To receive and consider the report of the Cabinet Member for Finance and Corporate Transformation.
Minutes:
· Report of the Cabinet Member for Finance and Corporate Transformation – Treasury Management Quarter 1 Report.
Issues Discussed:
· Report for the first quarter of the 2022-23 financial year.
· Update on the capital position - the initial programme approved in March 2022 was £133m, currently reduced to £115m. There has been various reprofiling and grants received during the year.
· £45m was expected to go out for GCRE but this is not going to happen this year so it has been removed from the capital programme.
· Inflation is having a serious impact on the capital programme. Services are trying to manage the costs but it may be that they will need to trim down their programme or reduce works to be undertaken to fit within existing budgets.
· There has been no borrowing taken out in the first quarter but some debt is maturing in the next quarter and dependent on the cash position it may be possible to repay those debts or secure additional borrowing.
· The repayment of Nant Helen S106 deposit is continuing which is reducing under-borrowed position of the Council. It is expected that the majority of this will be repaid in this financial year.
· Sundry debt has been included in the report for the first time – sets out the sundry debt at 11th July 2022. A further £1m owing from PTHB is not included in table. Total debt is around 21% of the annual generated income.
· Questions:
Question |
Response |
Sundry Debt - at first sight the level of age debt seems to be horrific. Is there any further comment in relation to this. |
The Head of Finance indicated that she looked forward to bringing the Committee more information about outstanding debt across the Council. There are some extensive debts that are quite old. There is a great deal of charging between the Council and PTHB with the Section 33 agreements. There is also historic debt which the Council is trying to resolve with the PTHB which will feature in the over 90 days debt.
There are regular meetings with PTHB officers to move things on and resolve disputes. Will bring more information to the Committee in future. There is a debt policy in place which can be shared with the Committee. |
There is also about £3m debt spread across other directorates. Is this reviewed on a regular basis. |
The Head of Finance indicated that we do work with services and there are monthly reports as well as regular meetings with officers. This may need to be stepped up and with greater focus due to cost of living pressures which are affecting the Council. |
What is the reason that debt is not being serviced. How is this being benchmarked and why are we not being paid within 90 days. Are we servicing our debts correctly by as an example sending invoices out on time. |
The Head of Finance indicated that part of the finance transformation programme is looking at various processes and the debts process is being reviewed as part of that work. The starting point is raising invoices as soon as possible and the review should be able to monitor how quickly this is happening and make the whole process more efficient. |
Millions of pounds have been paid to the Council by Welsh Government for the GCRE project. Is there a question about the legality of the Council accepting this funding in advance of an identified need. Is this sum also ring fenced, as some of the funding has been reclaimed. |
The Capital and Financial Planning Accountant indicated that there are two different elements to the site. The first is a S106 agreement (£19.5m) for the reinstatement of the site which is held for Celtic Energy and as they backfill we are repaying that money. The second element is for the GCRE testing facility and that loan funding was provided in March 2020 by Welsh Government. This was audited as part of the Council’s accounts. We did expect to have paid some of this back by the end of last year but we are still holding this funding.
The Head of Finance indicated that there were some confidential reports shared with the previous committee which could be circulated to the Committee. A further report will be presented to the Committee and the Finance Panel to update Members. All of this is under a specific agreement and we are complying with the terms and conditions of that agreement. This will be reviewed by Audit Wales as part of their audit work. |
In respect of the debt position with PTHB. What is the conflict resolution process as large sums of money are involved. |
The Committee received assurance from the Head of Finance that in terms of PTHB this is being dealt with at a very senior level by the Leader and senior officers in the Council with senior officers at PTHB. |
What debts do we owe as well so that we can have a balanced picture. |
The Head of Finance indicated that creditors information can be provided and included in the report. |
Short term debtors has jumped from £50m to £75m in the last year, most of which was grants promised from Welsh Government but not paid by year end. The Committee needs to have a closer look at the composition of this debt on a more regular basis. |
Noted. |
The report is alarming at first look. What was the trigger to look at this now as it was not considered previously. Due to Covid has this debt increased or not been addressed by other organisations due to Covid implications. Has debt always been this high or has it grown over that period of time, as if it was growing it is of concern that we should have been looking at it previously. |
The Head of Finance indicated that why it has been included, this is part of the ongoing improvements from the finance perspective, with a drive to give all committees more comparative and benchmarking data. This has also come out of discussions with the Chair around good practice. There is always a consistent level of debt in the organisation and trends will become evident as the Committee sees the reports. The level of historic debt with PTHB has increased due to disputes which are trying to be resolved.
The Chief Executive indicated that the level of debt with PTHB goes back to a change of policy in the 1990s. Discussions are ongoing with PTHB and there has been a commitment by both organisations to seek to resolve all outstanding issues by the end of this calendar year. |
Appendix B – purchase cards. These are still operating at unacceptable levels of error. What is the latest position. |
The Head of Finance indicated that there is a clear policy in place. We do have the ability to withdraw cards from individuals who consistently make errors.
The Capital and Financial Planning Accountant advised that about £1m per month is going through the cards. Cards are blocked until users resolve the issues and errors and we will continue to do so. |
Outcomes:
· Report Noted.
· Sundry Debt – in future reports can visual indicators be included so that the Committee can track trends.
· Debt policy to be shared with the Committee.
· GCRE – previous confidential reports to be shared with the Committee.
· Confidential briefing with the CEO of GCRE to be arranged for the Committee.
· Include creditor information (debt owed by the Council) in the sundry debt report as well as information about short term debtors.
Supporting documents: