Agenda item

Report by Head of Resources (attached).

The Committee considered a report by the Head of Resources (circulated previously) regarding the Performance and Financial Management for Quarter 2 of 2019/20.

The Accountancy Services Manager highlighted the following:

·         As at 30 September 2019, the latest forecast net budget was £12.605m, which produced a budget deficit of £0.087m.  The deficit for Quarter 1 was £0.028m.  Work would be undertaken towards reducing this throughout Quarter 3 and Quarter 4.  The measures detailed in paragraph 4.1.5 of the report were already factored in to the £0.087m deficit.  Details of all variances were shown in “Appendix A – Variations in the Revenue Budget”.

·         Operational Services have seen increasing pressure in Quarter 2 on various budgets due to increased levels of missed collections and higher levels of sickness absence.  Employee costs were currently forecast to exceed the budget by £0.229m, the main reasons contributing to this overspend were increased use of agency and overtime to cover the inefficiencies above.

·         The Head of Operational Services had outlined plans to address some of these issues by:

o   Introducing changes to the workshop to reduce vehicles off the road – The working hours of the vehicle workshop had been extended as part of a trial to increase vehicle availability and to reduce overtime both in the workshop and on the collection crews. The number of technicians had also been increased from 5 to 6 as part of the trial. Previously the workshop had been operating between 6am and 5pm with one technician in at 6am. The workshop was now operating between 6am and 6pm with two technicians in from 6am to 2pm, two from 8am to 4pm, and two from 10am to 6pm. Productivity would be closely monitored to establish the level of repairs/maintenance that were undertaken between 6am and 7am and 3pm & 6pm (the vehicles need to be available to the collection staff between 7am and 3pm). The intention was to complete more work outside of core hours and to minimise reduced vehicle availability from breakdowns and maintenance. This in turn would reduce/remove the need for collection crews to work beyond 3pm or on a Saturday to “catch up” due to the lack of vehicle availability.

o   Challenging the resource allocation across all Works and Recycling manual sections had identified that the street cleansing team could be reduced by 2 (over the winter months) and they will now be redeployed to assist with cover on the refuse and recycling services which in turn will see a positive reduction in the number of agency staff used for cover. In addition, an analysis of winter tonnages had been undertaken for the green collection service. Resource requirements have been challenged across the 10 day collection cycle and crew sizes have been reduced accordingly (in consultation with the staff).  This created a pool of staff that would now be redeployed to cover holiday and sickness across black and recycling services which would produce a positive reduction in agency support. Weekly usage of agency and overtime would now be tracked against the revised projections.

o   The average number of days lost to sickness in Works and Recycling was currently 16.3 days per person compared to 11.1 days per person in 2018/19. The budget included an average of 10 days per person so the increased level of 16.3 was placing an adverse pressure on the budget which was being addressed by Officers of Works and Recycling working closely together with Human Resources to reduce current levels by reviewing each individual case, referring staff to Occupational Health for up to date medical advice on staff capability. All sickness absence reviews would be updated, staff targets would be set and monitored and the Capability Policy would be used to reduce absence levels.

·         The sale of recyclable materials was an uncontrollable variable where there had been a recent decline in the income, in particular cardboard and paper, current projections show an income deficit of £0.090m.

·         The Shared Savings Scheme income was the Council’s 50% contribution from Devon County Council savings from the reduction in residual waste collected. The £0.028m additional income was the estimate based on current activity and estimated savings per tonne.

·         There had been a reduction in the forecast planning fee income of £0.190m due to a reduction in the larger applications received, this was in line with other authorities experiencing the same pressure. A further decline in large applications could worsen this projection.

·         At 30^th September 2019, it had been assumed that £0.200m increase to the business rates growth already factored into the budget, the growth was now estimated at £1.702m, this estimate is based on the update received from the Devon-wide Pool.

·         “Appendix B – Movement in reserves and Balances” detailed the movements to and from earmarked reserves in 2019/20.

·         Full details of the Strategic Contingency Reserve movements and commitments were detailed in “Appendix C – Strategic Contingency Reserve”.

·         The 2019/20 to 2021/22 Capital Programme was detailed in “Appendix D – Capital Programme”.

·         A capital funding bid for a further £0.030m was submitted to the Project Appraisal Group (PAG) in relation to Refurbishment of Lower Lyndale Public Toilets, Lynmouth. The project was to be funded from the repairs fund. This project had been scored medium to high and had been put forward by the Project Appraisal Group.

·         Variations to the 2019/20 Capital Programme as detailed in paragraph 4.4.4 of the report.

·         The revised Capital Programme for 2019/20 taking into account the budget variations was £9.012m.

·         Actual spend on the 2019/20 Capital Programme, as at 30 September 2019 was £2.408m. A number of the larger schemes were due to start shortly.

·         The overall Capital Programme for 2019/20 to 2021/22 was £30.471m.

·         The Programme of £30.471m was funded by Capital Receipts / Borrowing (£14.056m), External Grants and Contributions (£14.010m) and Reserves (£2.405m).

·         Release of Funds from the 2019/20 Capital Programme as detailed in paragraph 4.4.12 of the report.

·         Treasury Management, Debt Management and General Debtors as detailed in paragraphs 4.5 – 4.7 of the report.

·         Performance indicators as detailed in Appendix E.

In response to questions, the Head of Operational Services highlighted the following:

·         The service changes to Black and Green waste collection rounds due to the opening of the Transfer Station and in-vessel composter had resulted in an increase in the number of missed collections and employees having to work outside of normal working hours.

·         Changes had been made to the operational hours of the vehicle workshop to reduce vehicles off the road which had been implemented four weeks ago.

·          The sickness levels of employees was higher than expected and higher than the previous two years.  Work was being undertaken with Human Resources.

·         The two fires that had occurred in the processing hall had resulted in an additional cost of £32k due to the impact on collections and collection crews being required to work outside normal working hours, transportation of plastics by haulage, replacement of the flooring, external contractor being used to process recyclable materials and replacement of the bucket on the telehandler.

·         Following the implementation of the changes to date, the number of missed collections reported had started to reduce, this may be coincidence, however more data and monitoring will be undertaken to identify the impact of the changes.  The information gained from the system review of the service was starting to be used on a daily basis to challenge costs and improve performance.  The review also identified that alternative provision of vehicles such as contract hire should be investigated.

·         Occupational Health only identified root causes for sickness absence.

·         Food waste was sent to a digester and disposed of.  The cost of which was paid by Devon County Council.  If it was not sent to a digester it would be sent to the transfer station or landfill.  The Council benefitted from the shared savings scheme.

·         The Trade Waste recycling service was priced lower to encourage businesses to recycle.

·         The number of missed collections reported for Assisted Collections was very low.  The highest number reported was 7. 

·         The number of missed collections was now being reviewed on a daily basis to identify changes needed within the system to ensure that going forward, the missed collection was not repeated.

In response to questions, the Head of Resources highlighted the following:

·         The budget for 2020/21 would include a reduction in the forecast for planning fee income. 

·         In relation to the current overspend in Operational Services, all areas within the Council’s control would be reviewed such as sickness levels and vehicle maintenance. 

·         There was a need to ensure that the appropriate control measures were in place to ensure that costs were reduced and that a realistic base budget for 2020/21 could be set.  This was monitored on a monthly basis by the Senior Management Team.

·         There was a need to ensure that the core business for Waste and Recycling was stabilised and that all outstanding income was recovered.  Rounds needed to be optimised and the trade waste service to be commercially viable.  The Trade Waste service also included a recycling service. This service would be reviewed following the completion of the review of the missed collections.

·         It was anticipated that there would be a reduction in the claims for overtime from October compared to September due to change of hours for the vehicle workshop and redirection of the street cleansing team to assist with cover on the refuse and recycling services.

·         The Vanguard review of the service looked at efficiencies within the service from a customer perspective.

·         Consideration of rolling out the three weekly collection service had been delayed by a few months to ensure that the reasons for the current level of missed collections had been addressed.

·         New claims for housing benefits had now transferred to Universal Credit.  However, the majority of current claimants remained with the Council at present.  There was cross team working across the Revenues and Benefits teams which had resulted in the reduction in the number of days taken to process Housing Benefit and Council Tax support claims.

In response to questions, the Chief Executive advised the Committee that the principle of the Vanguard review approach was to ensure good customer service and that once that principle had been resolved it would produce financial savings as a result.  The number of missed collections had impacted on the Council’s financial position.  The core service needed to be resilient prior to consideration being given to the roll out of the three weekly collection service.  Vanguard was a consultant company that had been used to provide training to a number of our staff and to commence the systems review for missed collections.  This review was now being undertaken by our employees.