Agenda item

5.1  The Vice Chair asked Ian Williams to outline key points from the Overall Financial Position Paper.

5.2  The first point highlighted was the importance of focusing on the current year and on in year pressures that could adversely impact the budget, as well as considering how budgets are balanced in future years. An example was provided from corporate parenting to illustrate the nature and scale of unplanned expenditure, which had to be budgeted for. 

5.3  Through careful management, these in year pressures have been met through reserves, allowing time for medium term financial plans to be put in place for future years. Other examples included employment tribunal legal claims, the one off costs of additional elections and the loss of income from the Lido being closed. The Overall Financial Position Paper gives a good sense of the complexity of the business and the operating environment. 

Questions and discussion on first point

5.4  Members asked if more could be done to meet unplanned costs through a more systematic approach to identifying financial risks and making provisions in the budget.

The response was that thus far the approach to risk had been adequate. However the risks were becoming greater and the impacts more severe. The way that fluctuating currency rates might affect the Council’s capital programme or the impact of falling interest rates on pension investments were provided as examples. The Vice Chair reminded Commission Members that some of these risks would be more carefully considered by the Commission as part of the planned Impact of Brexit review scheduled for early in 2017.

5.5  Members asked if we are on track to balance our budgets this year.

Ian Williams explained that this was difficult to answer given the complexity of the business, and this is why close monitoring was required.

5.6  Members asked whether budget overspend was treated differently from incurring costs to meet additional demands.

The response was that overspend in a service like Policy and Performance would be treated differently from overspend incurred to meet demand and fulfil statutory duty.

5.7  Members asked if we took a consistent approach to underspend.

The response was that underspend is clawed back at the end of each year, rather than being retained by services, unless there is a clear and exceptional case. These reserves are needed as a contingency. To put this in context, the Council’s earned interest from investments had reduced dramatically in recent years because of low interest rates.

5.8  Members spoke asked what proactive work we were doing to reduce the cost pressures referenced above. Thinking about corporate parenting, what was being done to recruit more local foster carers? Ian Williams talked about ways that we could further incentivise foster carers, for example by paying their Council Tax. Hackney’s experience shared by all London boroughs because of the high costs of housing. This is well articulated in the London Councils response to autumn statement. There might come a point when the Council directly delivers care and interventions for children and families where there are complex needs. The Oxfordshire home which was being used to work intensively with families and the Pause Project were provided as examples of preventative work.

5.9  Members observed that we seem to be in a precarious positon and asked if we need to further rationalise what we do and whether we needed to look at more radical change. Cllr Taylor agreed that although we have “right-sized” our organisation, we would be unable to cope with too many more shocks. More thought was needed about how we work together with other local authorities. At the moment we are competing, for example, over temporary accommodation, foster carers, lawyers and planners.

5.10  The second point that Ian Williams wanted to draw attention to was the Capital programme including school developments such as Mossbourne Riverside Academy. It was worth highlighting that Tiger Way and Nile St could have been offered up as sites for free schools, but instead the Council chose to redevelop these as schools, although there is more work to do to engage residents in a discussion about viability. As an illustration of land values, the Educational Funding Agency paid £37m to acquire the Lea Bridge Thames Water site for the site of a new academy. There is also an extensive housing programme under way and the development of leisure facilities. There are also a number of capital projects designed to earn income. For example Keltan House will generate £1.3m per year and Dalston Lane Terrace and the new development on Church Street will also be income generators. 

5.11  As a third point, Ian Williams drew Members’ attention to Appendix 1, the Medium Term Planning Forecast and the recommendation to accept the Government’s offer of multi-year revenue support grant allocation.

Questions and discussion on point three

5.12  Members asked if there were other ways we were generating income, in addition to through capital assets.

Ian Williams referenced the Fees and Charges paper which had been brought to the Commission in the past and noted that the Commission had helped developed the approach taken to reviewing Fees and Charges. Other examples included buildings hire and sponsorship of assets. The Vice Chair reminded Commission Members that we would look at this topic in greater detail when the item on Commercialisation is discussed in the new year.

5.13  Members asked what the more radical options were to meet the risks outlined and how these might make the most of the assets this borough.

Cllr Taylor suggested this question is covered as part of the  devolution update

Other questions

5.14  The Vice Chair referred to press coverage about the £14m of payments which had been redacted in one calendar month, which questioned Hackney Council’s transparency. She asked how the Council had responded to this.

Ian Williams noted that Hackney had led the way on publishing transactions over £500 when the requirement first came in. However a large number of transactions had to be redacted each month because they would reveal individuals in receipt of housing benefit and Hackney has the largest number of claimants in London. There were some payments we should not have redacted and improvements to the banking system should mean that these can be published in the future. This was the response provided and this satisfied enquirers. It was regrettable that they did not ask for clarification before going to press.  A Member observed that there was clearly an assumption in the coverage that these were payments to contractors rather than individual beneficiaries.