Agenda item

Report of the Executive Director, Resources

Further to Minute 26/14 of the Cabinet, the City Council considered a report of the Executive Director, Resources, which set out the forecast outturn position for revenue and capital expenditure and the Council’s treasury management activity as at the end of September 2014.  The report would also be considered by the Audit and Procurement Committee at its meeting on 1^st December 2014.

The headline revenue forecast for 2014/15 was an underspend of £0.4m, which incorporated significant areas of overspend within the People Directorate, balanced largely by underspends within the Asset Management Revenue Account.  The People Directorate overspends resulted from high numbers of looked after children and increasing numbers of referrals into the service which had occurred despite additional budgetary provision being provided previously by Council.  Cabinet was reminded that this was one of the key issues that would need to be addressed in the forthcoming 2015/16 Budget Setting process.

It was noted that, at the same point in 2013/14, there was a reported overspend of £1.5m.  Given previous budgetary control trends and management expectations of continued robust control of expenditure, it was anticipated that the Council would be underspent at year-end and would be available to commit to corporate expenditure priorities. 

Subject to Council approval, the first call on this would be the Customer Service Centre Scheme, where it was proposed that additional costs of £2m be incurred for a revised and enhanced scheme to construct the new Customer Service Centre as a change to the Capital Programme.  This was a key part of the Council’s wider customer transformation and property rationalisation plans, which would secure existing £0.5m per annum savings targets and further savings of £5m per annum associated with the Kickstart Customer Journey Programme that would be set out within the Pre-Budget report.

Treasury advice indicated that it was likely that there would soon be a move by credit rating agencies whereby they would no longer include government support in banks’ credit ratings.  This would mean there was a chance that institutions such as Barclays, Lloyds, Nationwide and Santander could become BBB+ rated, down from their current rating of A- or better.  The BBB+ rating was below the Council’s current threshold of acceptable credit ratings of A-.  In line with advice from the Council’s Treasury Management Advisors, in order that the Council had a sufficient number of counterparties to make investments with, it was proposed that the Council adjusted its Treasury Management Strategy and Investment Policy to enable investments to be made with BBB+ rated institutions.  BBB ratings indicated a “good credit quality”.  In addition, it was proposed that a total limit for such non-specified investments was set at £32m.

The report also set out details of the Recovery Plan in respect of the lease granted to City College Coventry in respect of the multi-storey car park. 

The report further indicated that, on capital spending the forecast at the second quarter was projected to be £148m.  This represented a net decrease of £7.5m compared to the £155.5m reported at the first quarter.  This decrease in the Capital Programme comprised £13.6m rescheduling of expenditure into 2015/16, £6.6m new spending approvals, and a small underspend of £0.4m. Spending at this revised level would be met by resources identified previously.

RESOLVED that the City Council:

(1)  Approve the revisions to the Treasury Management Strategy and  Investment Policy as outlined in section 2.4 of the report submitted, including the lowering of minimum credit ratings to BBB+.

(2)  Approve the £2m additional cost of works required for the Council’s Customer Service Centre and the associated funding proposals outlined in sections 5.3 of the report.