To consider the reports of the Portfolio Holder for Finance.
· Report of the Portfolio Holder for Finance – Financial Outturn for the Year Ended 31 March 2018
· The Committee noted that financial monitoring reports were considered by Cabinet on a monthly basis which included a projected outturn of expenditure based on expenditure to date
· The monthly report is key in monitoring delivery of savings – these are only recorded once achieved. It is proposed that the report will show two figures – the actual savings achieved and those that can realistically be expected to be achieved.
· Within both the monthly and annual reports, each directorate is highlighted and whether they are expecting an over or under spend. Reporting is carried out on an exceptions basis. The impact on reserves is also reflected.
· A separate capital report is provided
· An underspend had been achieved at year end due to a number of late grants being received (including Welsh Government grants to assist with winter pressures and transformation). Some transformation costs have been capitalised.
· Work is ongoing with managers to ensure projections are more accurate
· One of the main areas for concern is that savings delivery is only 71%
· There had been an overspend in the People Directorate, mainly as a result of CIW Inspection Report. The Children’s Services Budget has been increased by £6M for 2018/19 to meet some of the continuing cost pressures and to deliver the Improvement Plan.
· It was suggested that the process was reactive and should be more proactive. Further clarity was needed regarding underspends and savings as underspends could be considered as serious as an overspend.
· Members also challenged the statement that the decline in savings from 79% achieved to 71% was slight – this was considered to be a worrying decline
· The underspend at year end was of concern to the committee – if this position had been known earlier it could have impacted positively on budget decisions and the level of council tax. The Portfolio Holder for Finance informed the Committee that the underspend had been used to protect the level of reserves held and provide additional resilience future years’ budgets.
· The Head of Finance stressed the need for confidence that resources were allocated where needed. Robust reporting was essential and variances should be identified early.
· The WAO reported that other authorities request reports from service areas where savings have not been achieved, detailing why these have not been delivered
· Members had concerns that debt was being rolled forward where savings had not been achieved. It was questionable whether some savings identified were achievable as it seemed that those identified as high risk in Impact assessments were frequently not achieved. The Portfolio Holder for Finance stated that unachieved savings were rolled forward as each area had to take responsibility for their budgets.
· The Head of Finance reported that savings plans for future years were already being considered by Cabinet to ensure they were deliverable and each proposal would require sign off by the S151 Officer. Savings not delivered were being reconsidered as part of this year’s budget planning – some will be removed including the £1.7M Income and Cost Improvement Board target which remains unachieved. It was noted that Powys has been reported as one of the worst performing authorities in terms of achieving savings.
· Further concerns were expressed that increasing debt or larger cuts to services would impact upon the duties placed on the Authority by the Future Generations Act
· It was essential that decisions were made in the full knowledge of the impact of any saving on services
· Reports from services would be requested explaining why savings had not been achieved
· The outturn report would be given further consideration by the Finance Scrutiny Panel