at Table 1. The Committee noted that the Capital Programme for 2010-2011 onwards would be funded from several sources: £3.7M from Capital Receipts, £0.6M from IT reserve, £1.4M from third party grants and contributions and £870,000 from s106 monies.

Unfortunately, current market conditions had delayed the Council’s Asset disposal programme with only £88,000 received in 2010 - 2011, giving a capital receipts balance to spend of £2.817M. The shortfall of £883,000 could either be met by further slippage, stopping certain schemes or by prudential borrowing.

The AM advised the Sub - Committee that consideration had been given to use prudential borrowing of £2.2M against the Museums Service Development Scheme. This proposal generated considerable debate on the merits and costs of prudential borrowing and Members were very concerned at the financial burden this decision would place on the Council. The Sub - Committee expressed a view that this sum of £2.2M might be more usefully gained by borrowing against one or more of the Capital Schemes which had little or no spend at present (as detailed at Table 3). In response to an enquiry the AM with regard to the early pay back of any prudential borrowing and charges agreed to send to all Members a memorandum on the rules of prudential borrowing. The AM also confirmed that prudential borrowing could be undertaken against a very wide range of Capital Schemes but that the expected interest rate on borrowing from the PWLB was 4.5 per cent against an average rate of 2 per cent on cash investments.

The Committee were unanimous that any prudential borrowing must be on a draw down basis as needed and not in one tranche. It was also commented that the project at Hitchin Town Hall for the Museums Service and Hitchin Initiative Community Centre was progressing slowly and there was no immediate need for prudential borrowing against this project. Members also considered that the main issue was the need to borrow against assets to meet the shortfall of £883,000 and that all avenues should be investigated and not just against one project i.e. the Museums Service. The AM confirmed that prudential borrowing would not be taken for the shortfall and not necessarily for the full sum of £2.2M if it was not required. In response to another question the AM confirmed that this was the first time in the recent past the authority had needed to consider prudential borrowing as capital receipts had been sufficient for the capital programme before.

In conclusion Members agreed that if any prudential borrowing was made that the reasons for doing so must be very carefully explained to Council, and it must be in small tranches. Members also considered that the shortfall could be met by delaying projects listed at Table 3 e.g. Improvements to Letchworth multi - storey and Hitchin Lairage car parks and unspent Visioning Monies without resorting to prudential borrowing.

RESOLVED:

(1)That the proposed changes to the projected capital programme for 2010-2011 onwards that arose as a result of scheme slippage, identified at Paragraph 4.3 Table 1 indicating a decrease in expenditure in 2010-2011 of £1,111,000 be noted;

(2)That the proposed changes to the projected capital programme for 2010-2011 that arose as a result of changes to the capital schemes, identified at Paragraph 4.4, Table 2 indicating a decrease in expenditure of £229,000 be noted;

(3)That the proposed bid for lottery funding of £1,240,000 to cover the fitting out costs of the NHDC Museum Service at Hitchin Town Hall be noted;

(4)To note that the Capital Programme would be subject to continual review to match available resources to planned schemes and that the timing of planned, but less time - critical schemes might be adjusted.

RECOMMENDED TO THE OVERVIEW AND SCRUTINY COMMITTEE:

(1)That subject to the completion of a comprehensive review of the existing capital programme estimates for the next two to three years to clarify the need for any prudential borrowing, Cabinet in consultation with the Portfolio Holder for Finance and IT borrow at the appropriate time against the Museum Services Development Scheme a total of up to £2,200,000 during the life of the project;

(2)That Cabinet be requested to review all schemes in the Capital Programme that are indicating slippage e.g. Hitchin Swim Centre Car Park Extension, with a view to reducing the amount of prudential borrowing.

REASON FOR DECISION:
To ensure that the Capital Programme is sufficiently robust and is fully funded.

33 CORPORATE BUSINESS PLANNING - DRAFT BUDGET 2011 - 2012 - BRIEFING NOTE - CORPORATE BUSINESS PLANNING FOR 2011-2012 AND BEYOND - FORMULA GRANT CHANGES
The Accountancy Manager (AM) apologised to the Committee that this was only a briefing note and not a full report but until the amount of Revenue Support Grant to be received from Central Government was determined it was very difficult to prepare a draft budget for 2011-2012.

The AM advised that unfortunately the amount of reduction that was expected to be even over four years could now be front loaded resulting in efficiencies in Year 1 of £1.8M to £1.5M in Year 4 amounting to 29 per cent efficiencies over the four years. In addition there were several topics which could impact with some favourable outcomes on the Council’s financial position over the next four years i.e. New Homes bonus, treatment of Business Rates and the local setting of planning fees, but as yet there had not been any clear indications of how these initiatives might be funded.

The Chairman thanked the Accountancy Manager for the information and the Sub-Committee noted the problems faced by the officers in preparing a budget report with the necessary information for setting the budget. Accordingly it was agreed that once all information was obtained it was the request of the Sub-Committee that a full set of the budget papers should be reviewed at the next meeting to be held on 17 January 2011.

RESOLVED:

(1)That the contents of the Briefing Note be noted;

(2)That the Head of Finance, Performance and Asset Management be requested to present a full set of budget papers for 2011-2012 at the next meeting of the Finance and Performance Scrutiny Sub - Committee to be held on 17 January 2011.

REASON FOR DECISION:
To allow the Finance and Performance Scrutiny Sub - Committee to undertake the review of Corporate Business Planning for 2011 - 2012 and beyond.
34 TITLE OF REPORT: CORPORATE PLAN MONITORING REPORT - AUGUST TO 12 NOVEMBER 2010
The Performance and Risk Manager (PRM) presented the report of the Head of Finance, Performance and Asset Management which identified progress against the Corporate Action Plan for the period 1 August to 12 November 2010.

The PRM referred the Sub - Committee to Appendix A which detailed all the completed actions and milestones which were aligned to the relevant priority. The Sub-Committee noted the completed actions for the three NHDC Priorities including Continuous Improvement e.g. Contract awarded for the re-development of Howard Park and Gardens. However, the details of date changes to 14 sub actions at Paragraph 5 were of great concern to Members and this was not the first time that a monitoring report had shown no changes to completion dates, despite the change of date being known in advance of publication of the monitoring report. The ongoing concern was the change of date to a sub-action not being made until the previous due date was reached. One sub-action i.e. Churchgate Development would not be completed by 31 March 2011 and yet the due date had not been changed in the Action Plan and was not listed at Paragraph 5. Members requested that as soon as a changed date was known that it should be amended in the Corporate Plan.

The Sub - Committee reviewed each change of date in turn and rather than highlight specific changes for clarification it was considered to be appropriate to request that Cabinet review, clarify and report back on reasons for the slippages of all 14 sub actions (Sub - Paragraphs 5. 3 to 5.17 refer). Nevertheless, the Sub - Committee highlighted for example two specific items: The lack of progress due to there being no meetings to date of the Project Board for Schools Recycling Service and Trade Waste, and the non - completion of the District Wide Housing Stock Condition Survey for clarification.

It was clear from the whole debate on this Monitoring Report that the Sub - Committee were unhappy with the progress against the Action Plan and whether serious consideration should be given to the likelihood or even the necessity of continuing with many of the sub - actions. It was suggested that only where there were available resource for a specific sub-action and this resource could be best used should the sub-actions be retained.

The PRM sought guidance from the Sub - Committee in light of the concerns and above and that as the next meeting was on 17 January 2011 whether this was too short a period to report back upon and whether there would be sufficient resource to provide clarification of the reasons for delay. The Chairman proposed and it was agreed to wait until the next pre-agenda meeting to be held on 20 December 2010 to decide on another Corporate Plan Monitoring Report.

RESOLVED:

(1)That the progress made against the Corporate Plan for the period 1 August 2010 to 12 November 2010 be noted;

(2)That the Performance and Risk Manager be requested to attend the next pre-agenda meeting of the Finance and Performance Scrutiny Sub - Committee in order to determine the need for an updating report with sufficient data on the Corporate Plan due to the short period from this meeting to the next meeting.

RECOMMENDED TO THE OVERVIEW AND SCRUTINY COMMITTEE:

(1)That Cabinet be advised that the Finance and Performance Scrutiny Sub - Committee expressed strongly their concern about the continuous slippage of the due dates in the Corporate Plan presented at Appendix A;

(2)That Cabinet be requested to undertake an in- depth review of the Date Changes as detailed at Paragraph 5 to this report, the reasons for slippages, revisit all due dates and submit a revised Corporate Plan and supporting report to a future meeting of the Finance and Performance Scrutiny Sub - Committee;

(3)That the Performance and Risk Manager be requested to ensure that whenever a due date was changed that the date should be entered on the Corporate Plan immediately and not wait until the due date was reached before changing;

(4)That the Performance and Risk Manager be requested to report back as per (2) above and explain why there had been no meetings of the Project Board for CPAP 011.001 - Schools Recycling Service and CPAP 011.002 Trade Waste Review and clarify a revised due date for completion;

(5)That Cabinet be requested to review the full current Corporate Plan in order to determine if all actions were still required.

REASON FOR DECISION:
To allow the Finance and Performance Scrutiny Sub - Committee to undertake fully its role in reviewing the performance of the Council in relation to its policy objectives.

35 PERFORMANCE INDICATOR MONITORING REPORT APRIL 2010 TO SEPTEMBER 2010
The Performance and Risk Manager (PRM) presented the report of the Head of Finance, Performance and Asset Management which identified progress against Performance Indicators for the period April 2010 to September 2010. The PRM reminded the Sub-Committee that the national and local indicators had been agreed in March 2010 and that there were 33 monthly and quarterly Performance Indicators of which two did not have targets( BV174 and BV175). The PRM referred the Sub-Committee to Appendix A which detailed all the data for each indicator and confirmed that 65 per cent were at Green, 19 per cent at Amber and 16 per cent at Red.

The PRM referred the Sub - Committee to Paragraph 4.3 which detailed the Indicators that had exceeded target levels. The Sub - Committee were very pleased to note the excellent increase of visitors to Museums and Art Galleries in North Hertfordshire (up by 45 per cent) and that congratulations should be offered to all staff for the improvement to sickness levels and lessening of days absent. The Sub - Committee reviewed Paragraph 4.4 which detailed Indicators that had fallen below target levels and were performing worse than this time in 2009, i.e. LI 026 and NI 16. Members were concerned that there may not be enough resources to manage LI 026 and the PRM indicated that recruitment was underway, but that this indicator would not achieve the target this year.

The Sub - Committee reviewed in detail the Performance Indicator Management Report as detailed at Appendix A and noted those indicators which had met or exceeded the target, those indicators which had not met targets but were still within the agreed tolerance range, those which had not met the target and were outside the approved tolerance range and the short and long term trends of improvement and worsening compared to the same period in 2009.

The Chairman thanked the PRM for the detailed report on Performance Indicators in the second quarter including those indicators that had not met targets.

RESOLVED:

(1)That the progress of Performance Indicators for the period April 2010 to September 2010 be noted;

(2)That the Corporate Human Resources Manager be requested to convey to all NHDC employees the thanks and congratulations from the Finance and Performance Scrutiny Sub - Committee in the marked improvement to Performance Indicator BV 12 - Working days lost to sickness.

REASON FOR DECISION:
To allow the Finance and Performance Scrutiny Sub - Committee to fulfil its Terms of Reference and review the performance of the Council in relation to set performance targets.
36 PERFORMANCE INDICATORS FOR 2020-2011
The Performance and Risk Manager (PRM) presented the report of the Head of Finance, Performance and Asset Management which at Appendix A listed all current indicators reported to the Sub - Committee. The PRM referred the Sub - Committee to Table 1 which listed the indicators proposed for deletion by Heads of Service and Corporate Managers - from 27 to 14. The Sub - Committee noted that the remaining indicators would be retained as management indicators on Covalent with monitoring by the relevant Portfolio Holder. The PRM advised that there would be smaller data sets from central government and that there would be a reduction in indicator monitoring.

The PRM advised the Sub - Committee that the performance data that central government would require NHDC to report on remained unknown and until this information was known the PRM proposed at Table 2 nine National Indicators that could be retained as Local Indicators.

There ensued a short discussion on the way forward for the measuring of performance and that until instructions had been received from central government there was little merit in deciding what NHDC should do and that the proposed Local Indicators transposed from National Indicators should not be agreed at the moment. A Member suggested that it was not realistic to agree Local Indicators when the new National Indicators were not known. It was subsequently agreed that the PRM should continue with the status quo until it was appropriate to make changes. It was also agreed that a Member Workshop on Performance Indicators should be held in early March 2011 to which all NHDC Portfolio Holders should be invited.

RESOLVED:

(1)That the contents of the report be noted;

(2)That the Committee were not minded to approve the proposed local performance indicators for 2011-2012;

(3)That the Performance and Risk Manager be requested to convene a Workshop for Members in early March 2011 to consider the expected National Performance Indicators and review a full and revised list of Local Performance Indicators;

(4)That the Performance and Risk Manager be requested to invite the seven NHDC Portfolio Holders to this Workshop to ensure that the performance indicators to be monitored in 2011-2012 are acceptable and agreed.

REASON FOR DECISION:
To ensure that a full set of National and Local Indicators can be agreed for monitoring in 2011-2012.
Published on Tuesday, 14th December, 2010
9.30 p.m.