Agenda item

To monitor the 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.

6.1       Period 6 Finance Report 2019/20

Rikin Tailor introduced the contents of the Period 6 Finance Report 2019/2020, which provided details of the forecast outturn in respect of revenue and capital by Cabinet Portfolio; together with projected revenue and capital expenditure, key risks and opportunities.

6.2       The report projected a £1.088m underspend against budget with net risks of £0.727m. The report also projected an expenditure variance of £79.181m by year end: and income variance of £28.930m resulting in a net variance of £50.251m. The Housing Revenue Account (HRA) revenue forecast was for an overall net surplus of £4.057m, resulting in an adverse variance of £5.736m compared to budget. The forecast gross capital expenditure outturn for the HRA at the end of period 6 was £146.948m, resulting in a total variance of £2.907m compared to the budget of £149.854m. Variances, risks and opportunities within Cabinet Portfolios continued to be monitored closely as the year progressed.

6.3       Councillor Elizabeth Hitchcock queried whether there were any areas of particular concern. Rikin Tailor advised that a watching brief was being maintained over parking, where a decrease in revenue was attributable to Parking Charge Notices (PCNs) and that suspensions income was volatile though opportunities were being identified and explored. Other issues discussed included the HRA revenue and the variance of £5.7m due to major works and fire safety measures; the continuing measures being taken to mitigate the deficit for 11 Westminster schools (including removing 480 places); the windfall of £1.100m underspend due to interest on cash balances being higher than budget assumptions; the impact of aligning the City West Homes failure to budget for service charge payments; and underspend in Family Services/Public Health due to one-off central government funding. Rikin Tailor also mentioned as a positive the Treasury income, which was performing well.

6.4       Councillor David Boothroyd noted the £1.100m gain from interest rate changes. Rikin Tailor advised that more street marshals and illegal parking had helped the position in Period 6. Councillor Boothroyd noted that there had been a reduction in Lessee Service Charges collected compared to budget which had not been budgeted in the City West Homes HRA 2019/2020 budget. Rikin Tailor advised that this was due to major works and had happened under the arm’s length management organisation (ALMO) but that the budgets would be more aligned this year, with better profiling and accuracy. Councillor Boothroyd also queried the service charges paid by the City to private sector landlords from whom property had been procured. Neil Wightman advised that, due to an oversight, whilst City West Homes had been paying those charges for council tenants in leasehold properties, they had not budgeted it.

6.5       Councillor Ian Rowley referred to the General Fund Summary (at paragraph 3.2 in the committee papers) and the Capital Programme Categorisation (Appendix 1 of the committee papers) and noted both the overspend and underspend. Councillor Rowley commented on improvement in execution but queried persistent optimism bias, execution and budgeting. Rikin Tailor observed that there had been improvement on previous years but that during the budget setting process, there needed to be identification of areas where assumptions have been made about schemes being on site, such as for example, the Oxford Street District Street underspend/slippage of £17.495m. Gerald Almeroth remarked that, whilst much was on target, there was potential for learning concerning alignment of plans and the optimism for those plans, including learning from the Oxford Street District scheme. He also observed that much of the slippage related to only three or four schemes. Councillor Rowley requested a more detailed report on this, with breakdown into operational, development, investment and third-party impact details. The Committee was advised that a report could be provided, listing the top five schemes and with risk ratings.

RESOLVED:  That the contents of the Period 6 Finance Report 2019/2020 be noted by the Committee.

6.6       Quarter 2 Performance Report

The Committee received a report which summarised the City Council’s performance at the end of the second quarter of the 2019/20 financial year against City for All priorities. The report set out progress and figures until the end of September, though the report narrative went until the middle of November, including Garside Nursing Home, where issues had first been raised in October with the Care Quality Commission completing an unannounced inspection on 5th November 2019. The way the report dealt with risks around community safety (crime, anti-social behaviour on housing estates, knife crime, the establishment of the Basic Command Unit and the work of the Hate Crime Commission) would be consolidated in future reports to the Committee. 

6.7       Officers highlighted notable achievements, including the completion of Dudley House and commencement of works on Luton Street/Edgware Road; outstanding Ofsted rating for Children’s Services; and climate declaration, including carbon neutral targets for 2030. Officers also highlighted various risks, including that crimes rates had gone up whilst detection rates had gone down; rough sleeping numbers as well as Unaccompanied Asylum-Seeking Children had increased; and a lack of financial settlement and resultant uncertainty. Officers also observed that the timing of the February meeting would be closer to the end of the period, with reporting towards the middle of December. The Committee noted the above national average GCSE and A Level results achieved by students at Westminster schools, though the Sir Simon Milton UTC results seemed off track.

6.8       The Committee also discussed risks to which the Council was exposed, including Strategic Risks. Members in discussing these risks referred to the reduction of policing resources following introduction of the Basic Command Unit and the fact that there had been a major terrorist incident during the last General Election; whether there would be the possibility of re-tendering or bringing in-house the Garside contract, given developments with Sanctuary at Garside House Nursing Home; whether there was any way to detect unlicensed Houses in Multiple Occupation; the future of Westminster on Wheels; levels of pollution from buildings in Westminster; the increase in schools in deficit within Westminster (from eight to 11); and the effect of Brexit on equity valuations.

6.9       The Committee made a number of requests for extra detail and asked to receive information to reflect the breakdown of operational, development, investment and third-party impact expenditure, indicating the top five schemes of slippage and relevant risk-ratings for the schemes. The Committee observed that a number of Key Performance Indicators were off-track, including in Public Health/Children’s Services for the number of children receiving their 2 - 2.5 year development review. The Committee also requested more information on this and a briefing on the pre-birth to five years pathway work being done by Public Health and Children’s Services. The Committee also requested more detailed information about Garside House Nursing Home, subject to the police investigation. Officers were asked to provide a comparison of the Sir Simon Milton UTC results with the results of other UTCs nationally.

6.10     RESOLVED: That the contents of the Quarter 2 Performance Report be noted.