Meeting documents
Finance and Best Value Overview and Scrutiny Committee
Tuesday, 6th February 2007
Present
Chair
DM Elderton
Councillors
FM Doyle, AER Jones, WW Smith, CM Teggin, Mrs K Wood
Deputy
DT Knowles (for Cllr ED Prout)
Index to Minutes
- Minute 54 - DECLARATIONS ON INTEREST/PARTY WHIP
- Minute 55 - MINUTES
- Minute 56 - PRESENTATION - BUDGETARY CONTROL
- Minute 57 - FINANCIAL MONITORING STATEMENT
- Minute 58 - MONITORING REPORTS
- Minute 59 - FINANCIAL MONITORING SUMMARY 2006/2007
- Minute 60 - CAPITAL MONITORING SUMMARY 2006/2007
- Minute 61 - SERVICE RE-ENGINEERING MONITORING SUMMARY 2006/2007
- Minute 62 - FINANCE DEPARTMENT - CURRENT ESTIMATE 2006/2007 AND BASE ESTIMATE 2007/2008
- Minute 63 - TREASURY MANAGEMENT - CURRENT ESTIMATE 2006/2007 AND BASE ESTIMATE 2007/2008
- Minute 64 - COMPREHENSIVE PERFORMANCE ASSESSMENT (CPA) - USE OF RESOURCES
- Minute 65 - EXEMPT INFORMATION - EXCLUSION OF MEMBERS OF THE PUBLIC
- Minute 66 - TENDER REPORT - PROVISION OF MICROSOFT SOFTWARE
- Minute 67 - TENDER REPORT - 4 COLOUR PRINTING PRESS
Minute 54 - DECLARATIONS ON INTEREST/PARTY WHIP
Minute Text :
Members were asked to consider whether they had personal or prejudicial interests in connection with any item(s) on this agenda and, if so, to declare them and state what they were. No such declarations were made.
Minute 55 - MINUTES
Minute Text :
Minute Decision :
Resolved - That the minutes of the meeting held on 6 December 2006, having been received or approved by the Council, be received.
Minute 56 - PRESENTATION - BUDGETARY CONTROL
Minute Text :
The Director of Finance gave a presentation to members upon the importance of financial management and how budgetary control was undertaken at Wirral. The Council's total revenue spend was in the order of £750m, with an annual budget of £260m. With a schools budget of £180m and capital spend of £70m, he commented that financial management was as much about ensuring that objectives were met as about managing money. He indicated that financial management involved Planning - setting an Annual budget and Medium Term Plan; Reporting and Accountability - the Annual Statement of Accounts; Governance and Controls - the Council's Constitution and guidelines; and Monitoring, which included budgetary control.
Having agreed the plans, or budgets for the year, budgetary control was the monitoring of progress against those plans. As there were approximately 130,000 budget lines within the Council, the key themes of budgetary control in Wirral were to focus on volatile areas, to report regularly to all levels and to ensure that budget holders took action to prevent any overspend. Key developments as a result of the integrated financial management system were the provision of better quality information in financial monitoring reports, and more accurate information being made available to budget holders in terms of spend to date and commitments. For clarification, in response to a comment from a member, the Director confirmed that although the Cabinet had on occasion approved some virement, no Chief Officer had authority to overspend on any budget.
In response to comments from the Chairman, the Director confirmed that the financial monitoring statement for January 2007 would soon be available, and that no auditing problems had become apparant. The Director indicated that a basic requirement for the achievement of a level 3 score from the Audit Commission was the provision of a financial management training course, and in response to a request from a member for a more detailed presentation, he suggested that the training course could incorporate greater detail with regard to budgetary control. The Chairman requested that members contact him with regard to areas they wished future reports or presentations to focus, upon which he would liaise with the Director of Finance to agree a timetable for presentation to Committee.
Minute Decision :
Resolved -
(1) That the presentation be noted.
(2) That the Director of Finance be requested to incorporate more detail on budgetary control within a future financial management training course.
Minute 57 - FINANCIAL MONITORING STATEMENT
Minute Text :
The Director of Finance provided a summary in tabular format of the position of the Authority revenue accounts and General Fund balances, as at 31 December 2006. It included the composition of the 2006/2007 budget by department including agreed Service Re-Engineering (SRE) savings, other savings and policy options, monitoring against the 2006/2007 budget, anticipated variance against the original budget, and an explanation of variances and areas identified as requiring further attention.
He reported that at its meeting held on 14 December 2006 (minute 191 refers), the Cabinet had agreed to fund from balances an overspend in the Cultural Services budget of £1.9m. However, at its meeting on 24 January 2007 (minute 230 refers) the Cabinet declined the use of balances with regard to an anticipated variance within the Children and Young People's Department budget of £650,000. Given the serious budgetary position this Council faced, and would continue to face, the Cabinet requested that every possible action be taken by the Director of Children’s Services to contain the overspend by the end of the financial year.
Minute Decision :
Resolved -
(1) That the contents of the financial monitoring statement be noted.
(2) That a further update be submitted to the next meeting of this Committee.
Minute 58 - MONITORING REPORTS
Minute Text :
The Director of Finance presented monitoring reports with regard to General Financial Matters, Insurance and Risk Management, and Performance Monitoring - Finance.
With regard to General Financial Matters, the report provided information on the money market key indicators, current interest rates, the Council cash position, the position regarding Council Tax, National Non Domestic Rate, general debt and cash income collection and the payment of Benefits. He provided information on budgets and income received by way of fees and charges, and in response to comments from members, offered further explanation on the budgets and income collection performance. He commented also that all variations had been reported to the Cabinet, and in addition to the funding of the Cultural Services budget shortfall from balances, an additional £1.9m had been built into next years budget. In response to a question from the Chairman with regard to the new Accounts Receivable System, the Director stated that although there had been some difficulties, which were the subject of continued negotiations with Fujitsu, he anticipated that recovery processing would be up to date by the year end.
With regard to Corporate Risk and Insurance Management, the Director provided information on progress made against objectives for the services and he set out anicipated developments in the coming months. In response to comments from the Chairman, the Director reported upon the failure of the contract for the supply for arboricultural services to the Council. Advice and guidance had been provided to the Director of Technical Services to create and implement a new contract that maximised protection to the liability function and the Director of Technical Services proposed to present a detailed report to the Executive Board.
Minute Decision :
Resolved - That the monitoring reports be noted.
Minute 59 - FINANCIAL MONITORING SUMMARY 2006/2007
Minute Text :
The Director of Finance provided a financial monitoring summary, extracted from Current Estimate 2006/2007 and Base Estimate 2007/2008 reports that had been presented to Overview and Scrutiny Committees in the current cycle. The summary detailed the key variations for the current financial year and provided a summary of the overall implications for the General Fund. He outlined progress on policy options and savings, and set out savings funded by bridging finance and from service re-engineering. The Director sumarised the financial position and having regard to variations identified, and decisions taken by the Cabinet and Executive Board, he indicated that based upon the latest projections, the estimated General Fund balances at 31 march 2007 were £8.5m.
In response to a comment from the Chairman with regard to outstanding PCT debt, the Director reported that invoices to the old Wirral PCTs were being paid off, and an agreement had been reached with the new Wirral PCT for payments to be made on a monthly basis. However, there had been no movement with regard to PCT debt from outside Wirral, which amounted to £1.9m. In response to comments from a member, he confirmed that the Director of Adult Social Services had sought legal advice upon commencing legal proceedings for the recovery of the outstanding debt, and an update report would be presented to the next meeting of the Committee.
With regard to the projected budget, the Director reported that at this time of the financial year, the financial position was very changeable. However, the position as at the last report to the Cabinet on 24 January 2007 indicated a budget gap of £11.5m and he commented that an increase in Council Tax of 5% together with the use of balances still left some £2m outstanding.
Minute Decision :
Resolved - That the report be noted.
Minute 60 - CAPITAL MONITORING SUMMARY 2006/2007
Minute Text :
The Director of Finance provided a summary of progress on the overall capital programme, based on capital monitoring reports presented to Overview and Scrutiny Committees during the current cycle. The capital programme for 2006/2009 was submitted to the Cabinet on 1 December 2005 when the base programme for the current year together with a priority list of schemes was approved, based upon the appraisal criteria that linked the Capital Strategy to the Corporate Plan. The Director compared the base programme approved in December 2005 with the forecast at November 2006 and the latest forecast position, and set out progress on the programme on a departmental basis.
He reported upon the impact of Council/Cabinet decisions, and in response to concerns expressed by members with regard to transfer from the Private Finance Initiative reserve, the Director clarified the position with regard to the disposal of school playing fields and the requirement for a receipt equivalent to the value of the playing field effectively being ringfenced, and recycled into improvements in other sports facilities used by schools.
Minute Decision :
Resolved -
(1) That the report be noted.
(2) That a further report be presented to the next meeting of the Committee to clarify outstanding issues in relation to PFI, and the implications for the Council.
Minute 61 - SERVICE RE-ENGINEERING MONITORING SUMMARY 2006/2007
Minute Text :
The Director of Finance provided an update by department on the progress being made in achieving gross service re-engineering (SRE) savings of £3.7m, contained within the budget for 2006/2007. Progress on SRE savings was reported to each cycle of Overview and Scrutiny Committees as part of the financial and performance monitoring reporting process throughout 2006/2007, and at this stage of the financial year the information was contained within the relevant departmental Current Estimate 2006/2007 and Base Estimate 2007/2008 reports. With the exception of £65,000 in the Children and Young People's budget that would not be achieved, and £600,000 within the Regeneration budget that the Cabinet had agreed to fund from balances, all SRE savings targets had been met.
Of the gross SRE savings, he reported that £1.2m represented an allocation for re-investment into services. To date, £660,000 had been agreed by the Cabinet/Executive Board for 2006/2007, with £540,000 still to be allocated. A member expressed the view that the SRE savings identified by Departments were not necessarily related to SRE, and he requested more clarity in relation to future savings plans. However, the Deputy Chief Executive commented that the 4th year target 2007/2008 would likely be superceded by targets set by the Cabinet for the reduction of costs by £30m over the next three years.
Minute Decision :
Resolved - That the report be noted.
Minute 62 - FINANCE DEPARTMENT - CURRENT ESTIMATE 2006/2007 AND BASE ESTIMATE 2007/2008
Minute Text :
The Director of Finance reported that following the budget meeting of the Council on 1 March 2006, the Base Estimate for 2006/2007 was set at £15,272,300. He set out progress with regard to Service Re-engineering savings and bridging finance, and he reported that as a result of decisions of the Cabinet/Executive Board, and variations during 2006/2007, the Current Estimate was £13,394,000. The Base Estimate for 2007/2008 was £14,878,900 and had been prepared assuming inflation of 3.00% for pay and prices. He indicated where variations were likely to occur, and commented that the 2007/2008 budget included a service re-engineering savings target of £653,000. No unapproved additional growth was included within the budget.
Minute Decision :
Resolved -
(1) That a further report on financial monitoring for 2006/2007 be submitted to the next appropriate meeting.
(2) That the Current Estimate for 2006/2007 and the Base Estimate for 2007/2008 be endorsed and referred to the budget meeting of the Cabinet on 19 February 2007.
Minute 63 - TREASURY MANAGEMENT - CURRENT ESTIMATE 2006/2007 AND BASE ESTIMATE 2007/2008
Minute Text :
The Director of Finance presented the Treasury Management Current Estimate for 2006/2007 and Base Estimate for 2007/2008, and he brought together the key financial issues that had been reported to the Committee during the year to date as part of the regular financial monitoring report. The Treasury Management budgets essentially related to the financing costs of asset management, with the related staffing and accomodation running costs being held within departmental budgets. Consequently, there was no service re-engineering target, and no policy options or savings which affected the budgets. The Base Estimate 2006/2007 was £14,414,700CR, and the Director reported upon variations for 2006/2007 and potential variations for 2007/2008. Significantly, he reported that, in June 2006, in order to bring public sector accounts into line with the UK GAAP (Generally Accepted Accounting Practice) standard, CIPFA removed the requirement for a notional financing charge to be applied to the value of the Council’s assets, although a depreciation charge was still required for operational assets. He reported that the net effect for the Committee was a reduction in income from capital charges of £17,443,700 in both 2006/2007 and 2007/2008, offset by decreases in other departmental budgets. The net effect was a Current Estimate 2006/2007 of £2,900,600DR, and a Base Estimate 2007/2008 of £6,398,900DR.
Minute Decision :
Resolved -
(1) That a further report on financial monitoring for 2006/2007 be submitted to the next appropriate meeting.
(2) That the Current Estimate for 2006/2007 and the Base Estimate for 2007/2008 be endorsed and referred to the budget meeting of the Cabinet on 19 February 2007.
Minute 64 - COMPREHENSIVE PERFORMANCE ASSESSMENT (CPA) - USE OF RESOURCES
Minute Text :
The Director of Finance provided details of the Audit Commission 2006 Comprehensive Performance Assessment Use of Resources judgement for Wirral. The assessment evaluated how well Councils managed and used their financial resources, and focused on the importance of sound and strategic financial management to ensure that resources were available to support the Council's priorities and improve services. It consisted of a judgement made over five themes of financial activity, known as key lines of enquiry and the Audit Commission report set out the key findings in relation to Financial Reporting, Financial Management, Financial Standing, Internal Control and Value for Money.
The overall score for Use of Resources was 2, which equated to 'adequate performance', and he commented that although the judgement for 2005 had also resulted in a score of 2, the latest assessment involved 'a harder test' than the previous year, and comparison showed significant improvements within each of the themes.
The annual assessment for 2007 would again be 'a harder test', and the Director set out those areas with increased emphasis for essential criteria within the assessment. The authority was already meeting some of the additional requirements for the harder test, and he submitted an action plan that would continue to be developed and reviewed, which aimed to ensure full coverage of the Use of Resources criteria.
Minute Decision :
Resolved -
(1) That the result of the 2006 Use of Resources assessment be noted.
(2) That the action plan responding to the issues raised by the Use of Resources assessment be endorsed.
Minute 65 - EXEMPT INFORMATION - EXCLUSION OF MEMBERS OF THE PUBLIC
Minute Text :
Minute Decision :
Resolved - That in accordance with section 100A (4) of the Local Government Act 1972, the public be excluded from the meeting during consideration of the following items of business, on the grounds that they involve the likely disclosure of exempt information as defined by the relevant paragraphs of Part 1 of Schedule 12A (as amended) to that Act.
Minute 66 - TENDER REPORT - PROVISION OF MICROSOFT SOFTWARE
Exempt :
NOT FOR PUBLICATION - Exempt by virtue of paragraph 3 of Part 1 of Schedule 12A (as amended) to the Local Government Act 1972
Minute Text :
The Director of Finance reported upon the acceptance of a tender for the supply of Microsoft software from Phoenix Software Limited. He commented that the Council, like most public sector organisations, purchased a significant number of Microsoft software licences each year, and in recognition of this Microsoft introduced its ‘Select’ agreement, a discount scheme for Local Authorities and educational establishments, several years ago. Since Microsoft did not supply software directly to users, tenders were invited every three years from companies accredited to supply software under the terms of the Select agreement. Due to the total value of the contract this was done via the Office of Government Commerce (OGC) and the Eastern Shires Purchasing Organisation (ESPO), both having satisfied the requirements of the European public sector purchasing legislation.
Minute Decision :
Resolved - That the award of a contract for the supply of Microsoft Software to Phoenix Software for a three year period, subject to annual review, be noted.
Minute 67 - TENDER REPORT - 4 COLOUR PRINTING PRESS
Exempt :
NOT FOR PUBLICATION - Exempt by virtue of paragraph 3 of Part 1 of Schedule 12A (as amended) to the Local Government Act 1972
Minute Text :
The Director of Finance reported upon the acceptance of a tender for the supply of a Heidelberg four colour printing press to be financed from the Printing Reserve. The acquisition of the four colour press would enable an estimated £200,000 of printing currently sourced from external suppliers to be produced internally at a saving of £90,000. In response to a comment from a member, the Director indicated that he was confident the anticipated savings would be achieved. He commented that the original intention had been to purchase a refurbished press as it was felt that the cost new would be prohibitive. However, Heidelberg had offered a new press, which matched the Council's technical specifications, at a considerable discount to the list price. The new press had a 12 month warranty, compared to 3 months for a reconditioned press, and the retained value of a new machine would be greater than reconditioned alternatives. The Director considered the offer to be an overwhelming reason to choose the new press instead of a refurbished unit, and he set out the advantages of the four colour machine, which was to be installed on 7 - 9 March 2007.
Minute Decision :
Resolved - That the report be noted.
(Minutes Published: 15 February 2007)