To receive and consider the report of the Cabinet Member for Finance and Corporate Transformation.
Minutes:
Documents Considered:
· Report of the Cabinet Member for Finance and Corporate Transformation
Issues Discussed:
· Questions:
Question |
Response |
The council tends to borrow considerable sums in March which we do not use. This is borrowed due to potential invoices coming in on capital projects. What was the position this year.
Is the Council getting the right cash flow needs information at the end of the year which historically has not been the case. |
Local authority borrowing was taken out in August and will be repaid in the following August.
The PWLB borrowing was taken out late last year and rates for 50 year money dipped. The opportunity was taken to borrow at the low rate and hold the cash for a few months. Further sums were not taken out more since then which seemed to be the right decision at the time.
We are trying to get better forecasts for the schemes but it is difficult with significant grants coming from Welsh Government at the end of the financial years. |
Cash flow fluctuations – do we bench mark cash management with other authorities. |
No but this could be considered. |
The report states that the Council is £40m under-borrowed. Can you explain this please |
We set a capital programme and how it is to be funded, as well as identifying what grants and other funding can be gained. What remains is the sum that needs to be borrowed. There are daily or monthly cash fluctuations during the year (surplus and deficits), so there is money in reserves earning interest. The Council therefore only borrows as a last resort when we run out of cash. The capital financing requirement is the amount we should have borrowed but because of the availability of cash it is better to use this cash rather than borrow. This is how you get the under-borrowing. |
As interest rates increase is it better to borrow. |
The forecast is that interest rates will go down so we try and borrow at the most optimum time and at the best rates possible.
Because of the impact of borrowing on the revenue budget and revenue funding have been decreasing the Council has looked at other options to support the capital programme instead of borrowing. |
The capital programme shows how much of the capital programme is funded from Welsh Government grants, and the cost of capital schemes. If the Council receives a grant then any increase in cost has to be found by the Council. However, additional grants from Welsh Government at year end cannot be guaranteed, therefore this could be an additional risk for Council having to borrow more to cover these schemes. |
This depends very much on the scheme. Much of the grants relate to 21st Century schools schemes, and these are based on each individual scheme. Dialogue is kept open with Welsh Government about costs where they are part funding the scheme. The Council needs to make sure it can keep within the funding envelope.
We are unlikely to see the level of funding from Welsh Government that we have seen in past and we do not plan that will be the case. Also, an increase in construction costs will mean we will have a higher borrowing requirement. All of this will be factored into the Medium Term Financial Strategy and a conversation is ongoing with the Cabinet about the capital programme and how we finance this over 10 – 15 years. |
Appendix P72 – purchase cards – at this level of error should we be fining services or cancelling cards. |
These are all options that we have. Whilst there is a large amount on purchase cards all of this is not recoverable e.g. some of the VAT cost may not be recoverable. The majority of the issues is around VAT that should not have been reclaimed. Work is ongoing to educate card holders. The use of cards is also far safer than using cash especially in deterring fraud.
Cards can be withdrawn or cancelled where cards are misused. No disciplinary action against a member of staff has been undertaken to date but that would be a last resort. Where this involves schools, the team for schools reinforces these messages with schools. |
Schools are audited. Is this something that can be audited with schools. |
Internal Audit recognise that purchase cards are an area of potential fraud, it is an area which works efficiently but there are risks. In the audit plan for Q2 there is an audit of purchase cards which will identify the issues and what are the root causes. Schools audits do include a comment on how they use purchase cards. |
Cllr Graham Breeze left the meeting 12:08
Cllr Ange Williams left the meeting 12:30
Outcomes:
Noted.
Supporting documents: