Agenda item

To consider Council performance in the second quarter of the year in regard to Key Performance Indicators, Revenue and Capital Budget Monitoring and Risk Management.

Members considered the performance in the second quarter of 2019/20 of the Council’s Service Indicators, Revenue Budget Monitoring, Capital Budget Monitoring and Risk Management.

The Portfolio Holder for Corporate Direction and Governance, Councillor V. Lewanski gave an overview of progress to date on Key Performance Indicators (KPIs) and Risk Management from July to September 2019.

Of the 14 KPIs that were reported on this quarter, 10 were on target. The council was unable to report on one performance indicator (KPI 1 levels of self-service transactions) due to a systems upgrade; one indicator (KPI 4 on homelessness) was outside the direct control of the Council. Two KPIs did not meet their target – KPI 2 (Total number of residential completions) and KPI 12 (increase in numbers of trade waste accounts).

The target for the first (KPI 2) was 230 and the actual was 122. This continued the trend from the first quarter. It was due to the low total number of completions caused by the phasing of some major developments, in particular finishing building flats, which can take 12 months or longer to be completed. As the work on buildings that started in 2018/19 was high in comparison to previous years, this should lead to higher numbers of completed buildings in the next half of the year. At the end of quarter 2 there were 2,041 units under construction, of which 56 began construction during the quarter.

KPI 12 was below the target of increasing the number of active trade waste accounts  by 15 and, in fact, 11 customer accounts were closed due to non-payment of invoices. Overall however, customer numbers remained healthy.

There were no new strategic risks to report in the Risk Management section.

Members made the following observations in the debate that followed:

·       Levels of self-service transactions – Members discussed the measurable benefit of reviewing and monitoring the levels of self-service transactions completed online. It was noted that two of the three measures could now be reported on. These were: paying a parking fine which was now exceeding the 80% target with 97% reports carried out online and purchasing a new/additional bin with 92% requests carried out using the online service. While the Council’s strategy was to move these transactions online, it was recognised that not all residents could do this as some did not have internet access. However, it was fundamental to the Channel Shift Strategy to know how many people were using the council’s online services and to move away from requests by telephone. These were high-volume transactions and the public’s online use of these services freed up staff resources to help residents with queries that were more suitable for answer by telephone. Members recognised that these were good results in line with the changes to internal processes. Members asked for the percentage of total self-service transactions that were made online. A written response giving further information would be provided to Members.

·       Trade waste – As the number of trade waste accounts had fallen by 11, Members asked if there was promotional activity that could be done to try and gain more customers and therefore more commercial revenue. It was noted that this was a discretionary service which the Council did not have to provide. It was a competitive market, but the usual communications channels were used to let businesses know about the service.  It was noted that more contextual information would be useful to give an overview of how many and types of customers the Council had to understand more fully the performance of this service. Members asked if the information could show what business had been gained and what had been lost and remedial action taken as well as what the Council could do proactively to win contracts. A written response would be provided.

·       Green waste – Members asked why KPI 13 – the target to increase the number of green waste bins – which was above target for the year – had dropped from 346  to 274 customers in the last quarter with a net loss of 73 in the last three months. It was identified that numbers fluctuated throughout the year depending on the season. Members asked if they could see the percentage and spread of residents taking-up use of green waste bins in the borough. More narrative would be provided for example in green waste as additional contextual information, a matter which had been raised in the Member workshop looking at developing KPIs in 2020/21.

·       Working group on KPIs –Members who attended the KPI workshop to develop performance indicators for 2020/21 said that they had made detailed comments and suggestions. They had discussed areas that were being raised by Members such as including more background and contextual information. The group had considered questions such as whether KPIs were sensibly achieving the aim of improving the Council’s services. Members wanted to understand the information behind the performance targets and what the Council could do about it. KPIs were important for Councillors to be able to report back to residents what services had improved and how services were keeping on track. It was noted that the revised KPIs for 2020/21 would be discussed at the February meeting of Overview and Scrutiny.

·       Strategic risk – financial sustainability – Members asked about this strategic risk and the statement that the Council’s ability to generate income from investments may be restricted by changes in regulations and codes of practice. It was noted that this reference referred to emerging guidance nationally about borrowing money for capital investment and what was prudent to borrow. The Council was mindful about ensuring it was compliant with emerging guidance and making sure decisions were taken in this context.

Members next considered the performance in the second quarter of 2019/20 of the Council’s Revenue and Capital Budget Monitoring.

The Portfolio Holder for Finance, Councillor T. Schofield, gave an overview of the Budget in Quarter 2. It was noted that a new format for the summary report gave more detail than before and highlighted significant variances with explanatory text included in the report pack.

The forecast outturn for services at the end of Q2 was £132k (or 1 per cent) lower than the management budget with the overall budget forecast, including central items, being £1.084m (or 6.3%) lower than the management budget for the year. This was an improvement compared to an overall forecast underspend of £774.4k (or 4.6%) lower than budget reported in Quarter 1. This change related to a better understanding of the likely use of contingencies at this point in the year. Significant overspends were reported in three areas: Finance (due to additional work relating to major projects and using interim staff to cover vacancies and improve finance processes), Benefits and Local Taxation (due to loss of DWP grant and additional consultancy and printing costs) and the Harlequin (due to a delay in the opening of the cinema and higher staff costs).

Budget underspends were due to vacancies in the management team and in Legal services. Property and facilities were better than budget due to new rental income from an acquisition in Salfords and income from Refuse and Recycling is higher than budgeted. Central items were £952k better than forecast mainly due to unallocated contingency budgets.

The Capital Programme Monitoring report for Quarter 2 showed that forecast expenditure was £43.7m which was £4.8m (or 9.9%) below the approved programme for the year. This was due to projected slippage on projects such as Marketfield Way development and Preston Park regeneration.

Members thanked officers for the new-look reports and had a number of questions and comments in the discussion that followed:

·       Harlequin Cinema –Members said they had raised the issue of delays in opening the refurbished cinema at the Harlequin in previous meetings. Members asked whether additional costs associated with the delays might be recovered from the contractor. A written answer would be provided to Members.

·       Regeneration of Marketfield Way, Redhill  – it was clarified that the Council would take possession of the site just before Christmas and the enabling works (which included demolition work) were due to commence in January 2020.

·       Pensions contingency – it was noted that in the Central items of the Revenue budget, there was a pensions contingency budget of £200k which was unallocated. It was identified that the employer pension contributions were set every three years. The Council was currently reviewing the outcome of the 2019 pension fund revaluation and part of that consideration would be whether there is a requirement to retain this contingency for future years. This would be set out in the 2020/21 budget update report that is scheduled to be presented  to the Committee at its 23 January 2020 meeting.

·       Headroom contingency – Members noted that £835k was unallocated to this budget as part of the Central items and that there has not been a requirement to call on it so far this year. They asked if it could be confirmed how this compared to recent years. It was identified that as part of the Revenue Budget Outturn 2018/19 report, as discussed at previous meetings, the contingency had been used for one-off bank reconciliation costs in 2018/19.

·       Air Quality Monitoring Equipment – it was noted that this service (to pay for staff and equipment to monitor air quality around Gatwick Airport) attracted both revenue and capital funding. Members asked for more information about funding for this service. It was identified that the Council was negotiating with Gatwick Airport to secure additional budget, however, the air quality would continue to be monitored as usual and the budget reflected this service.

·       Payment to external auditors – Members asked about the overspend in the finance area and if this included an additional fee from the Council’s external auditors for reviewing the accounts for 2018/19. It was identified that no additional charge had been received from the auditors to date and officers would report back to Members if there was a proposal to levy an extra charge. The costs referred to in the report covered the additional work required by the finance team to address issues raised by the new auditors. Members asked for a written breakdown of items in the Finance area which resulted in the forecast £437k overspend.

·       Legal services – it was notedthat legal services were forecast to be under budget for the first time in about five years. Members asked if this was because there was less legal activity and fewer projects. It was noted that this underspend was partly due to staff vacancies. Also, the new Head of Legal and Governance had commissioned legal advice only when necessary which had brought rigour to the legal services budget.

Members noted these observations which they would ask the Executive to consider when discussing the Revenue and Capital Budget Monitoring at its next meeting in January.

RESOLVED: that the Quarterly Performance Report (Q2 2019/20) be noted and any observations of the Committee taken into consideration by the Executive at its meeting on 30 January 2020.