Agenda item

The Executive are asked to consider report E/22/27 to ensure that budget exceptions are brought to their attention in order to approve remedial action where necessary.

The Executive Member for Finance and Resources presented the report which asked Members to endorse the actions of Officers, note the contents of the report and approve re-profiled capital programmes and Programme for Growth as set out at Appendices C and D.

Members noted that at the end of Quarter 2 the current estimated full year revenue outturn estimates indicated surpluses of (£371k) for the General Fund (GF) and (£68k) for the Housing Revenue Account (HRA). This included the year’s proposed pay award, with key variances highlighted in the report and further detail in Appendix A.

Executive Members acknowledged that all new general fund savings had been delayed to 2024/25, post Local Government reorganisation (LGR). The £195k saving in the Housing Revenue Account for the housing system would be aligned to delivery of phase 2 of the project, which was anticipated to be in Quarter 3 2022, although savings would not be realised until future years, and resource requirements for local government reorganisation could impact on delivery timescales.

Officers explained that the capital programme was on budget at the end of Quarter 2; both the GF and HRA forecasted their programmes to be spent by year end with the exception of two projects in the General Fund which saw £0.5m of costs pushed back to 2023/24, and the budget for boiler replacements in the HRA which was expected to overspend by £0.14m. There was however considerable risk of increased costs in the HRA property refurbishment budget as a result of inflation and higher than expected levels of voids which required refurbishment. The impacts on this budget were currently being assessed by Officers. Headlines could be found in the report with a more detailed analysis in Appendix C.

Lastly, Programme for Growth projects spend was £1,053k in Quarter 1 including £520k on staffing costs, £174k on the Transforming Cities Fund project and £122k on the Tadcaster business flood grant scheme. Project by project progress was shown in Appendix D.

The Chief Finance Officer updated Members on the HRA capital programme issue which had been highlighted in the report of a potential overspend of £2m, some of which had been driven by health and safety works and boiler replacements, with some failing more often than expected. This had been mitigated in part by switching to a different make of boiler which was more reliable, and the obsolescence of parts would be less of a problem with this new model.

Members noted that of greater concern was the cost of the voids programme with a significant increase in the number of voids coming forward and the accompanying cost of works that had been required to bring these properties up to standard.

The Chief Finance Officer repeated that, in looking at the trend of numbers coming forward, there was an expected overspend in the region of £2m. If this trajectory continued there would also be greater costs down the line. Officers had examined the issue in detail as well as the works undertaken; where there was a void property the opportunity had been taken to undertake work (such as window replacement) at that point to save such work in the future. However, this was not sustainable.

As such, Members were informed that these works had been temporarily suspended, subject to the decision to be invited today. An additional recommendation was made to the Executive by Officers to change the approach to work on voids that was needed to bring them up to a decent standard with essential works as required, but to no more than that. When the planned improvement work came around, it would be at this point that the additional works would be commenced, as for any other property.

The Chief Finance Officer explained that by changing the strategy the overspend would be forecast down to £1.5m. It was acknowledged that this was still a significant figure but reflected the work done to date. In terms of the overall resource within the HRA, whilst there were pressures, the last business plan that the Executive agreed had needed the approval of Council in February 2022, and had brought in voluntary set aside receipts in order to pay the self-financing debt. The original HRA Business Plan was to repay the self-financing debt over 30 years. The last HRA Business Plan had allowed the Council to set aside enough money to repay the debt when it was due.

The Executive noted that by taking out another £1.5m from the HRA balances the Council would still be able to repay the debt when it was needed, which was essential.

Officers clarified the additional recommendation to Members, which was as follows:

‘That the additional £1.5m be accommodated from the resources available in the HRA as a whole, including the funds set aside to repay self-financing debt.’

Additional money was required to cover the forecasted cost.

The Leader asked for confirmation from the Director of Corporate Services and Commissioning and the Monitoring Officer that the Executive were being asked to make a decision today that had not been notified in advance, and therefore permissible. Officers explained that the report had been published within the appropriate legal timeframe and that it was within the gift of the Executive to agree an additional recommendation to those set out in the report. The relevant information had been provided and details of some challenges around the HRA capital programme had been brought to the meeting verbally.

Officers clarified that the additional recommendation was for the Executive, but it would require formal Council approval, and may also require Section 24 consent which would need to be explored by Officers with colleagues at North Yorkshire County Council. HRA spend was commonly covered by the general consent, but should be checked because this was an additional amount of money in the budget. If Section 24 consent was required, Officers would go through that process as well. Members were assured that this was a forecast overspend and that the correct governance procedures would be followed.

The Executive Member for Finance and Resources confirmed that he was content with the report and the additional recommendation put forward by Officers and commended the report to the Executive for approval.

The Deputy Leader, as Executive Member with responsibility for housing and therefore the HRA, explained that he had been aware of the emerging issue but had only received a detailed briefing on the matter from Officers recently. If a decision was required today, the Deputy Leader suggested that it be delegated to Officers, working in collaboration with himself and the Executive Member for Finance and Resources, to take the matter away for further discussions and agree details outside of the meeting.

The Leader agreed with the Deputy Leader that the issue should be taken away for further consideration with Officers and emphasised the importance of it coming back to a full Council meeting in the future.

It was suggested that reference to the S151 Officer be added to the recommendation as well as delegation to the Deputy Leader and Executive Member for Finance and Resources. As such, the wording of the additional recommendation would be as follows:

‘That it be delegated to the S151 Officer, in consultation with the Deputy Leader and Executive Member for Finance and Resources, to determine the appropriate course of action and recommended to Council that the additional £1.5m be accommodated from the resources available within the HRA as a whole, including the funds set aside to repay self-financing debt.’

The Chief Finance Officer advised the Leader that the matter may become urgent and as such, urgency powers could need consideration; however, this would be looked at outside of the meeting as part of the proposed delegated authority.

The Leader of the Opposition was invited to comment on the proposal. It was acknowledged by the Leader of the Opposition that the matter would go to full Council, but he expressed his concern should it be taken as an urgent decision. It was queried which Council meeting the matter would be taken to, and further apprehensions were voiced around the potential build-up of works in the future, including the impact on insulation installation.

The Monitoring Officer gave options for future Council meetings at which the proposals could be considered but emphasised the importance of the ramifications that Members needed to be aware of. The Council meeting to be held on 13 December 2022 would be too short notice; as such the Leader suggested that the meeting in February 2023 or the convening of emergency extraordinary meeting could be more appropriate.

The Deputy Leader suggested that an update be given to all Members at full Council the following week on 13 December 2022 and a discussion had as to the best way forward; the update could be given as part of his portfolio update, or that of the Executive Member for Finance and Resources.

Members expressed their concern around stopping all property works but appreciated that the budget could not be overspent. Officers clarified that new work would not be started and that some could need to be halted, but that overall progress would not halt completely.

The recommendations set out in the report and the additional recommendation as discussed were proposed and seconded.

RESOLVED:

                        The Executive

i)   endorsed the actions of Officers and noted the contents of the report;

ii)  approved re-profiled capital programmes and Programme for Growth as set out at Appendices C and D; and

iii)delegated to the S151 Officer, in consultation with the Deputy Leader and Executive Member for Finance and Resources, to determine the appropriate course of action and recommended to Council that the additional £1.5m be accommodated from the resources available within the HRA as a whole, including the funds set aside to repay self-financing debt.

REASON FOR DECISION:

To ensure that budget exceptions were brought to the attention of the Executive in order to approve remedial action where necessary.