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

General questions

In response to a request for trend analysis of departmental spending, Caroline Holland said that it would not be meaningful to go back more than four years due to changes that had taken place in departments.

Caroline Holland explained that the council does not do zero based budgeting. The budget rolls forward year on year with adjustments made for pay and price inflation, growth and savings.

The council has an overall risk register that is reported to the Standards and General Purposes Committee and to Cabinet. Financial risks are included within the general register, there is no separate register for financial risk.

Caroline Holland outlined the council’s approach to building up and drawing down on various reserves. There is an annual report to Cabinet on the council’s reserves that is also received by the Overview and Scrutiny Commission.

Members expressed interest in looking at the accuracy of service expenditure forecasting in more detail and in understanding the processes used. Caroline Holland said that the table on page 7, showing the forecast at each month end over the past four years, could be produced for each department.

The Merton Improvement Board oversees the council’s transformation programme, including a programme of Lean reviews that have been identified by Directors. Members expressed an interest in receiving an update on learning from lean reviews.

Merton’s membership of the South London Waste Partnership has resulted in significant financial savings and other benefits including better information on the waste rounds.

The external auditors are still finalising the accounts due to an issue with valuations.

Revenue budgets

Caroline Holland provided additional information and clarification in response to questions:

Corporate Services

The forecast over-achievement of income by Merton’s bailiffs is largely due to an increase in the number of parking warrants issued.

The underspend in HR, partly due to the level of vacancies, has not had an impact on the council’s ability to recruit to other services.

Environment and Regeneration

The underspend in property management was forecast at £272k in December and revised in subsequent reports to Cabinet. The sheer number of reviews made this difficult to forecast. Progress has been made in relation to the backlog.

The work of the council-owned property company, Merantun, is at an early stage and is reported to Cabinet’s Property Sub-Committee.

Children Schools and Families

Members expressed concern at the level of predicted overspend and questioned the decision not to allocate monies for the unfunded budgets for un-accompanied asylum seeking children and no recourse to public funds. Caroline Holland said that work was underway to identify efficiencies and look at the contributions made by the Clinical Commissioning Group and NHS England that she anticipated would reduce the level of forecast overspend during 2018/19.

Community and Housing

In response to a question about why there had been a forecast overspend from the start of the financial year, Caroline Holland said that the forecast level of overspend had been a surprise and was associated with pressures in the cost of temporary accommodation and with implementation of requirements arising from the Homelessness Reduction Act.

Capital budget

Slippage is the practice of moving money that has not been spent in one financial year into a future year(s) if the funding is still required for that capital project. Proposed slippage is taken to Cabinet for approval.

The council uses the most cost effective way of funding the capital programme, namely capital receipts, grants and reserves rather than external borrowing.