The Director of Corporate Services, Caroline Holland, introduced the report and summarised the content.

Revenue budgets

In response to a question about the extent to which overly cautious forecasts by some budget managers are cancelled out by others who put forward unachievable savings, Caroline Holland said that finance officers work closely with budget managers to provide assistance and challenge to improve forecasting and delivery of savings.  The Head of Accountancy, Bindi Lakhani, added that there were no significant budget areas in which large budget variances occurred continually and that finance officers question underspends as well as overspends.

Caroline Holland provided additional information in response to questions about service budgets:

Environment and Regeneration

The underspend on waste services was partly due to the council’s unexpected involvement in the testing phase of the ERF (energy from waste) facility which led to one-off savings of £1.1m.

Work is underway to improve the IT system for residents to report environmental and other issues and this will be integrated with Veolia’s IT systems.

The transport services overspend and associated recruitment issues will be examined as part of the officer review of this service.

Children Schools and Families

Merton is not alone in experiencing a volatility of demand in placement and SEN transport budgets. Officers are examining the offer being made to young adults as a result of the Care Act requirement for responsibilities to continue until the age of 25. Consideration is also being given to the best way to meet the growing demand for special needs school places.

Officers are looking closely at the children’s social care budget to assess whether these pressures can be met within budget or whether there is a case for action similar to that taken for the adult social care budget. The Director reminded members of the requirement for the council to set a balanced budget overall.

The negative balance on the dedicated schools grant (DSG) reserve is likely to increase. A number of councils, including Merton, have jointly written to ask the government for additional funding to meet the DSG budget pressures. If this is not successful, the council may be forced to use the General Fund reserves.

Miscellaneous debt update 

The Head of Revenues and benefits, David Keppler, introduced this part of the report and drew members attention to the new table at paragraph 3.24 that shows the value of housing benefit overpayments created and collected by year.  David Keppler said that the higher amount collected in 2018/19 was partly due to the provision of improved and more timely data from the Department of Work and Pensions so that adjustments can be made to payments and, where applicable, attachments applied to earnings.

Members were pleased to note that the overall collection rate of sundry debt in 2018/19 now stands at 92%.

Reserves

Caroline Holland and Roger Kershaw, Assistant Director of Finance, provided information and explanation in response to members questions.

The approach taken to each reserve will depend upon its purpose and use. Also, the availability of funds for investment or other use, such as creating revenue streams, will depend on provenance and purpose – for example, government grants are generally given for a specific purpose and remain in the reserves budget until spent.

The draft accounts show that the council has £60m investments and sets out the strategy for use. The council considers options to maximise investment income whilst protecting its capital – the housing property company is one way of doing this. The council also uses cash to reduce debt charges on the capital programme. The financing of the capital programme is set out on page 66 of the 2019/23 Business Plan – copies of which were given to task group members:

https://www.merton.gov.uk/assets/Documents/Business%20Plan%202019-23%20%28Web%20Version%29.pdf

The council’s approach is reviewed quarterly as part of the treasury management strategy and capital programme.

Caroline Holland undertook to include detailed information on funding as part of the task group’s deep dive into the capital programme. ACTION: Director of Corporate Services

Narrative Statement

Task group members praised the clear and helpful language used in the Narrative Statement (Appendix 6) and suggested that the text could be used in wider communication to staff and residents on budget issues.

Establishment control and vacancy reporting

Members noted the stability of the data.

In response to a question about recruitment and the offer made to attract staff to the authority, Caroline Holland said that the offer is set out on the council’s website and includes local government pension, flexible working and the  employee assistance programme as well as information about the council’s ambition and reputation.