Agenda item

Received a report from the Corporate Director of Finance and Commercial Services showing the first indicative picture of the Council’s revenue and capital position for 2010/11, as at the end of May 2010, and highlighting the pressures on the planned budget position that have already been identified. The report also referred to a number of proposed draw-downs from reserves to support key areas of work within the Finance and Commercial Services division.

Current service pressures are projected at £3.1m for the year and the recent announcement by Central Government of cuts across the local government sector will mean in a reduction in funding of £5.5m in 2010/11 alone.  As a consequence, the Corporate Director has extended the stringent expenditure control measures that were put in place during the last half of the 2009/10 financial year into this year and each Chief Officer has been tasked with identifying additional savings to bring the budget position back into line by the year end.  The ring-fenced Housing Revenue Account (HRA) also shows a projected end of year deficit of £862,000 which would result in a reduction in its balance to £2.6m. 

Issues raised during the discussions included:-

• The pressures already being experienced within the Children’s Placements and Legal services.  Officers outlined the principle reasons behind these issues and the steps being taken to rectify the situation.
• The ‘risk management’ and ‘staffing’ implications referred to in the report.  The Corporate Finance Controller explained the external auditing arrangements and agreed to provide Cabinet Members with a breakdown of overtime payments across the Council’s services. 
• The ‘customer impact’ implications of the financial control measures that have been put in place.  In this respect, the Corporate Director of Adult and Community Services explained that the business cases that would have supported any service reduction proposals would have covered the impact on the local community and other customers and she referred to two examples within her department.
• The potential impact on services within Barking and Dagenham as a result of the Government’s recent announcement of a cap on housing benefit.  The Leader explained that the housing benefit cap will inevitably lead to families and individuals who receive housing benefit and who live in areas where private sector rents are high, such as in Kensington and Chelsea, will have very little choice but to relocate into areas such as Barking and Dagenham and Havering where private rent levels are considerably lower.  As a consequence there will be additional demands on, for example, the Borough’s education and social services.  The Acting Corporate Director of Customer Services referred to the London-wide protocol relating to the relocation of residents from one borough to another and suggested that this protocol needs to be reviewed by London Councils in the light of the perceived outcomes, and the Leader also advised that are joint approach to lobby Government is currently being discussed with the London Borough of Havering.

Agreed, as a matter of good financial practice, to:

  (i)  Note the current projected position for 2010/11 of the Council’s revenue and capital budget as detailed in the report and Appendices A and C;

  (ii)  Note the position for the HRA as detailed in the report and Appendix B;

  (iii)  Note that the Corporate Director of Finance and Commercial Services had imposed mechanisms to reduce in-year expenditure, and set targets for departments to contribute towards the reduced resources the Council will receive in-year; and

  (iv)  The draw-down of reserves, as detailed in paragraph 3.1.5 of the report, in respect of the following:

a.  £250,000 from the IT Reserve to support Oracle Financial systems development during 2010/11;

b.  £120,000 from the Contingency to the Internal Audit budget to facilitate the necessary work to be undertaken by the Head of Internal Audit in relation to the Council’s statutory duties;

c.  £100,000 from the International Financial Reporting Standards Reserve to support the development of the required new financial reporting regime.