Agenda and minutes

To sign the minutes of the meeting held on 18 June 2008.

The minutes of the meeting held on 18 June 2008 were taken as read and signed by the Chair as correct.

Councillors are reminded of the need to declare personal and prejudicial interests, including the nature and extent of such interests, in relation to business on the agenda, before any discussion takes place on the item.  Councillors requiring clarification should seek the advice of the Monitoring Officer prior to the day of the meeting.

Members made no declarations of interest.

To consider the joint report of the Head of Contracts and Direct Services, Head of Housing and Social Inclusion, Head of Treasury Services and the Head of Estates Services – report circulated (Monitoring Schedule available on request and on the Internet). 

The joint report of the Head of Contracts and Direct Services, Head of Housing Services, Head of Treasury Services and Head of Estates was submitted.

Scrutiny Committee – Resources noted the first quarter financial position of the £7m programme of reactive and planned property maintenance and refurbishment for 2008/2009, as detailed in the report.

(Report circulated)

To consider the report of the Head of Treasury Services - report circulated

The report of the Head of Treasury Services was submitted.

Scrutiny Committee - Resources noted the report.

(Report circulated)

To consider the report of the Head of Treasury Services - report circulated

The Head of Treasury Services presented a report on the current position in respect of the Council’s revised annual capital programme and advised Members of the anticipated level of deferred expenditure into future years.

He advised that during the first three months of the current financial year the Council spent £2,046,164 of the 2008/09 Capital Programme which equated to 6.9% of the revised Capital Programme. This compared to £2.5 million being spent in the first three months of 2007/08. The forecast spend to carry forward to 2009/10 was £997,935.

A Member queried issues surrounding the reliability and effectiveness of the wood pellet boiler at Belle Isle Nursery and whether it was likely that the installation of the wood pellet boiler at the Civic Centre would exceed the budget as was the case with the boiler at the Corn Exchange.

The Director Corporate Services confirmed that the wood pellet boilers at the Corn Exchange and Civic Centre would be dual fuel use but, until the issues with the boiler at Belle Isle Nursery had been fully assessed, their installation would be deferred. Members would be circulated with an update on the issues with the wood pellet boiler, what was being done to resolve them and the budget position with regards to the installation of the boiler at the Civic Centre in light of the increase in budget provision for the boiler at the Corn Exchange.

The Chair asked that the Committee be informed why £15,720 from the HRA Capital budget had been spent on Communal TV aerials and if this was due to the switch over to digital TV.

A Member raised a question with regards to £40,000 that had been spend on King William Street Car Park changing facilities and if this expense had been incurred because of the introduction of Civil Parking Enforcement Officers and the need to provide accommodation for them. If that was the case then he requested that officers investigate if these monies were recoverable from Devon County Council.

Scrutiny Committee - Resources supported the report and recommended approval by Executive of the current position in respect of the Council’s revised annual capital programme and anticipated level of deferred expenditure into future years.

(Report circulated)

To consider the report of the Head of Treasury Services - report circulated

The Head of Treasury Services presented a report on the overall projected financial position of the General Fund Revenue Budget after three months, for the 2008/09 financial year.

He informed Members that the Service Committee budgets showed a forecast under spend of £19,880 against a revised budget of £19,533,140. There was a reduction of £100,000 in respect of investment interest as a result of volatile interest rates and a decision to defer borrowing to finance the capital programme. This money had been invested at a higher interest rate until it was required. The Council was on target to deliver services within budget.

A Member raised concerns with regards to the overspend in the Scrutiny Committee – Economy Budget of £61,290; if this was due to the down turn in the economy; and if there was any possibility of any short term savings to off-set this against.

The Chief Executive stated that the first quarter of the year had indicated that car parking income was down by 2% and planning fees were down by 10%. The planning fees were down due to a reduction in construction activity.

In reply to Members’ concern regarding the securing of the Council’s assets in light of the volatile money markets, the Head of Treasury Services confirmed that the Fund Managers did spread the risk and invest in low risk options. The Council had a varied portfolio of investment and the Fund Managers reacted very quickly to any changes in the Market.

In answer to a Member’s question, the Head of Treasury Services stated that the majority of debt over 5 years was due to over payment of housing benefit and the non- payment of council tax. The collection of this type of debt was in a lot of cases spread over a number of years due to the person’s ability to pay back the debt.

The Scrutiny Committee - Resources supported the report and recommended approval by Executive of the forecast financial position for the 2008/09 financial year and the outstanding Sundry Debt position for the first quarter of 2008/09.

(Report circulated)

This item has been placed on the agenda at the request of the Chair, in light of the recent adverse media publicity concerning an alleged £11m to £30m budget deficit.

The purpose of placing this item on the agenda is to allow members to establish the facts concerning the financial position and to establish the background behind the release, briefing and publication of the information.

In order to allow the appropriate portfolio holders to give an account and to answer members’ questions, Councillors Fullam and R Hannaford have been requested to be present at the meeting in accordance with Scrutiny Procedure Rule 12.

The financial spreadsheet on which the Express & Echo based its story is circulated to members with a covering report by the Director Corporate Services to clarify the financial position shown in the capital forecast – report circulated

The Chair informed Members that this item had been placed on the agenda following media speculation about the Council’s alleged budget deficit. The Chair highlighted the Committee’s concern about the potential damage to the Council’s reputation of the media report, as well as the negative impact on the confidence in the overall financial position of the Council.

The Director Corporate Services outlined to Members the situation in relation to the articles that appeared in the Express and Echo concerning a budget deficit of ‘up to £30m’ on 23 August 2008 and an £11m ‘black hole’ on 29 August 2008.

He stated that the figures of £11m and £30m were obtained by subtracting the ‘Total Resources available’ and ‘Total General Fund’ figures in the ‘2008/09’ and ‘Total’ columns.  The resulting sum of money had then been described in media reports as a massive budget deficit.  The capital forecast which had been passed to the Express and Echo was similar to that included in the 2008/09 Estimates Book presented to Council in February this year.  The latest schedule on which the article had been based had simply been updated with current financial projections, but both overall positions shown, remained similar.

The Director Corporate Services stated that the gap between the resources available and the planned expenditure was normal and would be financed by borrowing, additional capital receipts or grant monies. It was highlighted that most other local authorities borrowed, for example, Ipswich Borough Council currently had long term borrowing of £41.7m, Cheltenham Borough Council £42.1m and Devon County Council £613m.

He stated that Members had been aware for the last two years that because of the Council’s ambitious capital investment it would no longer be ‘debt free’. There was no massive budget deficit of £11m or £30m but there would be a borrowing requirement to fund the Council’s investment programme in the future.  There was a challenging process ahead for Members to balance the revenue budget for 2009/10 and agree a capital programme it could afford to finance.  This would be settled during the normal budget process over the next six months.

In answer to a question from the Chair, the Director Corporate Services stated that a report from the Council’s external auditor was due shortly and it was anticipated that it would show that the finances of the Council were in ‘good health’. It was the Head of Treasury Services’ responsibility as the ‘Section 151 officer’ to certify that any borrowing was affordable.

A Member felt that it was perfectly acceptable that the Council would be borrowing to fund its capital programme and that the media speculation of a ‘black hole’ was highly misleading.

The Chair invited the Leader and the Portfolio Holder for Housing and Social Inclusion to address the Committee.

The Leader addressed the Committee.

He welcomed this opportunity to reflect on what had been reported in the press. He said the Council had known for sometime about the future budgetary position and at the Community Forum  ...  view the full minutes text for item 55.