Agenda and minutes

[Any apologies to be received and substitutions to be declared]

Apologies were received from Cllr Susan Roberts and Cllr Ellis Turrell. Cllr Paul Singh substituted for Cllr Ellis Turrell. 

[Any declarations of interest from Panel members and Offiers]

There were no declarations of interest from the Panel or Officers.

[To approve the minutes of the previous meeting as a correct record]

The minutes for the Resources and Equality Scrutiny Panel which occurred on the 12^th October 2023 were approved as a true and correct record.

[A Presentation will be delivered to the Panel]

The Director of Finance began the presentation (a copy is attached to the signed minutes) and informed the Panel that when Full Council approved the 2023-2024 budget on 1 March 2023 the Council had a forecasted budget deficit of £16.4 million in 2024-2025 rising to £23.1 million across 2025-2026.. Work had been undertaken by the Council to reduce the deficit, with the budget update to Cabinet in October, projecting the deficit to be in the region of £2.6 million for 2024-2025, but that current MTFS efficiency targets and future efficiency assumptions to be identified for 2024-2025 meant the total gap was currently £9.4 million. Work was still being undertaken to further reduce the deficit and create a balanced budget for the future with the current budget deficit rising to over £20 million for 2025-2026. Economic uncertainties were: future funding, inflationary pressures, demand for services, future pay awards.

The Corporate Analytics Manager informed the Panel that sickness rates had increased to 3.23% in quarter 2, and that this did not include COVID sick absence. Mental health issues, musculoskeletal and operations were the top 3 recorded reasons for workplace absence. Employees had access to mental health support via the employee assistance programme. Staff turnover had increased, the Council were operating a post-job change interview scheme to find out more about the reasons why staff were leaving the City of Wolverhampton Council as an employer and would have data in the future. As of 2023/2024, customer service call waiting times were lower than historic trends.

The Director of Finance expanded on risks, citing key areas for the Panel to note. There was increasing demand for temporary and supported living accommodation, which was caused by a multitude of factors, most common being an impact of the cost of living contributing to people becoming homeless, or landlords evicting people in the private sector. The Council was responding by looking into preventative measures available, such as taking back into ownership more properties to allow for temporary accommodation allocation. The Council were mitigating inflationary pressures on planned and reactive building maintenance by reducing overall activity in this area. There were on going and increasing cyber security risks. The energy market was volatile and this was a risk for central Council services cost wise. Further risks were listed on the presentation document.

The Vice Chair wanted to know why COVID illness cases were not included in the sick leave statistics and wanted to understand how they impacted the figures.

The Corporate Analytics Manager stated that COVID was not recorded in Agresso anymore, he explained that people who were off with COVID were recorded as part of the overall sickness statistics, but not separated anymore as they had been in previous times.

The Chair and Vice Chair sought further clarification in reference to the wording within the slides.

The Chief Operating Officer stated that the wording of the slides would need to be changed going forward. He confirmed what the Corporate Analytics Manager said was correct.

The  ...  view the full minutes text for item 4.

[A Presentation to be delivered to the Panel]

The interim Director of Finance summarised the definition of what reserves were: resources which had been set aside by the Council in previous financial years. They Council held earmarked reserves and general fund reserves. As part of its reserves strategy, the Council’s earmarked reserves were held for – managing risk, investment reserves, smoothing reserves, restricted reserves. On page 42 of the agenda pack, there were useable and unusable reserves. Useable funds were used to fund one off commitments, unusable reserves were designed to contribute to technical administrative funding. Capital reserves were for major repairs (Housing and Revenue Account specific), a capital receipts reserve was designed to ringfence between revenue and capital. This was to ensure capital assets sold were only allowed to fund capital purposes. The interim Director of Finance displayed a number of graphs displaying financial figures relating to the reserves strategy in the presentation (a copy of the presentation is attached to the signed minutes). The General Fund Balance Reserve was £15.3 million and was designed to maintain corporate contingency by cushioning the impact of unexpected events and emergencies. The interim Director of Finance thought the figure of £15.3 million should be considered a minimum level and not the target, he hoped the Council would continue to grow its General Fund Balance Reserve.

The Chair queried the graph and stated that the total useable earmarked reserves as of 1^st April 2023 was £49,073,000, the approved commitments were £26,500,000, leaving a balance of £22,000,000. He believed according to the data provided that the Council was going to be spending around £23,000,000 which he wanted noting. He also noted with concern the smoothing reserve, which was designed to deal with costs and then smooth back out over time. This reserve was not indicating signs of returning to a reasonable level and was in a state of decline, he cited that across 2 years this fund had decreased from £18,000,000 to £1,000,000. He believed a strategy was needed to get the smoothing fund back on track.

The interim Director of Finance cited page 52 of the agenda pack and highlighted the future years strategy reserve which was £11,000,000, he said some of the pressures from the previous year were built into this figure.

The Director of Finance stated that the previous year they had anticipated an underspend in the budget and that money was to be used to smooth out money for the current financial year and mitigate the on-going financial pressures the Council faces. The October report identified potentially £3.2 million left over to use the following financial year. She stated that the presentation of the graph was not clear enough when viewed with hindsight and stated that some of the money would be stretched across into the following financial year. She stated that there was no underspend predicted for the current financial year and stated that the Chair was correct in reference to the smoothing reserve fund; once the money was gone, it was gone.

A Councillor stated  ...  view the full minutes text for item 5.

[To consider the report by Finance]

The interim Director of Finance stated that the purpose of the report was to provide an update on the mid-year 2023-2024 Treasury Management activities for the General Fund and the Housing Revenue Account (HRA). He summarised the definition of treasury management to the Panel. However, as these were regular reports the Panel received, he moved on to the newer and more relevant information. He informed the Panel that the Council had operated within its prudential and treasury indicators. No new borrowing had been undertaken since March 2019. The level of borrowing as of September 30 2023 was £703.2 million. During quarter 2 (July – September) no loans were repaid.  He then discussed Lender Option Borrower Loans (LOBOs), of which the Council had taken out 9 as of March 2023. These were a specific type of loan wherein the lender can “call in” the loan at any time, which means they could change the conditions of the loan such as interest rates. In such a scenario, the Council had two options: Accept the new terms or pay the loan off in full with no penalties.  In October 2023, one of these loans were called in by the lender, to which the Council chose to repay back in full. He displayed the out-turn position 2023 – 2024 General Fund and HRA, informing the Panel that the variance was in the positive relative to approved budget and the forecast budget.

The Chair asked the interim Director of Finance to circulate to the Panel (subject to legal sensitivity) the contents of the 8 remaining LOBOs so that they could look at the risk levels facing the Council should a number be called in closely together.

The Chair and the Panel extended their thanks and well wishes to the Director of Finance for her hard work in the Council over the years.