Issue - items at meetings - Targetted Budget Management (TBM) 2015/16 Month 5

Report of the Interim Executive Director for Finance & Resources (copy attached).

1)    That the Committee note the forecast risk position for the General Fund, which indicates a budget pressure of £7.658m. This consists of £7.203m on council controlled budgets and £0.455m on the council’s share of the NHS managed Section 75 services.

2)    That the Committee note the forecast for the Housing Revenue Account (HRA), which is an underspend of £0.529m.

3)    That the Committee note the forecast risk position for the Dedicated Schools Grant which is an underspend of £0.015m.

4)    That the Committee note the forecast outturn position on the capital programme.

5)    That the Committee approve the capital programme variations and reprofiles in Appendix 3 and new capital schemes in Appendix 4.

6)    That the Committee approve the Virements from Housing Related Support Services as set out in paragraph 6.2.

7)    That the Committee approve delegated authority to the Executive Director of Finance & Resources and the Head of Law to make a loan of £0.061m to the Brighton Open Market Community Interest Company (CIC) as set out in paragraphs 6.3 and 6.4 subject to satisfactory terms and a Recovery Plan being agreed.

49.1       The Chair noted that he had agreed to allow a late deputation from the traders of the Open market in relation to recommendation 2.7 in the report; he asked Mr Asaduzzaman to come forward and put his deputation to the Committee.

49.2       Mr Asaduzzaman explained that he and the two other directors on the board were under pressure to accept the loan from the Council as means to prevent the Open Market going into insolvency. Due to confidentiality the directors had not been able to discuss the loan with the traders until late in the previous week. The traders were concerned about further borrowing given there was already a mortgage on the new building; however, it was acknowledged that the position of the Council was to protect the market. The traders had met and taken a vote on further borrowing and were overwhelming against; there were also concerns that the high running costs left little room to progress the market as a shopping destination.

49.3       Mr Asaduzzaman went on to add there was little confidence in the management agent. Footfall at the market was at a low and traders were finding it increasingly difficult to pay their rent and service charges. There were also concerns in relation to the recovery plan as this proposed further expenditure to boost trade; instead of cutting costs associated with the management agent. There were concerns in relation to transparency of the agent as they had refused requests on the part of the traders to inspect the accounts; the traders were reluctant to agree further borrowing when they felt they were not in possession of the full facts.

49.4       RESOLVED: That the Committee note the deputation.

49.5       In response to some of the points raised in the deputation the Acting Executive Director for Environment, Development & Housing stated that the Council had been working for a number of years to build and establish the open market as part of the community asset transfer. Whilst there had been a good take up of the permanent stools the higher business rates had led to a reduced take up of the temporary stools and prevented the market from breaking even financially. The request for the loan had come from the board of directors in response to the cash flow issues; others measures would also be considered as part of the recovery plan such as weekend themed markets to help boost trade. In terms of the management agreement this had been agreed by the board of directors and it was not within the Council’s remit to become involved; however, they would seek assurance on the recovery plan before fully agreeing to the loan.

49.6       Councillor G. Theobald expressed concern in relation to the content of the deputation.

49.7       The Interim Executive Director for Finance & Resources highlighted that the recommendation sought approval for her and the Monitoring Officer to grant the loan subject to satisfactory terms and a recovery plan.

49.8       Councillor A. Norman thanked Mr Asaduzzaman for coming and giving the deputation, and added that the market was an important facility for the city. Given the reluctance of the traders to accept the loan she queried if the Committee should agree the recommendation. In response the Acting Executive Director for Environment, Development & Housing clarified that the aim of the loan was to increase trade at the market and use this to address income challenges.

49.10    The Committee agreed to move further discussion of the Open Market to Part Two later in the agenda to consider exempt information as defined in paragraph (3) of schedule 12A, Part 1, to the Local Government Act 1972 (as amended).

49.11    Councillor Hamilton noted his increased concern in relation to the budget positon, and he hoped that the position at month 6 would be improved given the impact of the new tighter financial controls. He recognised that the majority of the overspend was in Children’s and Adults’ Services, but many of the functions performed were statutory. He added that the overspend needed to be brought back into line as the 2016/17 budget setting approached.

49.12    Councillor G. Theobald welcomed the controls that had been now put into place, and hoped that the budget could be brought back into a sustainable position. In response to queries about the scrutiny of Adult Services, in the context of the Health & Wellbeing Board, it was clarified that this fell within the remit of the Overview & Scrutiny Committee.

49.13    In response to queries the Executive Director for Children’s Services explained that the total number of children in care was reducing and the Council was working to reduce the numbers in higher cost placements; however, it was vital to remember that whilst the financial model made a prediction, the very real life nature of this work was in itself unpredictable. The Executive Director also added that he was personally reviewing all cases to establish if there were any opportunities for lower cost placements.

49.14    Councillor Sykes highlighted that the administration had already overspent in a number of discretion areas, and stated his view that this was for political reasons.

49.15    Councillor Bewick stated that there needed to be recognition that much of the projected overspend in Children’s Services related to demand pressures, and the success of the MASH had led to more children being seen. He also added that previous difficult decisions in relation to the service had not been taken and there needed to be a fundamental review of the structure used to deliver children’s services in the city. The special meeting of the Committee in November would be an opportunity to prepare residents for the challenge ahead and ensure savings were delivered in a fair and equitable way.

49.16    In response to Councillor Janio the Executive Director for Children’s Services explained that benchmarking was complex, but did take place; the city had a higher than average number of children in care, but this had been the position for some time. The cost per child in care was broadly average, and it was added that the profile of the city was similar to an inner London Borough.

49.17    The Chair then put recommendations 2.1 to 2.6 to the vote on the understanding that recommendation 2.7 would form the basis of a discussion in Part Two.

49.18    RESOLVED:

1)        That the Committee note the forecast risk position for the General Fund, which indicates a budget pressure of £7.658m. This consists of £7.203m on council controlled budgets and £0.455m on the council’s share of the NHS managed Section 75 services.

2)        That the Committee note the forecast for the Housing Revenue Account (HRA), which is an underspend of £0.529m.

3)        That the Committee note the forecast risk position for the Dedicated Schools Grant which is an underspend of £0.015m.

4)        That the Committee note the forecast outturn position on the capital programme.

5)        That the Committee approve the capital programme variations and reprofiles in Appendix 3 and new capital schemes in Appendix 4.

6)        That the Committee approve the Virements from Housing Related Support Services as set out in paragraph 6.2.