Report of the Deputy Chief Executive (Place)
The Cabinet considered a report of the Deputy Chief Executive (Place) which provided the forecast outturn position for the revenue and capital expenditure and the Council’s treasury management activity as at the end of Quarter 3 (December 2018).
The Cabinet noted that the report would also be considered by the Audit and Procurement Committee at their meeting scheduled for 25th February 2019.
Cabinet approved the Council’s revenue budget of £234.8m on the 20th February 2018 and a Directorate Capital Programme of £262.5m. The headline revenue forecast for 2018/19, at Quarter 3, is an under-spend of £1.8m. At the same point in 2017/18 there was a projected overspend of £1.8m. The headline capital position reports £58.6m of expenditure rescheduled into 2019/20 reflecting the reality that some of the Council’s major schemes will fall significantly short of their planned progress this year. Notwithstanding the Council is still expected to deliver its largest capital programme in the modern era.
The revenue position continues to reflect overspends in several service areas that have been subject to recent budgetary pressures which continue to demand management attention. This is most pressing and significant in relation to housing and homelessness services, the financial position for which as further worsened. Although a range of plans are being implemented, these circumstances are expected to in place for some time. This is reflected in the financial proposals within the 2019/20 Re-Budget report which are likely to be updated in the Council’s final 2019/20 Budget report.
The change in the overall revenue bottom line is due to several positive unbudgeted movements with including expected Coventry and Solihull Waste Disposal Company dividends and improved investment returns. These are opportune movements at a time when the Council needs to assess its financial resilience in relation to current financial risks and potential future shocks. It is likely that recommendations will be brought within June’s financial outturn report regarding the need to reinforce the level of reserves to address this. Ahead of this, the report submitted recommends contributing £1.2m of Business Rates Levy surplus, announced as part of the Government’s Provisional Settlement in December, to the Council’s Business Rates reserve.
The Council’s capital spending is projected to be £173.7m for the year, a net decrease of £48.7m on the programme planned at Quarter 2. In previous quarterly reports Cabinet was alerted to the possibility of significant capital slippage later in the budgetary cycle and this risk is one that has materialised. Significant movements have occurred in a number of schemes, including Whitley South, City Centre South and the Friargate regeneration scheme. However, the Council has now finalised the legal agreement establishing the Friargate Joint Venture Company with Cannon Kirk which should enable progress on the Friargate Scheme.
The report also set out the current position in relation to treasury management activity in 2018/19, including interest rates; long term (capital) borrowing; short term (temporary) borrowing; external investments and the prudential indicators and prudential code.
RESOLVED that the Cabinet:
1. Note the forecast revenue at Quarter 3.
2. Approve contribution of the Business Rates Levy surplus resources expected from Government (c£1.2m) to the Business Rates reserve.
3. Approve the revised capital estimated outturn position for the year of £173.7m incorporating £10.0m net increase in spending relating to approved/technical changes, £58.6m net rescheduling of expenditure into 2019/20 and a £0.1m net scheme underspend.