Agenda item

[Claire Nye, Chief Accountant, to present report on update on budget planning including the Financial Plan]

Mark Taylor, Director of Finance provided the ‘Budget Update and Review’ report and gave an overview of the ‘City of Wolverhampton Council’s Financial Plan’.

The Director of Finance explained that the financial plan is a strategic document to set the scene for the next financial year and the medium term, as usual regular reports on the budget and the medium term financial strategy will be presented to Cabinet and scrutiny throughout the year.  The first update was considered by Cabinet 23 June 2015.

In response to a question from Cllr Alan Bolshaw relating to the percentage of repayments on HRA borrowing the Director of Finance advised that the financial plan (page 19) highlights that interest costs account for approximately one-tenth of the total revenue expenditure. He advised that the housing budget is exposed to interest rate movements which are monitored daily but that there is a need to repay the borrowing to maintain the decent homes position and to replace houses.  He acknowledged that there will be a need to revisit the cycle of replacement later in the forecast and debt curve 2014/15 – 2043/44 as there most probably will be an impact to assets, but that it is not possible to forecast how or when.

Cllr Alan Bolshaw asked a further question relating to the impact of Governments ‘Right to Buy’ announcement and the impact on the councils Housing Budget. The Director of Finance advised that the Right to Buy (RTB) sales is one of the many unknown factors where an assumption has to be made over the course of thirty years.  He acknowledged that during 2014 the RTB sales had been higher and clarified that there had been a need to review the HRA business plan and as a result a freeze was implemented on Wolverhampton Homes (WH) management fees for five years. Scrutiny members agreed that there is a need to monitor the situation going forward.

In response to a question from Cllr Milkinder Jaspal relating to equality implications resulting from savings proposals the Director of Finance advised that the Council assesses the equalities implications of each individual savings proposal as well as the cumulative impact of all savings.  He advised that having due regard to the equality requirements is at the forefront of budget and policy development, but that having due regard to those implications does not protect everyone from the impact of cuts. He informed the panel that if equality analysis is not carried out the savings proposal cannot be progressed.

In response to a question from Councillor Wendy Thompson relating to the amount of interest paid on borrowing the Director of Finance advised that the full account detail had been considered by Cabinet 22 July 2015 but that the figure of loan interest was in the region of £20 million, half of that figure would be Housing Revenue Account (HRA) and half of that general fund.  He advised that final borrowing figures relating to equal pay were not available as this is still a work in progress; he did however clarify that for each £10 million around £1 million would be payable annually.

In response to a request for update on Agresso the Director of Finance advised Cllr Wendy Thompson that the initial implementation phases are complete. He advised that there have been some challenges as with every new system but that on the whole Agresso is fairly well settled and managers are getting to grips with the system.  He advised that the challenges that had been experienced with payments to suppliers had now been largely addressed. The Director of Finance advised that there is more work with Managers to embrace the Agresso system but that there is a real sense of improvement to the processes.

In response to a request for further detail on the savings proposals of £20 million the Director of Finance advised Cllr Wendy Thompson that the actual total of Savings proposed was £22 million and that Cabinet 22 July 2015 had considered the report which identified savings of £17.1 million.  He advised that the next stage of the process is for detailed proposals, including equality analysis to be prepared to go before Cabinet in October 2015, following which there will be a period of consultation on the proposals and the finance settlement from Government was expected in December after the Spending Review was announced by the Chancellor in November. 

The Director of Finance advised the panel that 2017-18 budget will be particularly challenging to find the saving proposals and 2018-19 very challenging as there are now further budget pressures to consider such as the introduction of the ‘Living wage’ which will impact on contracts in businesses such as care providers.  He advised that some provision was made within the medium term financial strategy for such pressures, however this was unlikely to be sufficient enough.

Cllr Jacqueline Sweetman referred to Financial Plan page 13 (table 2). She suggested that the Council should be looking for alternative opportunities to generat income that could help to mitigate the cuts and growth outlined in the table.  She suggested that Local Government is changing in terms of finance and that Wolverhampton should look at the unique selling point and how processes internally can be utilised to income generate.  She indicated that scrutiny can be proactive here and that some detailed work is needed to turn upside down the way we think and work as this is vital to the transformation agenda.  She urged that this work and generation of ideas should start now.

Cllr Andrew Wynne questioned the increasing cost pressures referred to on page 12 (chart 5) of the Financial Plan.  The Director of Finance clarified that the analysis by reducing resources and increasing cost pressures chart  indicated where it was planned to use reserves in the past (in red), and that the remaining area shaded red indicated the projected medium term budget deficit.

In response to a further question from Cllr Wendy Thompson the Director of Finance confirmed that employee consultation relating to car park charges can commence following Cabinet approval of the proposal. He advised that there had already been some discussions with unions relating to this proposal. 

Cllr Milkinder Jaspal referred to a savings proposal at Birmingham City Council to reduce the number of Councillors and asked what the position is in Wolverhampton.  The Director of Finance advised that reducing the number of Councillors in Wolverhampton was already assumed in the medium term financial strategy, however, it would be necessary to reprofile the timing of the savings as the Boundary Commission wanted to review all boundaries across the Black Country rather than just Wolverhampton. It was not clear when this work would commence.

The Chair requested that the minutes reflect the Scrutiny Panels thanks to the Director of Finance for the outstanding work he carries out at the City of Wolverhampton Council.

Resolved:

1.    That the Panel welcome the arrangements for adequate identification and management of budget risks, budget planning and forecasting for future years.

2.    That the Panel receive the City of Wolverhampton Council’s Financial Plan and agreed that there is a need to monitor the external pressures going forward.

3.    That the Panel request a report to a future meeting to consider alternative solutions through income generation.