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Maidstone Borough Council
Cabinet
10 September 2008
Reference from Corporate Services Overview and Scrutiny Committee
1. Draft Budget Strategy 2008/09 Onwards
1.1 At its meeting on 5 August 2008, the Corporate Services Overview and Scrutiny Committee interviewed the Leader of the Council and the Chief Finance Officer with regard to the Draft Budget Strategy 2008/09. The draft minutes of the meeting are as follows:
“The Chief Finance Officer, Derek Williamson, gave a presentation to the Committee on the Draft Budget Strategy 2009-10 Onwards (attached at Appendix A). Key points arising from the presentation included:
· The economic downturn meant that fees, charges and capital receipts were all major risks for the coming year; and
· The capital programme now needed reviewing, as this was due to be funded from capital receipts and approximately £7 million of the planned £12.2 million capital receipts was now at risk.
A planned capital receipt highlighted in the presentation was from Hayle Place. A Councillor stated that under the original agreement, the Council was supposed to receive payment for this when planning permission had been granted, which had now happened. Clarification was requested on whether this was still the case or whether payment was now dependent on the sale of Hayle Place.
A Councillor referred to an English Heritage report that had indicated that some of Maidstone’s listed buildings, including those maintained by the Council, were in bad condition. The Leader was therefore requested to consider the use of the Large Buildings Maintenance Fund to address this.
In response to a question on the rollout of the waste and recycling scheme, the Leader stated that because the new bins had not been purchased in one load, there were now issues with bin shortages and price increases. However, the rollout of the scheme would continue, although it could be delayed.
A Councillor sought assurance that politically sensitive projects in the capital programme, for example the Leisure Centre, would not continue to be delayed. The Leader stated that the Leisure Centre was currently being pump primed by the Council and money was also being sought from the private sector.
With regard to balances, Mr Williamson explained that the budget strategy required that the level of unallocated balances be maintained at a minimum of 10% of the Council’s revenue spend. If balances were to go below this, full Council would need to be informed. Mr Williamson was also under statutory responsibility to report to full Council when it considered the budget if he believed balances were approaching an unacceptable level.
A Councillor highlighted that in the Medium Term Financial Strategy, one way in which capital programmes were prioritised was according to ‘local priorities’. It was clarified that this referred to the corporate priorities. The Leader then stated that residents were consulted on revenue spend and the revenue budget therefore reflected residents’ priorities.
A Councillor highlighted that the review of corporate assets was not due to be completed until March 2009 and suggested that in the current economic climate, it would be advisable to bring this date forward. The Leader agreed that this should be considered.
A Member asked whether the Council would need to borrow money in the future. Mr Williamson confirmed that this would need to be considered in the future, though this could be sooner if capital receipts were not achieved and the capital programme was not reduced accordingly. It was highlighted that borrowing was acceptable if the investment of borrowed money was justifiable.
A number of other points were covered during the meeting:
· A report on the funding of the disabled travel scheme would go to Cabinet in August. This would recommend that additional investment income this year should go into balances and £150,000 of this should be allocated to funding concessionary fares for the next 2 years;
· There was currently no evidence that the economic downturn had caused an increase in homelessness spend;
· Revenue funds could be used to support the capital programme, but capital funds could not be used for revenue expenditure;
· The Council’s pension contributions were fixed for three years by an actuarial review;
· The Council had a locally agreed pay deal and had therefore not been affected by recent strikes over local government pay. It was important that the Council had a pay structure that attracted and retained staff; and
· If the economic downturn resulted in an increase in uptake of benefits, the issues for the Council would be in terms of capacity, performance and reputation. Benefits were reimbursed 100% by the Government.
The Chairman thanked the Leader and Mr Williamson for their attendance and for an informative presentation.”
1.2 Following its discussions, the Committee made the following recommendations:
That:
a) Confirmation be sought on whether the capital receipt from Hayle Place was due upon sale of the land or confirmation of planning permission;
b) The Leader consider the use of the Large Buildings Maintenance Fund in light of the recent English Heritage report on listed buildings in the Borough; and
c) The review of corporate assets be brought forward in light of the current economic climate.
1.3 These recommendations have been forwarded individually to the Cabinet Member for Regeneration, the Leader and the Cabinet Member for Corporate Services respectively, however Cabinet is being informed of the comments of the Committee as part of its ongoing budget consultation work.
1.4 Recommendation (a) has been investigated by the Legal Department and the capital receipt from Hayle Place will be due on the sale of the land, rather than when planning permission is confirmed.
1.5 Recommendation (b) was considered by the Cabinet at its meeting on 13 August 2008 as part of its consideration of the First Quarter 2008/09 Budget Monitoring Report.
2. Recommendation
2.1 Cabinet is recommended to note the comments of the Corporate Services Overview and Scrutiny Committee.