The Committee considered the report of the Head of Finance and Customer Services setting out the risk assessment of the budget strategy 2012/13 onwards.  It was noted that the risk assessment considered operational risks rather than strategic risks and as such the actions to mitigate these risks would form part of the Finance Section’s service plan for 2012/13 onwards.  Specific reference was made in the report to the key elements of the monitoring and control processes in place to identify the emergence of factors that triggered these risks.

The Committee asked a number of questions of the Officers relating to the reasons for the underspend of just over £0.4m against the profiled budget and whether “underspend” was the correct word to use as it implied slippage; the implications of the provisional formula grant settlement and the planned localisation of business rates and potential top slicing of the baseline to fund New Homes Bonus; the use of the New Homes Bonus primarily to mitigate the cash flow risks currently inherent in the Capital Programme (thus reducing the risk profile to D III); the action to be taken to mitigate the impact of additional budget pressures arising from the introduction of Universal Credit and the possible recommendation of a zero percent increase in Council Tax and acceptance of the Council Tax freeze grant for 2012/13; the value of the two unexpected asset sales (Cemetery Cottage and Raigersfeld Lodge totalling £440,000), the receipt from Golding Homes from Right to Buy sales (£90,000) and the receipt from HM Revenue and Customs in relation to a VAT Rebate (£80,000); the results of the consultation on the potential savings available from variations in the level of customer service; and the risks associated with Pension Fund changes.

The Committee indicated that it understood the risks associated with the limitation of Council Tax increases, but wished the Cabinet to give consideration to the consequences of any decision to accept the Council Tax freeze grant for a second year before making that recommendation.  The Committee also indicated that it wished to receive further information as to how it was proposed to find the resultant increase in savings required.

RESOLVED:

1.  That the Cabinet be recommended to agree the risk assessment of the budget strategy 2012/13 onwards subject to (a) the risk profile in relation to capital financing being amended to D III to reflect the proposed use of New Homes Bonus funds to mitigate the cash flow risks currently inherent in the Capital Programme and (b) consideration being given to the consequences of any decision to accept the Council Tax freeze grant for a second year before making that recommendation.

2.  That details of how it is proposed to find the increase in savings required as a result of any decision to accept the Council Tax freeze grant for 2012/13 should be circulated to Members of the Audit Committee for information.