Agenda item

6.1  The Chair welcomed for this item:

  Ian Williams, Group Director Finance and Resources (IW)

  Tim Shields, Chief Executive (TS)

  Cllr Rebecca Rennison, Cabinet Member for Finance and Housing  Needs

  Mayor Philip Glanville

And the Chair stated that the Panel received regular Financial Updates from the Group Director.

6.2  Members gave consideration to three reports:

a)  Overall Financial Position, Property Disposals and Acquisitions Report agreed by Cabinet in July

b)  Capital Update report agreed by Cabinet in September

c)  Presentation on ‘Funding Cuts and Challenges’, which was tabled

6.3  IW took Members through the reports and stated that on the revenue side the Council continued to experience significant financial challenges, however the overspend was just 5% of overall budget and the Council was in a very strong position vis-à-vis other local authorities in the country which were in crisis e.g. Northamptonshire, Surrey and Lancashire.

6.4  IW drew Members’ attention to point 2.8 of OFP report regarding the plans for a North London Heat and Power Project by the North London Waste Authority.  Hackney was one of the 7 councils involved.  This would represent the largest investment by the Council for many years and so there would be regular updates to Members as well as updates in the regular OFP reports. 

6.5  With reference to point 1.1 on p.62 of the OFP report and the £5.5m overspend, Members asked for clarification on how much the over spend would deplete reserves and how this would be handled and how for example expectations about potential lower council tax collection rates were factored in. IW replied that there would be no draw down of the Corporate Contingency and the Council wouldn’t factor in an assumption about overspend.  In the current situation it was too early to tell what the actual impact would be.  He described how in the past £2.5m had been used to fund emergency works.  Generally if council tax was raised 1% it would generate £800k but a 0.5% raise would just generate c£300k.  Members asked further what the depletion of reserves was last year.  IW replied that the Council was able to draw down agreed balances from the CCG which had meant that they did not need to dip into the reserves on that occasion.

6.6  Members asked about the financial challenges relating to Adult Social Care and CYP services.  IW replied that the adult and children’s social care came out of the general fund but SEND was funded from the Direct Schools Grant.  They factored in growth pressures and the costs of Looked After Children and of placement costs in Adult Care.  All things being equal they were confident that they would be able to manage the situation back to balance.  He stated that in London overall there was a £100m deficit with SEND.  As SEND was funded out of DSG the issue cannot be resolved through council tax. 

6.7  With regard to the financial impact of the North London Heat and Power project Members asked how evolved the modelling was.  Were there clear specifications in place and was the £8-9m per annum estimation expected to rise to £14-15m?  IW replied that Hackney will have to pay its share c. £600m for the whole project.  Several growth pressures were being factored in and the Council would build up the levy.  He also cautioned that issues such as moving to twice weekly collections won’t materially impact on the bigger picture here.  Officers would be bringing a paper on recycling and the NWLA to Members soon. 

6.8  Members asked what the impact would be of the government’s announcement that week regarding lifting the cap on councils’ ability to borrow for building social housing.  IW cautioned that while it was of course to be welcomed it represented an increase in borrowing rather than any new kind of grant funding.  They would still have to build more private units to secure more social units. He stated that they had just met with MHCLG (Ministry of Housing, Communities and Local Government) formerly DCLG, who were about to launch a period of statutory consultation on amending the prudential code for borrowing by local authorities.  It not being a grant the same questions about viability remained.  He added that the Council had made a submission on the borrowing cap to MHCLG in Nov 2017.

6.9  The Mayor described how the change would allow building plans to be scaled up and the financing mix between use of cross subsidy, borrowing and Right to Buy receipts.  While it wouldn’t be possible to increase the tenure mix, the new borrowing could fund 50% of the cost of the new units.  He described a recent bid to Mayor of London where they planned to switch 100 units of shared ownership to social housing.  He stated that other councils had S.106 war chests that they could access because of their approach.  As the new Local Plan is rolled out in Hackney there may be able to be S106 contributions specifically for social housing he added.  Overall the Housing Revenue Account borrowing cap allows Hackney to expand and scale up its plans but not to change the existing tenure mix. 2000 homes could be possible by 2022 or 4000 by 2025 including 800 for private sale.

6.10 The Chair of Audit Committee (Cllr Sharman) commented that the national funding crisis on Special Education Needs and Disability (SEND) was a very serious challenge as the Council could not control the demand and had no control over the level of funding for it which came from the Direct Schools Grant. He stated that Hackney Learning Trust and Finance officers had already made a presentation to Audit Committee on the issue and a report was expected in November on the medium term plan to address the issue locally and he would be happy to share this with Scrutiny Panel Members. The Chair added that she and Cllr Patrick were on the Co-Design Group in relation to this.

6.11 Members asked what the plans were for Hackney House. Polly Cziok replied that the most significant cost associated with it was the business rates which were increasing significantly. This had to be balanced against the fact that it was an excellent venue for hosting events and being located in Shoreditch was ideal for targeting specific stakeholders such as the tech industry. The landlord of the venue currently had a good deal but there were many factors for the Council to consider and a decision on its future viability would have to be taken very soon. 

6.12 The Chair took issue with the level of spend on the IT Enabler Group. IW replied that this was part of the Integrated Commissioning system and it would allow Section 256 money to be released and was not a top up. They did not anticipate further increases in spend on this. Monies were being held for this purpose and this referred just to the mechanism for releasing it.

6.13 The Chair thanked IW for his report and attendance.