Agenda item

Scrutiny committee is recommended to note the overall outturn position of the council as well as the outturn of individual service areas.

Cabinet member for Finance and Property Assets introduced the report. Also present was Head of Finance, and the Strategic Finance Officer was present online to answer questions. The Cabinet member explained that the main points were that there had been a reduction in net expenditure and a carry forward of capital spend.

Head of Finance added the following points for committee to note:

·       On revenue, the budget raised to £21m from the projected £15m at budget setting in 2022, including budget carry forwards and slippage in one off Revenue growth schemes from the previous year being added to the budget and the £21m formed the basis of the variance for the year in terms of Revenue expenditure.

·       Table three points out that there was an underspend on expenditure of £3.4 million but when we take into account investment income there’s no significant underspend.

·       There was a significant carry forward of over 4 million from certain schemes and these are shown in more detail in appendices.

·       This budget was set the week before the invasion of Ukraine began which means that our expenditure budget did not take account of what happened to the economy during 2022-23 where we saw our costs go up which we had not foreseen when we set the budget. We also saw interest rates go up and utility costs supplies and services costs go up but at the same time we had more money in our investments.

·       Regarding capital and the significant slippage over the last two years. We had undertaken a very detailed piece of work, looking at the revenue budget. It had been subject to significant budget challenging exercises, but we had neglected capital from such an exercise but we were rectifying that as we speak. We're in the middle of a capital programme challenge exercise now, which was reviewing all of our current capital projects in terms of meeting current corporate priorities and making sure we've got the funding.

·       We had not got the profiling right when we set the capital program for 22-23, which we were endeavouring to fix as part of next year's budget setting.

·       There were significant slippage items - those relating to the Community Infrastructure Levy (CIL) funding. As part of our current CIL funding strategy, we allocate all the CIL we take after the amount for Parishes and the admin levy. 50% was allocated to Oxfordshire County Council, 20% was allocated to Clinical Commissioning Group (CCG) and 30% was for South Oxfordshire. What the underspend represents was money that we had collected on behalf of CCG and hold for the CCG to spend on schemes on their behalf. We await details from CCG on what schemes the funding should be allocated to.

Below summarises the main comments and questions raised by the scrutiny committee.

• Committee asked questions of clarification on the underspend and the impact of the war in Ukraine in terms of inflation. It was responded that there was no concern that the grant funding wouldn’t be enough to achieve the scheme outcomes.
• Policy Programmes underspend £4m – what was behind these underspends, was it transformation projects phasing? It was explained by Head of Finance and Deputy Chief Executive for Transformation and Operations that profiling changed due to changes to the programme. Of the 16 projects planned over 5 years, some projects were moved around so the phasing changed. Didcot Garden Town and Berinsfield Garden Town projects were now allocated and had delivery plans to match grant funding. The Cabinet member for Finance explained that the impact was a slow down on project delivery, but the budget didn’t reflect that the money couldn’t be spent in just that year, but the capital review would give better understanding and improve the profiling and presentation of this in budget reports.
• Cabinet member for Corporate Services added that a programme manager was now employed, and a team was in place for delivery of transformation projects. During 2022-23 the team had to settle in.
• Para 24 page 15: 200k for revenue project  - it was commented that a Cabinet Member had identified this income from business rates. Head of Finance provided some context on business rates: there was no requirement for businesses to tell the council. Resources were needed to check businesses. The inspection regime was not easy. Some businesses were hard to spot. A member who knew their area well identified businesses they knew of. Mapping technology helped identify these businesses who weren’t paying rates. We used a third party with tools to help, on top of the inspection regime. This was set to continue.
• Deputy Chief Executive for Transformation and Operations would respond to a question on the £200k underspend on the climate projects and what was driving that (paragraph 23, page 15 of the agenda pack).
• Queries on Homes for Ukraine scheme underspend. It was responded that the war wasn’t happening when the budget was set. Support money was received from government in response. This was a phasing of funding received to support Homes for Ukraine. We can carry forward funds.
• National non-domestic rates (NNDR) – a member asked about appeals to rates. Head of Finance explained that there was provision for if a bill was challenged. We were likely over prudent about debt after the end of Covid but can release those provisions at the end of the year.
• A realistic Capital programme with better profiling – Head of Finance explained that external and internal funded capital programmes will be in the budget papers as separate budgets. There was improved use of CIL/S106 and external funds.
• Will slippage go beyond 2024/25? Head of Finance wanted a realistic capital programme, hoping that slippage would become minimal over time. It was explained that the delivery of some schemes was optimistic, hence the underspend. The review will assist in correcting this.
• Item 13/14, page 14 – agency staff costs – can we reduce? It was responded that the Legal team were trying to address this through restructure.
• A member asked for detail of variances of revenues for Planning and Development & Corporate Landlord. The former was due to a downturn in the economy, where there were less applications. The latter was due to Cornerstone and carparks. This was detailed in the report. A Cornerstone report would be presented in December.
• A member asked about budgeting for planning appeals.

Chair gave thanks for the report.

Resolved:

Committee noted the report and provided comments for Cabinet:

1.         Committee were concerned that temporary/agency staff costs needed addressing

2.         On planning appeals, we should have a cost budgeted for appeals, including legal costs. We should recognise the cost.

3.         We need to have good control over the capital budgeting process and ask extra questions around it.