Agenda item

Report of the Executive Director of Resources

The Committee considered a report of the Executive Director of Resources, which outlined the final revenue and capital outturn position for 2015/16 and reviewed treasury management activity and 2015/16 Prudential Indicators reported under the Prudential Code for Capital Finance.

The Committee noted that the report had also been considered by Cabinet at their meeting on 5th July 2016 and Council on 12^th July 2016.

The overall financial position included a revenue overspending of £1.3m which was to be balanced to nil by a contribution from the General Fund Balance.  Headline variations included an overspend of £5.4m within the People Directorate and an underspend of £5.6m within the Asset Management Revenue Account.  There was a Capital Programme expenditure of £014m and a capital spending of £10.9m rescheduled into 2016/17.  Revenue reserve balances were reduced from £84m to £83m.  After taking into account capital grants received and capital receipts generated ahead of the need to spend, overall reserve balances had increased by £10m to £95m.

The need for the Council to manage very large cuts in government resources in recent years had required wide-ranging measures to reduce the Council’s cost base, with the most important element of this being large-scale reductions in the Council’s employee numbers.  A resourcing package for Council staffing reductions was approved by the Cabinet in November 2015 and nearly 300 individuals had agreed to leave the Council as a result of redundancy and early retirement decisions during 2015/16.  The Council had incurred costs of £5.8m, compared to £10.3m during 2014/15.  A budget of £2.4m existed to part fund these costs and, at their meeting on 12^th July 2016, the Council had approved that the remaining £3.4m be funded from within the overall revenue bottom line.  This would ensure that the £12.5m reserve balance established as part of the November report would be available to support future redundancy and early retirement programmes.

The report further indicated the Council had recognised that it needed to deliver the new city centre water-park, swimming pool and leisure centre as soon as possible.  The facility would be a visible symbol of growth and regeneration and was part of the City Centre transformation vision, along with  Friargate.  It would support the City Centre South development and demonstrate physical change in the city centre, use redundant sites in the city centre and have a positive impact on the people of Coventry in terms of better sport provision. 

In order to achieve this, it had been necessary to accelerate vacant possession of Christchurch House and Spire House and relocate the relevant staff into other accommodation on a temporary basis, ahead of the completion date for Friargate.  It made sense to vacate Christchurch House and Spire House earlier in order to guarantee a date for the sports facility and to avoid the potential of any additional costs due to either construction inflation, on-going running costs at Fairfax Street Sport Centre, or as a result of any delays at Friargate.  The Committee noted that the delivery of Friargate was largely in the hands of Friargate LLP and not the Council, so this was the best way to safeguard the delivery of the new Sport Centre.  The project was advanced enough to give confidence that if the Christchurch House and Spire House site could be available earlier, the sports facility would be open in early November 2018, rather than the original date of August 2019.  Total costs of £1.3m would arise from ICT and building works and leased building costs to accommodate relocated staff, with savings from vacating Christchurch House and Spire House and the Fairfax Street site funding the relocation costs and producing an overall saving of £0.1m.  Approximately £0.1m of the total costs had been incurred in 2015/16 with the majority of the remainder likely to be incurred during 2016/17.

The Committee were informed that the Local Government Act 2003 and associated CIPFA Prudential and Treasury Management Codes set the framework for the local government capital finance system.  Authorities were able to borrow whatever sums they saw fit to support their capital programmes, subject to them being able to afford the revenue costs.  The framework required that authorities set and monitor against a number of prudential and treasury indicator relating to capital, treasury management and revenue issues.  These indicators were designed to ensure that borrowing entered into for capital purposes was affordable, sustainable and prudent and were for the purpose of supporting decision making and financial management rather than illustrate comparative performance.

Appendix 3 of the report submitted set out the Ratio of Financing costs to Net Revenue Stream which highlighted the revenue impact of the capital programme.  This showed the revenue costs of financing the Council’s capital programme as a proportion of its income from government grant and council tax.  The actual was 13.91% as against a 14.83% as forecast in the Treasury Management Strategy and reflected a lower level of borrowing than anticipated to fund the Capital Programme and higher levels of investment balances.

RESOLVED that, having considered the contents of the report, the Audit and Procurement Committee determine that there were no specific issues which it wants to refer to the Cabinet Member for Strategic Finance and Resources.