Agenda item

The report on the progress on the delivery of the Council’s Financial Strategy.

The Director of Finance Investment and Risk presented the report which outlined the Councils financial performance and outcome for the period of 1 April 2017 to 31 March 2018.

The Committee was informed that although the outturn for 2017/18 was an overspend of £5.03m, this was an improvement from the anticipated overspend at q3. This was achieved through careful and strong financial management. The areas of overspend were reported to Cabinet throughout the year and were areas that were impacted by demand and statutory responsibilities.

In response to a member comment that Croydon historically had low levels of reserves compared to other Local Authorities, the Executive Director of Resources stated that as part of the financial strategy, they had been looking at the principles around reserves. Croydon was doing all it could to maintain a prudent position.

A Member queried if the surplus in collection funds was repeatable. Officers responded that the collection fund could not be budgeted for every year. The Committee was informed that there were three keys things that drove council tax performance which were the number of properties that provided income, tax base was increasing at a rapid rate with growth playing a big part in financial strategy. The amount collected from Council Tax, Business Rates and Discount relief exemption.

In response to the Chairs question on how Croydon’s reserves match up against other LA’s, officers said that Croydon had one of the lowest reserves in London whilst inner London Boroughs had greater reserves. Croydon does not budgeted to use its reserves whilst some Boroughs had. Croydon had usable reserves in capital receipts and this could be utilised to fund transformation and not just to fund capital expenditure.

In response to a Member question as to whether the Council had learnt to be more careful with its reserves, and what figure would be acceptable in 2019/20 for reserves, the Cabinet Member for Finance and Treasury stated that this remained a challenge. The Council had to be careful to manage pressures in areas such as Adult Social Care but there was also no choice in how some of the reserves were used. An extra £1m had been put into contingency to manage risks in 2019/20.

The Chair commented that there was significant over spend in areas such as Special Education Needs (SEN), asked if underspend in some areas was leading to overspend in others and how exceptional were the items reported. Officers stated that overspend was as a result of significant pressures in specific areas. Expenditure that had been incurred throughout the year was reported periodically to Cabinet. The Costs were exceptional due to the level of costs the LA had to bear such as Universal Credit which had a £2.5m deficit following the pilot which was covered by the Council.

The Chair commented that it would be helpful in future if a breakdown was provided on earmarked reserves for specific projects. – Officers notes that these are provided in the annual accounts.

In response to whether more funds had been budgeted for the Think Family Programme, the Cabinet member for Finance and Treasury stated that this was ran as a pilot and formally set up 18 months ago. The team had now been expanded to provide innovative solution to issues in a holistic way and were supporting more families.

A member queried how the Council’s assets were being utilised. Officers responded that revenue had been delivered through selling buildings such as Jeanette Wallace house and by generated income from letting space in BWH.

The Chair thanked officers for their responses to questions.

The Committee Resolved to:

1. Approve the levels of reserves and provisions set out in section 7.4 of the report, as recommended by the Section 151 Officer;

2. Note the Council’s outturn position, and the progress of the Council’s current Financial Strategy objectives;

3. Note the departmental outturn variances as contained within Table 2 and Appendix 1 of the report;

4. Note that a report seeking final approval of the accounts following their review by external audit is a separate item on this agenda;

5. Note following a review of the financial strategy a new financial strategy will be presented to Cabinet in September 2018.