Agenda item

To submit the report of the Head of Finance.

Submitted - the report of the Head of Finance Department noting that in accordance with the requirements of the Local Government (Wales) Measure 2011, that the Audit Committee was expected to scrutinise some financial matters including budget monitoring reports, when appropriate.

The Cabinet Member for Resources set out the context and elaborated on the content of the report submitted to the Cabinet on 22 November 2016. Attention was drawn to the following decisions for the attention of the committee to scrutinise -

“To accept the report on the second quarter review of the Revenue Budget (position as at 30 September 2016) and consider the latest financial situation regarding the budgets of each department / service, and ask the Cabinet Members and the relevant heads of department to take the appropriate steps regarding matters under their leadership/management.

·        To transfer (£135k) from a corporate budget to the Adults, Health and Well-being Department to finance the additional costs resulting from the change in charging for the first six weeks of residential and nursing care.

·        To allow the Regulatory Department to use (£200k) of their underspend to finance specific plans to improve the condition of car parks.

·        To transfer (£300k) from the Regulatory Department to the Corporate Redundancy Fund to assist with the changes facing us as a Council.

·        To harvest (£300k) from the favourable Council Tax collections, and (£290k) from the Benefits underspend, together with (£200k) of the underspend included within 'Other', and transfer as follows:

-     use (£20k) of the underspend as a financial contribution to the independent Harlech Swimming Pool as a one-off bridging payment for the period to 31 March 2017, in accordance with the Cabinet decision on 4 October 2016.

-     use (£135k) to finance the financial obligations of the change in the Care Act 2014 by the Adult, Health and Well-being Department.

-     the remainder of (£635k) to be set aside in the Transformation Fund”

The Head of Finance Department explained that finance harvested was used for Council priorities. The Departments and Cabinet Members were thanked for their budgetary management.

During the ensuing discussion officers responded to members' enquiries as follows:

·        In terms of the fact that closing tourist information centres could affect the income received in car parks, a substantial impact was not anticipated as there was a movement towards booking accommodation on-line;

·        In terms of the Maritime Service's overspend of £108,000, Hafan Pwllheli had been taken in-house in 2007 prior to the financial crash in 2008, and it could not be anticipated whether or not the financial position would have been better if Hafan would have remained within the management of a private company as there was less demand with more supply. The Economy and Community Department could be asked to examine the option of externalising Hafan, but the situation had become more complicated since the time of transfer, as the management of Hafan and the Harbour had been combined, and the emergence of Plas Heli;

·        That parking fees made up most of the income under the 'Parking and Parking Enforcement Services' heading rather than parking fines. After increasing the number of car parks where a fee was charged, as well as the high number of visitors, income had increased;

·        Following the permanent appointment of the new Head of Department and Senior Managers, that the Adults, Health and Well-being Department was re-designing its savings programme. It was ensured that the underachieving situation was being addressed;

·        That underspend was anticipated under the Post-16 Services heading in the Children and Supporting Families Department following a current reduction in the demand for Post-16 support plans.

A discussion was held on Hafan Pwllheli noting that the Economy and Community Department should be asked to provide information on the situation prior to when it was taken in-house and on the current situation in terms of the financial position, user numbers and moorings. The Audit Manager noted that an audit was being held in Hafan Pwllheli and one element considered was the arrangements for paying fees and the difficulties in terms of establishing a direct debit payment arrangement which was likely to have an impact on income.

A member noted that the situation should be examined in terms of taxing caravans as some caravan sites were open throughout the year and that their owners used services but did not contribute bearing in mind that the Council was considering charging a premium of 50% on second homes. In response, the Head of Finance Department noted that the Council had the right to tax a property that was a second home but in terms of caravans they were included in the caravan site's assessment in its entirety in terms of business rates. It was added that a letter had been sent requesting powers for the Council to charge a different tax but only powers in terms of second homes had been received. The Council was operating within the regulations.

The Cabinet Member for Resources noted that the business rates system was a national system. A member noted that a scrutiny investigation should be held in relation to caravan site tax arrangements similar to the one undertaken on holiday homes. In response, the Head of Finance Department noted that the Holiday Homes and Taxes Scrutiny Investigation had suggested that the Council used powers to charge a premium on second homes and that the Council used a proportion of the income tax to provide affordable housing. It was noted that this would assist the Welsh Government to ensure more affordable housing for local people and it would be attempted to convince them with other aspects of the rateable agenda asking for planning powers for the Council in respect of domestic housing used as holiday homes rather than the existing arbitrary system.

In response to members' concerns in terms of charging a premium on second homes, the Cabinet Member for Resources noted that the Holiday Homes and Taxes Scrutiny Investigation had investigated the concerns in detail.

The Senior Manager - Revenue and Risk explained that caravans that had been granted planning permission to be used as a home were taxed in accordance with Council Tax arrangements and a premium could be charged, whilst a premium could not be charged on any caravan where a planning condition prevented individuals from living there for at least 4 weeks a year.

RESOLVED:

(i)     to note the situation and the relevant risks in the context of the Council’s budgets and its departments;

(ii)    to ask the Economy and Community Department (with support from the Finance Department) to submit information to the Committee on Hafan Pwllheli prior to when it was taken in-house and on the current situation;

(iii)  to ask the Corporate Scrutiny Committee to consider undertaking a scrutiny investigation in relation to caravan site tax arrangements.