Agenda item

Quarter 2 Performance Report - Finance & Resources


N Howcutt introduced the report. Of the 9 key KPIs (key performance indicators), 1 is currently red and is regarding the time taken for debtors to pay. This has become a regular occurrence since the onset of Covid. Due to changes in government policy on the collection of debt, debt levels have therefore increased and a larger number of clients are now on payment plans. In response to this, they are looking at changing the KPI target as well as breaking this KPI down to measure performance against new and old debt. The government's Covid policy on debt recovery for commercial property and rent has changed since October and this KPI should therefore start to improve.


The scores have not changed in the Operational and Risk Report from quarter 1 to quarter 2 and performance remains strong. There are vulnerabilities, particularly around income generated from commercial assets due to bad debt and the current economic status. Overall, the risk targets for quarter 2 have been achieved.


The Chairman referred to FIN06 on page 14 of the report, noting that the position is of end of June. He asked if it was appropriate that the report should only run up to June given that it is now November, and whether this report was now irrelevant.


N Howcutt responded that it was not completely irrelevant, though the report could be timelier. N Howcutt advised that the original agenda included the quarter 2 budget monitoring report, though this was removed due to the pay award announcement made today, as the report would've changed significantly in light of this. This report will therefore come back to the Committee next month with a more up-to-date position. N Howcutt added that comments included in the report do take the more recent economic situation into account and that there has not been a significant change since quarter 2, notwithstanding the pay award change made today.


Cllr Guest referred to FIN02a on page 10 of the report regarding the time taken for debtors to pay, and asked if there were any announcements regarding other types of debt.


N Howcutt commented that other than commercial property and CIL (Community Infrastructure Levy) payments, all other areas are achieving the target, and that the issue is primarily linked to commercial debt. As commercial debt is around 80% of overall debt, it therefore overlaps all other areas.


Cllr Guest advised that she is Chair of the Development Management Committee and asked if any actions are being taken to achieve CIL payments.


N Howcutt confirmed that there is an additional KPI regarding CIL payments and it is being monitored closely. CIL payments are generally very large and are due as soon as development starts, though this is the hardest point for developers from a cash flow perspective, and 1-2 CIL payments not being made can affect 60-70% of overall CIL payments. This is being monitored separately and has significantly improved over recent years.


The Chairman commented on the new infrastructure levy proposed by the government and asked if it would make it less onerous on developers in terms of timing.


In response, N Howcutt stated that the new infrastructure charge will come in when planning permission is approved, which will make it easier for the council team to manage as they will not need to monitor when developments have begun.


Cllr Freedman commented that the report was more reassuring than previous. On the red KPI, it was asked when this may affect commercial decisions and if there is any change in the provision of bad debt in relation to this KPI.


N Howcutt confirmed that there is no cash flow issue currently. On provision for bad debt, N Howcutt advised that they had to make more provisions during Covid and it will have no impact on the bottom line. The key is to ensure that the council liaises with commercial property partners given that they drive the local economy, and the aim is to ensure that they are sustainable and support the local economy. This may require looking at historic debt going forward and whether this can be written off or paid through longer-term payment plans.


Cllr Guest referred to RBF01 on page 16 regarding the average time taken to respond to benefit-related contact and asked what '14.64' was referring to. It was also noted that there is no RAG rating or target included.


N Howcutt confirmed that the measure is for internal performance management and relates to 14.6 working days. The benefits service is facing additional work, particularly with asylum and refugee work, causing delays to the service. The service is also receiving an increase in queries regarding potential benefit claimants. Work has been undertaken to help educate residents on when they should contact the council and signpost them to relevant organisations. There is no overall target, though individuals in the team have their own targets, and cases are looked at on an individual basis given the complex nature of some issues.


Cllr Stevens commented on RBF01 and asked if it would be beneficial for the Committee to understand how many people are involved in the days stated. The number of days had increased by 50% in the quarter.


N Howcutt noted that there is a lot of information behind the days stated and that the figure is to help give members an indication of how much time is spent on that service. There is no more resource going into the team and it is experiencing an increase in workload.


Cllr Freedman commented on the FIN06 target, noting that it was green due to not spending as much on major projects as initially planned. He asked if other projects are being discussed and decisions are being made on money between projects.


N Howcutt advised that no capital spending is on hold and that HRA capital expenditure is around 50% higher than in pre-Covid years, and the council is getting new contracts approved. On inflation, construction inflation was high before overall inflation increased and this is now starting to tail off with demand for construction reducing across the sector. There may be an impact on affordability and the medium-term capital programme may require review to decide what is affordable. This will be assessed as part of budget setting and it is currently felt that the existing capital programme is affordable and sustainable.


Cllr Suqlain Mahmood queried the process around recovering debt from local businesses.


N Howcutt confirmed that there is a debt process and policy in place and that the debt collection team will be in touch with the business if a debt hasn't been paid within 30 days. A period of time will then be set for a payment plan, and if new terms aren't met then the case will be escalated to the Head of Service who will look at a historical payment plan or any external impact. Any changes to payment plans over £15,000 will be escalated to the Assistant Director. The business' impact on the community is always assessed as an increase in vacant properties should be avoided and therefore there is a commercial reason to liaise with businesses as much as possible. Prior to Covid, arrears were around 8% and this has now increased to around 19%, with a target to reduce them back to pre-Covid levels by quarter 3, 2023-24. There is currently double the amount of debt on pre-payment plans and the aim is to avoid sustainable businesses becoming bankrupt due to historical debt and so there is some leniency around payment plans.


Cllr Suqlain Mahmood asked if debts are ever sold on.


N Howcutt advised that they do go to court and evict businesses, though this is much further down the line compared to other organisations.


Cllr Symington noted the pay award and asked if this was in line with expectation.


N Howcutt confirmed that it is and that the effect on the council will be approximately 5.90%. Now that confirmation on the pay award has been received, the numbers will be reviewed, though the impact is expected to be the same.


Cllr Adeleke commented on the aim to return to pre-Covid levels for arrears and queried what impact this would have on the medium-term forecast if this isn't achieved.


N Howcutt advised that he is less concerned about arrears given the healthy provision for bad debt. If occupancy and rental income starts to fall then this will have an impact on the short and medium term budget. There is an expected income stream of around £5.5m and any decrease would then need to be found from other service areas or income streams. The impact of the wider economy will be felt if there is an impact on commercial rentals and people start to use fewer discretionary services, such as leisure and car parking.




The report was noted.


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