Agenda item

To receive the Period 8 Finance Performance Report for the period to November 2018 against the 2018/19 approved budget. To also monitor the City Council’s financial position including revenue forecast outturn, revenue expenditure including key risks and opportunities, capital expenditure and HRA revenue and capital expenditure and reserves.

To receive and monitor the Quarter 2 Performance Report for the end of the second quarter of 2018/19 (September 2018); which includes a commentary in respect of outstanding and poor performance, and details of remedial actions being taken, where appropriate.

6.1      David Hodgkinson (Assistant City Treasurer) presented the period 8 finance report, which provided details of the forecast outturn in respect of revenue and capita, together with a summary by Cabinet portfolio of forecast variances, risks and opportunities. The report also included details in relation to the revenue and capital expenditure for the Housing Revenue Account (HRA).

6.2       Revenue monitoring for period 8 had projected a net underspend of £1.697m by end of year, with net risks of £1.009m. All variances would be subject to active management through the financial year, and it was anticipated that the net risk position would be mitigated by year-end. Capital monitoring had projected an underspend in expenditure of £30.477m by the end of the year; and income was forecast to under-recover by £24.464m, resulting in a net forecast underspend of £6.012m.

6.3       The HRA revenue forecast at period 8 was for an overspend of £0.466m, compared to a budgeted surplus of £6.994m. The forecast gross capital outturn for the HRA was £119.644m, resulting in a total underspend of £30.702m compared to the budget of £150.345m. Cabinet portfolios were also projecting a net underspend of £1.697m by year-end, with net risks of £1.009m. Specific pressures were reported in areas such as parking income; family services; transport; and costs associated with unaccompanied asylum seeking children. Members suggested that the decline in parking revenue was an on-going trend, and that an acceleration in the decline could be expected following the introduction of the Ultra-Low Emission Zone, which was a traffic pollution charge scheme that aimed to reduce the exhaust gas emissions of diesel-powered commercial vehicles in London.

6.4       The Council’s General Fund capital projects were currently reporting a forecast gross expenditure of £274.983m with gross income of £109.473m; against a revised gross expenditure budget of £305.460m and gross income budget of £133.937m. This equated to a net underspend of £6.012m, comprising of £30.477m on expenditure and an under-recovery of income of £24.464m.  The Committee noted that the revenue surplus had been generated by higher than expected interest on investments, and asked whether this had been gained through market variations, or had been structural in allowing for a high interest rate. The Assistant City Treasurer confirmed that variances in the £780m budget always occurred at this time of year.

6.5       The Assistant City Treasurer acknowledged that some issues remained in delivering projects in the Capital Budget, as schemes that were dependent on third parties could be out of the City Council’s control and subject to slippage. The Committee discussed the capital programme for Oxford Street, and highlighted concern that the project could be at risk of over-running on delivery through over-optimism in its timing.

6.6       Committee Members also discussed the revenue account and commented on the risk to property relating to lease and rent reviews, and to the assumption that backdated rents would be obtained.

Action: The Committee noted the distinction between funding from the City Council and third parties, and requested that future reports include a breakdown on the sources of funding for major projects such as Hanover Square and Jermyn Street.  (Action for David Hodgkinson - Assistant City Treasurer)

7          QUARTER 2 PERFORMANCE REPORT 

7.1       Damian Highwood (Evaluation & Performance Manager) and Mo Rahman (Planning & Performance Manager) presented the Quarter 2 Performance Report, which set out the latest outturns available at the end of the second quarter of 2018/19 (April - September 2018).  Updates that were available for Quarter 3 were given at the meeting. The report provided commentary in respect of outstanding and poor performance against the City for All priorities, and where appropriate included details of remedial actions that were being taken.

7.2       The main accomplishments had included Cabinet approval of £2.5m to support the development of key work streams relating to the Oxford Street District Project; and examination results in Westminster’s schools continuing to be well above national averages. The main emerging and current risks included an increase in singles approaching Housing Options as a result of the Homelessness Reduction Act; the risk that service levels could deteriorate during the process of bringing CityWest Homes services back under Council control; and the significant concerns over the new police Basic Command Unit structures.

7.3       The Committee sought clarification of how the City Council’s targets for building new homes had been set, as the funding for the development of affordable housing could vary and the number and mix of properties being built could change. Ezra Wallace (Head of City Policy & Strategy) confirmed that the proposal for 2000 affordable homes by 2023 had been set after identifying sites that could deliver that target. The proposal for 1,495 homes included in the draft City Plan had been established through a methodology given by the government based on population demand for housing, and evidence of having land supply for 5 years. The draft Plan included the aspiration of 35% of the homes being affordable housing; and that the possibility of increasing building heights and opportunity areas provided the potential to increase both business and residential capacity. Committee Members discussed the discharge of duty into the private rental sector, and suggested that current arrangements for landlords to be paid £4000 to take a Westminster nominated tenancy for a year but only £1500 for a renewed further year may not achieve best value for money.

7.4       The Committee noted that the new Basic Command Unit (BCU) for Westminster was to go live in February 2019, and discussed the effect that the BCU could have on the new organisational structure being put in place for the City Council’s street management and enforcement unit.  The Committee agreed that Westminster’s unique crime profile in areas such as the West End required significant policing resources. The Borough Commander had made a commitment to work with partners to develop the new BCU; and a Police Performance list had been made accessible to monitor police performance around response times, detection rates and crime, which would support the scrutiny process

7.5       Committee Members suggested that the social mobility referred to in the featured analysis ‘Leaving Westminster’ could not be measured by assuming people stayed in the same borough, as in reality only a minority of adults living in Westminster had been residents since childhood.

7.6       Other issues discussed included concerns over schools developing budget deficits following the introduction of the National Funding Formula; the strategic risk of major contracts being unable to provide services to meet health and safety obligations; ongoing funding for the My Westminster schemes; and Westminster’s participation in data-sharing to inform the Local Government funding review.  Committee Members also commented on the review of the Amey contracts; the possible risks associated with the reductions in the Public Health Grant; and on the Integrated Healthy Lifestyle Service.

            ACTIONS:

1.         That an analysis be provided on drainage conditions and defects in Westminster; and on targets for outcomes and jobs completed. (Action for Kevin Goad - Director of City Highways)

2.         That a breakdown be provided by age group of the total participants in sport, leisure and wellbeing activities provided by the City Council. acknowledged the request for action. (Action for Richard Barker - Director of Community Services)

3.         That details of budget deficits being developed by schools be included in future performance reports from Q3, together with details of any mitigation. (Action for John O'Sullivan - Head of Children’s Business Intelligence & Strategy)

4.         That more detail be provided on why the levels for sundry debtors since Q3 are still significantly higher than the ideal target of 5%; together with more detail on how this is managed and migrated to ideal levels. (Action for Martin Hinkley - Assistant Director: Revenues & Benefits)

5.         That details be given of the total number of Homes of Multiple Occupation in Westminster; together with a breakdown by Ward and confirmation whether new properties were being assessed or discovered. (Action for Twila Grower - CMC Business & Performance Manager)

6.         That a briefing be given on the City Council’s contractual agreements when Westminster’s statutory housing duty is discharged into the private rented sector, in view of Westminster paying a big initial fee to landlords where, which is then reduced in subsequent years. (Action for Ian Clarke – Performance Manager)

7.         That an update be provided on the review of the Amey contracts. (Action for Ian Clarke – Performance Manager)

8.         That an update be provided on Public Health grant reductions, together with the nature of the risks and possible consequences. (Action for Gary Hamilton – Head of Programme Management, Adult Social Care)

9.         That more detail be provided on the Thrive Tribe service provider and its role in supporting the Integrated Healthy Lifestyle Service. (Action for Gary Hamilton – Head of Programme Management, Adult Social Care)

10.       That the following items be added to the Committee Work Programme for future monitoring:

•           To monitor and report back on the performance of CityWest Homes 6 months after the transition to an in-house service, and in the year-end performance report and again in the Q2 2020 report. (Action for Mo Rahman and Damian Highwood – Evaluation & Performance)

•           To monitor and report back on the performance of the Police Basic Command Unit for Westminster 6 months after implementation, and in the year-end performance report and again in the Q2 2020 report. (Action for Twila Grower - CMC Business & Performance Manager)