Tri-Borough Executive Decision Report

A4 Executive Decision Report

Decision maker and Leadership Team 15 July 2020 date of Leadership Forward Plan reference: 05672/20/K/A Team meeting or (in the case of individual Lead Portfolio: Cllr Mary Weale, Lead Member Member decisions) the for Finance and Customer Delivery earliest date the decision will be taken

Report title 2019/20 Financial Outturn

Reporting officer Mike Curtis – Executive Director Resources

Key decision Yes

Access to information Public classification

1. EXECUTIVE SUMMARY General Fund Revenue Position 1.1. The overall position on services is a small overspend of £143,000 (including Grenfell). In addition, there is an underspend of £10.4m on corporate items, of which £3.8m is due to the full implementation of the Treasury Management Strategy and increased investment income which has been reported for most of the year. This is a one-off underspend and budgets have been adjusted for 2020/21. The remainder relates to the corporate contingency and the provision set aside for the pension fund liability which has not been required during the year. Further details are set out in paragraph 5.2.

1.2. After the proposed transfer of the £11.3m to earmarked reserves, the Council will maintain its General Fund working balance at £10m. This £10m is in line with what is agreed in the Council’s Medium-Term Financial Strategy and reserves policy. General Fund Capital Programme 1.3. The total original General Fund Capital Programme budget in 2019/20, including budget carried forward from the 2018/19 was £163.066m. During the first three quarters of the year, there was a total variance of £91.249m giving a current budget of £71.817m. The General Fund Capital Programme outturn position

shows total expenditure of £47.776m, a further variation of £24.041m. Of this, £23.535m will be re-phased and relates to spend that will now be incurred in the financial year 2020/21 and £506,000 has been identified as a net underspend on required expenditure. Leadership Team is asked to agree these changes and that the 2020/21 Capital Programme be amended to reflect amounts re-phased. 1.4. The Council has recognised the recurring issue of rephasing spend year on year and the need to review the governance around the capital programme. During 2019/20, the Council commissioned an external review of the processes and governance arrangements for capital investment across the borough. Officers are currently implementing the Action Plan arising from that review during the course of 2020/21, which will introduce measures to address the reasons for the large levels of slippage incurred in recent years, improve accuracy of budgets, monitoring and scrutiny of delivery and timely delivery of projects. Housing Revenue Account Revenue Position 1.5. Overall, at the end of the year there was a drawdown of £7.156 million against the HRA Working Balance, taking the balance to £7.5 million. This compares to a budgeted working balance of £16.4 million. The main reasons for the variation relate to repairs, energy costs and the charging to revenue of expenditure on the former redevelopment at Treverton. Full details are set out in Section 8. Housing Revenue Account Capital Programme 1.6. The total capital budget for the HRA was originally set at £37.79m. This was revised during the year to £17.379m to reflect the content of the new HRA Business Plan approved at Full Council in March 2020. Expenditure in the later months of the year was higher than anticipated, resulting in an overspend of £1.963 million against the revised budget. However, these costs will be contained within the overall 7-year capital budget which has been set for the HRA. Full details are set out from Section 8. 2. RECOMMENDATIONS 2.1. The Leadership Team is recommended to: a. Note the provisional outturn position for the General Fund (Table 1) of a net underspend of £11.3m before proposed transfers to/from reserves.

b. Approve the carry forwards and transfers to/from reserves as detailed in section 10 of the report, of which £24.2m transfers from and £1.5m transfers to had been previously agreed by Leadership Team through the 2019/20 budget setting report and 2019/20 in year monitoring reports. For completeness, a full listing of these reserve movements and an additional request of £12.9m transfers from and £30.7m transfers to reserves as part of the year end process are detailed in Appendix 2.

c. Note the actions which the Executive Director Resources as Section 151 Officer has taken under delegated authority to close the accounts, which includes:

 ensuring that the working balance is kept at the target level of £10m at 31 March 2020 as set out in the Medium-Term Financial Strategy;

 transferring £381,000 to the Car Parking reserve after financing eligible revenue expenditure that can be legitimately financed by parking income; and

 transferring the remaining underspend of £10.9m into the budget stabilisation reserve.

d. Note the outturn position on the 2019/20 General Fund Capital Programme of £47.776m and agree the proposed re-phasing of budget to the 2020/21 Capital Programme.

e. Agree that the identified net underspend on the General Fund Capital Programme of £506,000 is transferred to the Capital Contingency increasing the balance to £5.949m to set against any future additional requirements on the programme.

f. Note the outturn position of an in-year deficit of £7.2m on the HRA revenue budget

g. Note the outturn position on the 2019/20 HRA Capital Programme of £19.342m and agree the proposed re-phasing of budget from the 2020/21 Capital Programme.

h. Delegate to the Executive Director Resources authority to agree any required adjustments for the final position to be reflected in the final 2019/20 Statement of Accounts.

3. REASONS FOR DECISION

3.1. The Council is, under statute and regulation, required to close the 2019/20 accounts and publish them by 31 August 2020. This statutory deadline has been delayed due to the Coronavirus pandemic, but the Council published its draft accounts as planned by 30 June. Leadership Team are required to note the outturn position and agree any transfer to and from reserves and the details are set out in this report.

4. BACKGROUND

4.1. There are a number of key financial processes and reports in each financial year. In July 2018, the Council updated its Medium-Term Financial Strategy including

the Capital Strategy. This informed the development of service plans and capital project plans through the remainder of the year to inform the budget setting report in March 2019, including the Capital Programme. On 6th March 2019, Council agreed the 2019/20 revenue budget and Capital Programme. The Council then regularly monitors performance through the year against these budgets, including projections for the remainder of the year to enable corrective actions to be developed and agreed. Once the financial year has ended, accounting processes are completed to close the accounts and develop the outturn position to review performance for the full year and agree final adjustments through reserves to account for under/overspends in each service area.

This is the outturn report for the year 2019/20 which ended 31 March 2020. For further guidance in understanding the report please refer to Appendix 1.

4.2. As a result of COVID-19, Government extended the deadline for publication of 2019/20 draft accounts from 31st May to 31st August and the deadline for completion of audit from 31st July to 30th November 2020.

4.3. The accounts for 2019/20 are closed and the draft 2019/20 Statement of Accounts signed by the Executive Director Resources submitted to the external auditors, Grant Thornton.

4.4. The external audit has begun and the accounts are expected to be approved by the Audit and Transparency Committee at their September meeting. Any significant changes will be set out in a report to the Audit and Transparency Committee and will be copied to all Council members.

5. PROPOSAL AND ISSUES

General Fund Revenue Outturn

5.1. The revenue outturn position for 2019/20 for net expenditure on services was an overspend of £127,000 (excluding Grenfell) after the proposed application of reserves and an underspend of £10.4m on levies and corporate items - such as the centrally held contingency, the provision for the pension fund liability, increased investment income and lower borrowing costs through treasury management.

Table 1 – General Fund Revenue Outturn 2019/20 Directorate Budget Outturn Net cont. Use of Adjusted Variation to/from Contingency Outturn reserves

£'000 £'000 £'000 £'000 £'000 £'000 Adult Social Care and Public Health 35,613 35,454 (442) 0 35,012 (601) Children’s Services and Education 32,474 34,222 (408) (66) 33,748 1,274 Environment and Communities 5,920 5,501 (235) 0 5,266 (654) Housing and Social 6,555 6,205 612 0 6,817 262 Investment Grenfell - Corporate 14,650 17,623 (2,046) 0 15,577 927 Resources and Customer Delivery 54,408 58,075 (4,346) (402) 53,327 (1,081) Total Service Expenditure 149,620 157,080 (6,865) (468) 149,747 127 Grenfell – Recovery 12,000 10,570 2,047 (601) 12,016 16 Total Service Expenditure 161,620 167,650 (4,818) (1,069) 161,763 143 (including Grenfell) Total Levies and Corporate Items 25,061 13,341 230 1,069 14,640 (10,421)

Use of Reserves (22,612) (12,965) (11,147) (24,112) (1,500) Resourcing (164,069) (179,312) 15,735 (163,577) 492 Total 0 (11,286) 0 0 (11,286) (11,286) Transfer to/from reserves

Parking Reserve 381 Budget Stabilisation 10,905 General Fund - Deficit/Surplus

5.2. There have been claims on contingency in year as a result of spend that was not anticipated at the time of setting the budget. These movements have been agreed by the Executive Director of Resources and Customer Delivery (Section 151 Officer) under delegated powers. The original corporate contingency budget was set at £5.5m and examples of how it has been used include additional staffing costs due to services coming back in house, an increase in City Living Local Life grants paid out to local communities, funding for the new corporate complaints team and some housing cost pressures among other unbudgeted for pressures.

5.3 There are unspent budgets that will be carried forward to deal with pressures emerging in 2020/21. These movements are subject to agreement by the Leadership Team in line with the Council’s Financial Procedure Rules and are set out in the section in this report on transfers to reserves (Section 10).

General Fund Capital Programme Outturn

5.4 The total original General Fund budget figure for capital spend in 2019/20, including budget carried forward from the 2018/19, was £163.066m.

5.5 The latest Capital Programme for 2019/20 to 2022/23 was agreed by Full Council in March 2020. During the year, there were amendments to the budget to reflect scheme changes and the re-phasing of some schemes. The latest agreed General Fund capital investment for 2019/20 was budgeted at £71.817m. The end of year position is showing that £47.776m (67%) was spent in year, a final variance of £24.041m. Of the identified variance, £23.535m is requested to be carried forward to 2020/21 for future year spend. The remaining balance of £506,000 represents a net underspend on the programme which will be transferred to the Capital Contingency to set against any future additional requirements on the programme. Details of the Capital Programme outturn is set out in summary in Table 2 below and in detail at Appendix 3 to the report.

Chart 1 Capital - Outturn spend vs Budget 2019/20 by service

Capital Programme Contingency Resources and Customer Delivery Housing and Social Investment Environment and Communities Children’s Services and Education Adult Social Care and Public Health

0 5,000 10,000 15,000 20,000 25,000 30,000 35,000 40,000 45,000 50,000

Current Budget Outturn

Table 2 – Capital Outturn General Fund 2019/20. Service 2019/20 2019/20 Variance Over- Under- Slippage Budget Outturn spend Spend £’m £’m £’m £’m £’m £’m Adult Social Care & 0.568 0.434 (0.134) - - (0.134) Public Health Children’s Services 12.433 12.996 0.563 0.819 (0.565) 0.308 and Education Environment & 14.560 8.097 (6.463) 0.221 - (6.684) Communities Housing & Social 32.021 22.027 (9.994) 0.047 (0.996) (9.045) Investment Resources & 6.792 4.222 (2.570) 0.076 (0.108) (2.538) Customer Delivery Capital Contingency 5.443 - (5.443) - - (5.443) Total 71.817 47.776 (24.041) 1.163 (1.669) (23.536)

5.6 During 2019/20, expenditure on the Capital Programme has progressed and delivered various schemes across services, including:  Early Years and the borough’s Children’s Centres;  New and refurbished Schools, including Kensington Academy, Bousfield and Barlby;  Improvements to the transport network and the street scene;  Refurbishment of Leighton House Museum;  Holland Park Footpath Resurfacing; and  Routine maintenance and repairs to the Council’s property estate.

5.7 Of the £24.041m re-phasing of budget balances, £16.295m or 68% is accounted for by ten major projects listed as below. The first three of the schemes were also flagged in the Q3 monitoring report. Further details on each of these are set out in sections of this report that follow:

 Street Scene Improvements - £999,000  Leighton House - £1.098m  Kensington Town Hall Cyclical Works Phase 2 - £1.533m  Remodelling and refurbishment of Oxford Gardens & Park Walk Primary Schools - £628,000  Parks Strategy - £652,000  Golborne Road Improvements - £889,000  Leasehold Compensation Scheme - £1.958m  Acquisition of Street Properties – Dwellings - £2.087m  Holland Park House Structural Works - £1.008m  Capital Programme Contingency - £5.443m

5.8 Officers are currently implementing the Action Plan arising from an external review of Capital Governance arrangements. As part of this, there will be a full review of the existing Capital Programme during 2020/21 to ensure that capital investment remains in line with priorities and is affordable. Any recommendations to amend the Capital Programme will be reported to Leadership Team as part of the Capital Strategy and the Medium-Term Financial Strategy in the Autumn. Recommendations will be subject to approval by Full Council.

6 A service by service breakdown of Revenue & Capital Movements is provided below:

6.3 Adults & Public Health

Revenue (underspend £600,000)

6.3.1 Adult Social Care has statutory duties under the Care Act 2014 and in addition provides a number of discretionary services. Overall, Adult Social Care services benchmark as delivering good outcomes and are high performing and low cost compared to statistical neighbours.

6.3.2 In recognition of continuing pressures in recent years, Central Government has allowed additional increases in council tax to be used to fund Adult Social Care. This is known as the Social Care Precept. As part of council tax setting for 2019/20 the Council applied a 2% precept.

6.3.3 The Service is developing a new approach to meeting the health and care outcomes of individuals, including those functions within the Better Care Fund as part of a three to five-year programme reviewing the client pathway from ‘front door’ to long term support. This will develop a long term sustainable service focussed around choice and control for individuals, a focus on strength based support, developing strong and reliant communities and flexible accommodation options.

6.3.4 To align the Better Care Fund programme with the Joint Health and Wellbeing Board priorities, during 2019/20 West London CCG and the Council agreed to vary the programme so that schemes no longer aligned to the priorities were removed which in turn has led to a reduction in the total budget within the BCF programme.

6.3.5 Public Health funding is currently a ring-fenced grant. Through effective use of its dedicated funding, he service aims to bring together the Council, NHS, and other partners through the Joint Health and Wellbeing Strategy to improve and protect the health and wellbeing of residents and reduce health inequalities in the borough. This includes reducing childhood obesity, improving mental wellbeing and reducing smoking rates. In 2019/20, the borough was one of the best performing on NHS Health Checks and in delivering the 1st full year of ‘One You’

- the Integrated Healthy Lifestyle Service which brings together 4 previous contracts into one. The service exceeded a number of targets, performing high in London and the country, including 3rd in London for Smokers setting a quit date and smokers successfully quitting at 4 weeks.

6.3.6 The position at year end shows that for adult social care services and public health, the latter of which is funded by grant, there is an underspend of £600,000. This was compared to an underspend of £281,000 forecast at the end of Quarter 3. This underspend has increased due to reduced spending on staffing costs and a lower number than anticipated of people with learning disabilities transitioning from children’s services. These are explained in more detail in the following sections.

Table 3 Adult Social Care and Public Health (including reserve movements and contingency) Adult Social Care and Public Health Budget Adjusted Over/(Under) Outturn Spend

£'000 £'000 £'000 £'000 Adult Social Care Support with memory & cognition - adults 1,259 1,351 92 Commissioning & Service Delivery 2,460 2,396 (64) Social Care Activities 6,421 6,085 (336) Physical support 12,067 11,884 (183) Learning disability support - adults 8,764 8,525 (239) Sensory support - adults 128 139 11 Mental health support - adults 4,298 4,366 68 Social support: Support for carer (7) (7) 0 Assistive Equipment & Technology 93 147 54 Social support: Substance misuse 0 0 0 support Housing welfare: Supporting People 130 126 (4) Total Adult Social Care 35,613 35,012 (601)

Public Health Families and Children 5,913 5,651 (262) Behaviour Change 1,850 1,337 (513) Substance Misuse/Offender Health 4,855 4,659 (196) Commissioning Salaries and Overheads 1,554 1,759 205 Transformation Funding 3,452 4,146 694 Sexual Health 3,883 3,230 (653) Intelligence and Social Determinants 50 1 (49) Public Health Grant Income (20,347) (20,347) 0 Reserves Drawdown (1,210) (436) 774 Total Public Health 0 0 0

Total Adult Social Care and Public 35,612 35,013 (601) Health

Adult Social Care

Social Care Activities (£336,000 underspend) 6.3.7 This service underspent due to staffing vacancies and a number of posts held vacant pending individual team restructures.

Social support: Support for carer (breakeven) 6.3.8 A key element of supporting people at home is to provide support to carers. These services are fully funded via the Better Care Fund contribution.

Physical Support (£182,000 underspend) 6.3.9 During the year the number of service users admitted to residential and nursing care decreased as a result of the investment into services to support reablement and discharge from hospital. The focus has been on short term interventions to ensure service users are enabled to move back home and live independently. This is evident in the DTOC (Delayed Transfers of Care) performance measures which show an overall reduction in delayed transfers.

6.3.10 As residential placements reduced throughout the year, more service users were supported with community-based care and direct payments. The number of packages less than 14 hours is increasing, but the number of complex packages of more than 28 hours is falling, showing the impact the Moving with Dignity project where there has been a reduction in the number of double staff packages. In the last few years there has been lots of development in moving and handling support and equipment which has shown that with the use of technology, equipment and training a single carer can provide care safely on their own.

Learning disability support – adults (£239,000 underspend) 6.3.11 During the 2019/20 financial year, the number of service users being supported and the cost of their support is less than the expected. The budget includes an assumption for those service users transitioning from Children’s Services to Adult Social Care once they complete their education, but the numbers are lower than had been predicted when setting the budget. This is because they either remained in education and will transition at a future date; their health needs met the criteria for continuing health care or they have been supported by their families upon completion of the education.

6.3.12 Funding from health for integrated services and integrated budgets forms a significant proportion (25%) of the total spend on social care and integrated services. The Council’s future plans are significantly influenced by, and dependent on the Council’s partnership with health and the future of health and social care integration across North-West London. This represents a prevailing risk into 2020/21.

Public Health

Families and Children (£262,000 underspend) 6.3.13 The Children’s Obesity contract was re-procured during the year. The previous contract ended in July 2019 but the new contract did not start until the 2020/21 financial year. This delayed start has resulted in an underspend against budget.

Behaviour Change (£513,000 underspend) 6.3.14 As part of the new Integrated Health Service the decision was taken to target smoking cessation services primarily on residents of the borough. Previously non- residents with GPs in the borough were also able to access this service. This lower provision has therefore reduced expenditure. The budget for Health Checks assumed maximum attendance of this service. However, take up was lower than anticipated and therefore this increased the underspend in this area.

Transformation Funding (£694,000 overspend) 6.3.15 During the year, additional projects were agreed which aimed to improve the health of the borough’s population. These included projects working to tackle serious youth violence, provision of children’s health services, and mental health promotion. These led to an increase in expenditure in this area.

Sexual Health (£653,000 underspend) 6.3.16 The variance is due primarily to the contingency fund in relation to sexual health clinics not being required. In addition to this, there was a combination of smaller underspends in Contraception and Community Support services.

Adults & Public Health Capital (variance to budget £0.134m)

6.3.17 The total Adults and Public Health Capital Programme for 2019/20 was budgeted at £568,000 against which there was spend of £434,000 for progressing the Day Centre Re-provision and IT Systems development.

6.4 Children’s Services and Education

Revenue (overspend £1.3m)

6.4.1 In 2019/20, Children’s Services were inspected by OFSTED and received an Outstanding rating in every category and were judged to deliver “exemplary practice” for children who cannot live with their families. This is an improvement on the previous inspection rating from 2016, which was also Outstanding overall.

6.4.2 The borough’s schools continue to be high performing, with 100% rated as good or outstanding and Educational achievement is high. The borough is the third highest performing for Key Stage 2 with 77% at expected levels in writing, reading and maths compared to the national average of 65%. In terms of GCSE

performance, this is well above the national average with 76% achieving grades 4 to 9 in GCSE English and Maths compared to the national average of 65%.

6.4.3 The Council introduced its new youth service in September 2019 following a thorough consultation with young people in the borough and partner organisations. The result is a service focussed on the areas that matter to young people, including wellbeing and safety and is backed by greater collaboration between the council, police, education providers, health providers and community groups and direct control over a £40,000 budget for young people.

6.4.4 The Home Office funding regime for Unaccompanied Asylum Seeking Children (UASC) is now simpler and helps to mitigate previous cost pressures in this area where the Council had an average cohort of 33 Looked after UASC over the course of the year and which has been increasing year on year. The government also introduced increased funding for care leavers during the year.

6.4.5 The position at year end shows that for Children’s Services and Education there is an overspend of £1.3m. This was compared to an overspend of £937,000 forecast at the end of Quarter 3. This increased overspend includes costs relating to the Coronavirus pandemic which are detailed in paragraph 6.2.12 below, and an increase in spend against the Grenfell Education Fund to ensure the education needs of the children affected by the tragedy are covered, as detailed in paragraph 6.2.11

Table 4 Children’s Services and Education (including reserve movements and contingency) Children's Services and Education Budget Adjusted Over/(Under) Outturn Spend £'000 £'000 £'000 £'000 Education 5,560 5,930 370 Family Services 20,190 20,646 456 Grenfell Education Fund 500 898 398 Operations and Programmes 6,115 6,075 (40) COVID 19 Costs 0 54 54 School Funding 109 145 36 Total Children's Services and 32,474 33,748 1,274 Education

Education (£370,000 overspend) 6.4.6 During the year, the Council undertook a review of the Education budgets. This resulted in the rebasing of budgets and the realignment of shared service salary costs across the Council and Westminster City Council. Pressures arising from this (£235,000) coupled with rising respite placement costs for children with disabilities (£138,000) have emerged within the Special Educational Needs

(SEN) service. These were partly offset by an underspend within School Standards attributable to grant funding for school improvement.

6.4.7 Based on historic and emerging trends, there is increased complexity of need and increasing costs – both of which remains a risk on the budget. Work is being undertaken to establish underlying trends.

6.4.8 The previously reported pressure on the Special Educational Needs (SEN) transport service (£591,000) due to an increase of students from September 2019 is being funded through parking income. Additional provision of £650,000 for these pressures has been built into the budget over the next three years as set out in the 2020/21 budget report.

Family services (£454,000 overspend) 6.4.9 There continues to be a pressure on placement costs within Family Services (£2.2m) as a result of an increased level of residential and semi residential places and the additional level of support required. Additional provision of £675,000 for these pressures has been built into the budget over the next three years. Budgets will be reviewed and if required, re-aligned during 2020/21

6.4.10 This pressure is partly offset by underspends in other areas such as increased Home Office funding for UASC and care leavers (£484,000) and delays in appointing staff following the youth service review.

Grenfell Education Fund (£398,000) overspend 6.4.11 The Grenfell Education Fund was set up to address the education needs of the wider community of young people and schools in North Kensington affected by the tragedy. Funding is used to support the pastoral and academic needs of those affected. Schools are the main recipients of targeted support accessed via bids to the Fund. The 2019/20 outturn reflects the range of support offered, including school-based therapeutic and counselling support, additional tuition and access to extra-curricular activities that would not otherwise be available.

COVID 19 Costs (£54,000 overspend) 6.4.12 The overspend relates to staffing costs within the Short Breaks service. Due to the pandemic, sessional staff received an average salary rather than the usual practice of being paid for actual hours worked. This arrangement is ongoing until normal business resumes.

Capital (variance to budget £563,000)

6.4.13 The total Children’s Services and Education Capital Programme for 2019/20 was budgeted at £12.433m against which there was spend of £12.996m. A summary of the main variations (greater than £0.5m) arising since the Quarter 3 Monitor report and against the revised budget is set out below:

Barlby & Special Educational Needs Schools - £1.832m re-phased from 2020/21

6.4.14 There have been delays incurred onsite and enforced time away from the site whilst ground contamination issues were addressed. As a result, the contractor has been able to proceed works at a greater rate than forecast and as such there has been a greater level of spend in year from the total scheme budget. This means that the 2020/21 budget will be reduced to reflect earlier spend in 2019/20.

Remodelling and refurbishment of Oxford Gardens & Park Walk Primary Schools - £628,000 re-phased to 2020/21 6.4.15 The scheme was paused in response to the Covid-19 recovery measures and as such works scheduled at the end of 2019/20 will not be delivered until 2020/21. The scheme is due to be completed in 2021/22 and at the current time initial delays incurred are not forecast to impact on delivery in that financial year.

6.5 Environment and Communities

Revenue (Underspend £654,000)

6.5.1 Environment and Communities incorporates a broad portfolio of services covering the range of strategic priorities. A large number of services were previously run on a bi-borough basis but following agreement, the majority of these arrangements have come to an end and the department has gone through a major disaggregation and restructuring process during 2019/20.

6.5.2 In April 2019, the Council re-opened an improved Chelsea Old Town Hall following 15 months of refurbishment works. The building is the home of the borough’s registrar’s service who each year on average register 7,000 births, 1,500 deaths and perform 2,000 marriages. In December 2019, the service delivered the first opposite sex civil partnership. The library service has been meeting the needs of the socially excluded and digitally isolated and has also developed a virtual library service.

6.5.3 In August, another successful Notting Hill Carnival was held, and the Council delivered a number of other cultural initiatives through the year including the Sparks Fly Circus and Science Festival during October half term

6.5.4 The Council declared a Climate Emergency in October 2019 and set itself ambitious targets for achieving Carbon Neutrality for both the Council itself and the borough and with environmental impacts to be considered as part of all decision making. This acts as another driver for change in how the Council operates and designs services in the future. Working with Repowering London Community Benefit Society, the Council has helped to develop and deliver the award-winning North Kensington Community Energy project which installs solar panels on community buildings.

6.5.5 In consultation with residents, the department has also been continuing to develop its Customer and Resident Focussed Environmental Transformation

Programme (CREST) looking to join up and improve enforcement services across the borough which deal with issues such as fly tipping and anti-social behaviour. In March 2020 a new team was established on a 12-month trial basis to deal with environmental crimes in the Earls Court area but unfortunately this work has been disrupted following COVID-19.

6.5.6 The position at year end for Environment and Communities, excluding Parking Income, is an overspend of £678,000, compared with an £856,000 overspend projected at Quarter 3.

6.5.7 Including parking income, the position improves to an overall underspend of £654,000 compared to a projected £1.3m underspend at Quarter 3. Legislation dictates that this income can only be used to fund eligible expenditure, including the costs of providing the parking service, maintaining the 188km of roads and highways and the 376km of footways across the borough; and many of the environmental and transport services the Council provides. Any excess income that cannot be used against eligible expenditure is therefore placed in a dedicated reserve. For 2019/20, £381,000 will be transferred to the Parking Reserve.

Table 5 Environment and Communities (including reserve movements and contingency) Environment and Communities Budget Adjusted Over/(Under) Outturn Spend £'000 £'000 £'000 £'000 Cleaner, Greener and Cultural Services 25,905 25,476 (429) Community Safety 3,655 3,440 (215) Executive, Finance and Contingency 833 852 19 Libraries & Registrars 2,351 2,279 (72) Planning & Borough Development 1,332 2,130 798 Public Protection 4,037 4,203 166 Transport, & Highways 6,275 6,687 412 Subtotal excluding Parking 44,388 45,067 679

Parking (38,468) (39,801) (1,333)

Total Environment and Communities 5,920 5,266 (654)

Cleaner, Greener and Cultural Services (£429,000 underspend) 6.5.8 The underspend relates mainly to savings on waste disposal costs (£545,000). This is predominantly due to the Council receiving a preferential rate of 50% reduction on recycling rates. The Council has been given notice that this arrangement will cease from April 2021 and although a provision has been

included within financial plans for these increased costs officers are working to see how to mitigate this potential pressure in future years.

Community Safety (£215,000 underspend) 6.5.9 The Council’s previous contract with the Metropolitan Police to provide 17 police officers has been reduced to retain 3 uniformed police officers alongside the creation of a new Wardens team which will be in place from early 2020/21. Staff vacancies under the previous arrangements has resulted in an underspend of £194,000 on this contract during 2019/20.

Planning and Borough Development (£798,000 overspend) 6.5.10 There is a £577,000 underachievement of income which has reflected the general economic uncertainty of the last few years. Specifically, this comprises of shortfalls against budgeted income from land charges (£111,000), planning application fees (£561,000) and pre-application advice (£572,000). This is partially offset by overachievements of income from S106 planning obligation monitoring fees; Community Infrastructure Levy administration fees (£718,000); and other smaller income streams such as planning conditions and flood grants (£51,000).

6.5.11 During the year, the Council was required to change its provider of Arboriculture services which has resulted in increased costs of £140,000.

6.5.12 Spend on the legal services budget for the service tends to fluctuate year-to-year depending on the number of judicial reviews, planning inquiries, planning advice, appeals, and other challenges. During 2019/20 there was an underspend of £66,000.

Public Protection (£166,000 overspend) 6.5.13 There is an income overachievement of £178,000 mostly due to Pest Control (£104,000), Noise and Nuisance (£33,000) and Licensing (£40,000). This was partly offset by a shortfall in income for the Food Safety Training Service (£45,000) due to the loss of training facilities in Pembroke Road.

6.5.14 These have been offset by salary pressures in the service following the disaggregation of shared services and legal fees relating to Licensing and Trading Standards.

Transport and Highways (£412,000 overspend) 6.5.15 There has been a shortfall on Network Management income (£96,000) due to increased compliance with regulations by utility companies’ meaning less work was required and fewer fines were issued as a result.

6.5.16 There have been overspends within Highways due to salary pressures following disaggregation of shared services (£290,000) and increased spend required on reactive highway maintenance. The high cost of electricity for street lighting has also caused an overspend of £103,000 on energy costs. The Council received

additional pothole funding from TfL which, alongside other minor variances, contributed £303,000 to costs.

6.5.17 The Council has also increased its provision for expected credit loss from its income from bus shelter advertising. There are ongoing discussions with the current contractor which has caused the overspend to increase by £197,000.

Parking Services (£1.3m underspend) 6.5.18 During the year, the Council underspent by £1.3m on its parking services. This was due to an overachievement of income as well as a delayed staffing restructure following the return to a sovereign service provisions and one-off income for backdated charges to Hammersmith and Fulham for use of the vehicle pound.

6.5.19 Following the Coronavirus pandemic parking income is hugely down on 2019/20 levels and this over achievement of income is unlikely to be available in the short and possibly medium term. This is detailed in the 2020/21 monitoring report elsewhere on this agenda.

6.5.20 The overall parking surplus (the difference between parking income received and eligible expenditure it can be used to finance) during the year was £381,000. This was transferred to the Parking Reserve to fund future eligible expenditure in future years.

Capital (variance to budget £6.463m)

6.5.21 The total Environment and Communities Capital Programme for 2019/20 was budgeted at £14.560m against which there was spend of £8.097m. A summary of the main variations (greater than £0.5m) arising since the Quarter 3 Monitor report and against the revised budget is set out in the following sections:

Street Scene Improvements - £999,000 re-phased to 2020/21 6.5.22 This relates to a programme of works covering multiple schemes being delivered in conjunction with the TfL Local Implementation Plan programme. The budget assists in developing the work programme alongside the Council’s commitment to the Mayor’s Transport Strategy for London. Committed projects are progressing but there are a number of high value schemes that have been delayed due to the new governance process, public consultation and co- ordination with other departments and await final approval to progress.

Kensington Leisure Centre – New Building - £647,000 re-phased from 2020/21 6.5.23 The Contractor carried out additional work to make good at their own cost but costs relating to contractors site establishment, installation of temporary changing rooms and reimbursements to the contracted provider has resulted in additional levels of expenditure in year from the total scheme budget. The balance of the total scheme budget (£2.350m) is profiled to be utilised in 2020/21 and remaining commitments are forecast to be met within the budget.

Golborne Road Improvements - £889,000 re-phased to 2020/21 6.5.24 The scheme is forecasting a potential underspend, but this will be confirmed in 2020/21 on a longstanding (10yrs +) capital allocation to improve Golborne Road. With no firm plans for a Phase 2 yet the funding could be potentially used elsewhere in the medium-term. This will be considered further as part of the Capital Programme Review.

Leighton House Phase 3 - £1.098m re-phased to 2020/21 6.5.25 Delays incurred in commencing the project whilst enabling works were completed, combined with a subsequent pause in response to the Covid-19 recovery measures have meant that works scheduled for 2019/20 will not be delivered until 2020/21. This delay was primarily associated with initiating ground works but this is not currently forecast to impact on scheme completion in financial year 2021/22. 6.6 Housing & Social Investment

Revenue (Overspend £261,000)

6.6.1 This Directorate combines both the General Fund Housing Service and the Social Investment and Property function following a management reorganisation. The Social Investment and Property function is enabling the Council to maximise the potential of the portfolio and continued property investment to serve as an enabler of the Council’s policies and priorities.

6.6.2 The position at year end shows that there is an overspend of £261,000. This was compared to an overspend of £379,000 forecast at the end of Quarter 3.

6.6.3 The cost of supporting households in Temporary Accommodation continued to be the greatest cost pressure for the Housing General Fund budget. During the year, a project was established to review Temporary Accommodation and has developed new processes and initiatives to improve practice, maintain quality of outcomes and reduce the overall cost of the service. Delivery commenced in year and will continue into 2020/21 and beyond. During 2019/20, the number of households living in temporary accommodation dropped from 2,340 to 2,240.

6.6.4 The Council holds a broad property portfolio, including a commercial rental portfolio of over 400 properties and over 100 operational assets (including schools and libraries) which are valuable for the income contribution to support funding of other Council Services and also the Social investment value they can contribute in support of the Council Plan Priorities.

Table 6 Housing and Social Investment (including reserve movements and contingency) Housing and Social Investment Budget Adjusted Over/(Under) Outturn Spend £'000 £'000 £'000 £'000

Housing Housing Needs & Homelessness 5,867 5,848 (19) Housing Commissioning 524 443 (81) Housing Directorate & Policy 675 536 (139) Supporting People 4,828 4,715 (113) Temporary Accommodation 6,564 7,143 579 Travellers Site 13 17 4 Total Housing 18,471 18,702 231

Social Investment & Property Property & Social Investment 581 838 257 Investment and Development (13,394) (13,004) 390 Asset Management 603 59 (544) Capital Projects Team 294 222 (72) Total Social Investment & Property (11,916) (11,885) 31

Total Housing and Social Investment 6,555 6,817 262

Temporary Accommodation (£579,000 overspend) 6.6.5 The Temporary Accommodation Budget had been forecast to overspend throughout the year due to a significant increase in the numbers of households supported. As highlighted above, a project was set up to reduce costs and this has successfully helped to reduce the overspend by £300,000. The full year benefits of the project will be realised in 2020/21. However, the Council also expect significant pressures to arise later in the year from COVID-19 and are extremely difficult to predict as more people face financial hardship and present as homeless.

6.6.6 Additional provision of £3.5m for these pressures is built into the budget over the next three years as detailed in the 2020/21 budget report.

Social Investment & Property (£31,000 overspend) 6.6.7 A combination of overachievement of income but also some overspends has resulted in an overall small overspend of £31,000. The overspends were mainly a result of larger than budgeted valuation fees (£99,000) and use of agency staff (£80,000) for some development projects. Some of the overachievement of income relates to non-recurring income from review of rent agreements.

Capital (variance to budget £9.994m)

6.6.8 The New Homes Delivery Programme will deliver 600 new homes in the borough, of which at least 300 will be for social rent. Planning applications for the first phase of delivery have been submitted.

6.6.9 The Council has secured a grant of £33.6m from the Greater London Authority towards the cost of the programme – the equivalent of £100,000 per social rent property. Officers are currently considering other additional funding sources for the remaining costs of the programme, including other grants, use of Section 106 monies for affordable housing or potential capital receipts.

6.6.10 There was significant progress in the delivery of the Grenfell capital programme during 2019/20, as summarised below:

 Acquisition of Grainger Properties – The purchase of Bomore Road completed early in 2019/20. Works to Grainger properties are ongoing and properties are in the process of being allocated.

 Street Property Purchases – 2019/20 saw the completion of renovations for the majority of properties acquired for Grenfell, and the subsequent acceptance and occupation of those properties. The remaining budget will be used to meet property renovations, existing property management requirements for the newly acquired properties and other housing commitments in 2020/21.

 Leaseholder Compensation Scheme – Negotiations are ongoing with the very few remaining leaseholders. The unspent 2019/20 budget will be used to meet these commitments in 2020/21.

 Grenfell Site Costs – Ownership of the site was successfully transferred to MHCLG in July 2019. All final accounts have been settled. It is expected that all costs relating to the site which were incurred by the Council in 2019/20 will be met from MHCLG S31 grant funding.

The total Housing and Social Investment Capital Programme for 2019/20 was budgeted at £32.021m, against which there was spend of £22.027m, of which £1.874m relates to the New Homes Programme. A summary of the main variations (greater than £0.5m) arising since the Quarter 3 Monitor report are set out in the following sections:

Leasehold Compensation Scheme - £1.958m re-phased to 2020/21 6.6.11 A budget is in place to compensate both residential and non-residential leaseholders for the value of their properties in the Grenfell Tower and Grenfell

Walk. The balance is required to meet the requirements of final cases yet to be settled.

Acquisition of Street Properties - Dwellings - £2.087m re-phased to 2020/21 6.6.12 A property purchase is awaiting completion and the remaining budget will need to be carried forward to 2020/21 to meet the commitment.

New Homes Delivery Programme - £626,000 re-phased to 2020/21 6.6.13 This budget was allocated from Special Projects reserve to commence the delivery of the feasibility, design and planning of the Stage 1 schemes. The costs covered both internal project and development management costs and ssociated external consultant’s fees related to design and delivery. The budget estimate was allocated in advance of the detailed financial modelling and spend is lower than anticipated.

Acquisition of Wornington Road - £500,000 Underspend 6.6.14 This budget was originally included within the Capital Programme at £4.375m related to the acquisition of the site in regard to Kensington Leisure Centre. However, in the Quarter 1 Monitoring report it was reported that the basis of the arrangement had changed and the majority of the budget was no longer required. The sum of £500k was retained against potential fees arising. The scheme is now complete, and no further expenditure is required.

Canalside House – Required Health & Safety Works - £500,000 re-phased to 2020/21 6.6.15 The originally proposed Canalside relocation was cancelled during 2019/20 but there remained an ongoing need to meet the cost of essential window replacement and refurbishment works to enable continuing occupation. Therefore the budget was retained. The works did not commence in 2019/20 and have paused in response to the Covid-19 recovery measures but are expected to be completed in 2020/21.

Holland Park House Structural Works - £1.008m re-phased to 2020/21 6.6.16 This budget relates to the delivery of planned works to Holland House, Holland House East Wing, Holland Park Café and the Elevated Walkway/s to deal with Health and Safety requirements and address matters of concern raised by Historic England. Delays have been incurred in meeting Listed building requirements but are planned to progress in 2020/21.

6.7 Grenfell Recovery

Revenue (Overspend £16,000)

6.7.1 The position at year end shows that for Grenfell Recovery there is a small overspend of £16,000.

6.7.2 The majority of services and initiatives funded through the Grenfell recovery budget are in line with the budget. However, there is a small overall overspend of £16,000 due to unanticipated rehousing costs. These costs were not originally budgeted for because the expectation was that these would be met by Government funding.

Table 7 Grenfell Recovery (including reserve movements and contingency) Grenfell Recovery Budget Adjusted Variance Outturn £'000 £'000 £'000

Bereaved and Survivors 5,921 6,311 390 Support for Transition 1,082 844 (238) 7,003 7,155 152

Wider Community 5,849 6,551 702 Support for transition 1,017 905 (112) 6,866 7,456 590

Core Costs 742 551 (191) Grant Income (2,611) (3,146) (535)

Total Grenfell Recovery 12,000 12,016 16

6.7.3 In 2019/20, the Council spent £3.862m on rehousing. The main area of overspend relates to the costs of emergency and temporary accommodation. The Council spent £821,900 in 2019/20 on hotels, serviced apartments and Private Rented Sector accommodation for former residents of Grenfell Tower and Grenfell Walk. The Council spent £672,400 in 2019/20 on temporary accommodation for Wider Grenfell residents.

6.7.4 The Government agreed to provide an additional £500,000 towards these costs for former residents of Grenfell Tower and Grenfell Walk to cover the period up until 1 July 2019. The Government has confirmed that no further funding will be forthcoming for rehousing costs and they must therefore be met by the Council.

6.7.5 Some of the predicted overspend can be met from underspends on transition support costs in the Grenfell recovery budget. The remainder of the overspend will fall as a pressure on the Council’s General Fund and will be funded through

corporate resources. This means that in 2019/20 no more than £12m will be drawn down from the £50m ringfenced for Grenfell Recovery as originally agreed.

6.7.6 Ongoing rehousing costs have been factored into next year’s Grenfell recovery budget.

6.7.7 There have been some delays to some of the Grenfell Recovery initiatives due to the impact of COVID-19. This includes the Grenfell Projects Fund grants and the funding for employment and skills commissioning. This money will be carried forward so that it can be spent in the next financial year and in addition to the Grenfell Recovery budget agreed for 2020/21. 6.8 Resources and Customer Delivery

Revenue (Underspend £1.1m)

6.8.1 Resources and Customer Delivery is a mixed portfolio consisting of front line services (such as the Customer Contact Centre), Regulatory Services (such as Audit, Risk, Fraud and Insurance), enabling services that support other departments in delivering core outcomes (such as IT, HR, Finance) and services that facilitate the executive operations of the Council (such as Governance and co-ordination).

6.8.2 With a commitment to supporting staff development and increasing employment opportunities in the borough, in 2019 the Council met and exceeded its apprenticeships public sector target for 2019/20 with 63 new apprenticeships made up of 36 existing staff and 27 new recruits.

6.8.3 The Council is also seeking to improve access to information about council services and the ease of transacting with the Council. As part of this, following consultation with staff and residents earlier this year, the Council has been redeveloping its website. A new look website launched and improvements continue to be made. The year also saw the introduction of a new complaints team and system for managing complaints to provide a more robust and transparent approach and to ensure complaints lead to real learning and changes within the Council where required.

6.8.4 In June, the Council brought debt enforcement in house as it adopts it’s approach in line with newly introduced safeguarding and anti-poverty policies. The Council has worked with Citizens Advice and The Samaritans to train staff to spot signs of people getting into difficulties or struggling with mental health difficulties so that it can take a more pro-active and supportive approach in helping residents with money problems.

6.8.5 The position at year end shows that for Resources and Customer Delivery there is an underspend of £1.1m. This was compared to an underspend of £112,000 forecast at the end of Quarter 3. This positive movement was mainly due to one

off historic balances that have been written back into revenue as detailed in paragraph 6.6.15 and an increased underspend on the overall cost of benefits.

Table 8 Resources and Customer Delivery (including reserve movements and contingency) Resources and Customer Delivery Budget Adjusted Over/(Under) Outturn Spend £'000 £'000 £'000 £'000 Audit, Risk, Fraud and Insurance 1,733 1,229 (504) Chief Executive 1,665 1,570 (95) Chief Information Officer 6,986 7,276 290 Communications 567 707 140 Community Engagement 4,032 3,990 (42) Customer Delivery 23,995 23,569 (426) Financial Management 8,769 8,453 (316) Governance and Co-ordination 2,787 2,539 (248) Human Resources 4,286 4,700 414 Innovation & Change Management 128 0 (128) Legal Services (540) (706) (166)

Total Resources and Customer 54,408 53,327 (1,081) Delivery

Audit, Fraud, Insurance, and Strategic Procurement (underspend £504,000) 6.8.6 The Strategic Procurement service underspent by £255,000 due to the delayed implementation of the Procurement Strategy and implementation of the proposed staffing structure. There was a further underspend of £190,000 in the Audit service, resulting mainly from work being undertaken internally instead of utilising the external provider. The Fraud service had a £89,000 underspend through successful recovery of legal costs and Proceeds of Crime Act (POCA) money of which £60,000 has been requested to transfer into a new Proceeds of Crime Reserve.

Communications (overspend £140,000) 6.8.7 This comprises an overspend of £190,000 in staffing costs resulting from the additional resources that has been put in place over the last year. This is offset by income generated by the in-house design team. A detailed exercise to establish staff costs will be carried out to determine any ongoing pressures that need to be addressed as part of next year’s budget process.

Customer Delivery (underspend £427,000) 6.8.8 The later than anticipated start of the new Enforcement Service resulted in an underspend of £94,000. This was the result of an underspend of £167,000 on salaries and supplies and service, offset by lower than anticipated collection of fees and charges of (£73,000 overspend).

6.8.9 The Benefits service underspent by £289,000. This is mainly a result of unbudgeted grants received from DWP in year for initiatives such as New Burdens – to support implementation of welfare reform changes and an overall underspend in the cost of administrating benefits.

6.8.10 The Conference and Events function had a £197,000 underspend as a result of achieving more income than anticipated. This was a result of a mix of increased pricing and generating additional volume of business.

6.8.11 The Council’s Facilities Management contract with an outside contractor was terminated in 2018/19. The transfer of some services in house and the re- tendering of the remaining services was completed during 2019/20. This resulted in increased costs due to three main factors – the introduction of the London Living Wage, compliance with industry standards and costs reflective of current market prices. As a result, £2.8m was transferred from the Budget Stabilisation Reserve and £500,000 from the Carry Forward Reserve to fund this pressure in year. These increased costs have been built into the budget from 2020/21.

Financial Management (underspend £316,000) 6.8.12 This service comprises two areas: Financial Management, which is the strategic and operational function of the finance service, and Corporate Management, which is made up of Council wide corporate costs.

Financial Management overspent by £258,000. This is as a consequence of three areas; legacy financial system costs (£144,000); legal costs (£57,000); and temporary staffing resources (£86,000).

6.8.13 The on-going support of legacy financial systems is currently under review to determine any long-term requirements and it is anticipated that some support will no longer be required from 2021/22. In relation to staffing costs, there are higher than planned levels of agency staff within the department. This is currently under review and will be considered as part of the HR review of the department that was carried out earlier in the year. Recommendations from the review are currently being considered and will be implemented from 2021/22.

6.8.14 Corporate Management underspent by £519,000. This was as a consequence of:

 One-off accounting adjustments to historic balances of £659,000; and  The budget for bank charges was increased by £170,000 but the overspend is still approximately £50,000. This is from bank charges that are incurred by the Council as more people pay by card. This is a method of payment that the Council wants to continue to promote and reduce the use of cash and cheques and therefore the budget and charges will remain under review.

Governance and Co-Ordination (underspend £248,000) 6.8.15 Within the service area there is a forecast underspend in Governance Services and the Mayoralty of £195,000. This is due to an underspend on salaries because

of vacancies being held and a service re-organisation. This is offset partially by an overspend on the cost of live streaming of Council meetings and an overspend due to work being carried out on the Mayor’s Exhibition Space. From 1 April 2020 this service will be reported under Legal and Governance services.

6.8.16 A £53,000 underspend in Economic Development Services is mainly due to an overachievement of rental income of £100,000 from Westbourne Studios. The rent is determined by a profit share arrangement with the management company. The Council share is 15%. This overachievement occurs year on year and therefore changes to the budget in 2020/21 have been made to help fund the Council's New Economic Development Strategy. It is unclear if COVID-19 will have a significant long-term detrimental impact on future income streams.

6.8.17 The in-year underspend is contributing to spend on the New Economic Development Strategy which has been included in budgets for 2020/21 together with contribution from the New Homes Bonus.

Human Resources and Elections (£414,000 overspend) 6.8.18 The Human Resources service overspent by £180,000. An overspend of £68,000 is from the cost of union support. This is an overspend that has been present for several years. There were also one-off costs of £163,000 resulting from unrecoverable debts relating to schools HR support.

6.8.19 The HR service is undertaking various council wide projects that are adding extra costs to the service in the short term but are expected to result in council wide savings in the medium term through reducing staffing costs. The cost of this work has been funded from the Special Projects reserve.

6.8.20 The Elections Services overspent by £234,000 for several reasons. An overspend of £92,000 on postage; £56,000 overspend for IT kit for canvassers and software licences for the Elections management system. There was also a £40,000 overspend on extra staffing costs for the Parliamentary Elections count. Many of these overspends are ongoing and will need to be addressed long-term.

ICT (overspend £290,000) 6.8.21 Staffing budgets overspent by £200,000. This is the result of a shortfall in the budget for centralised Adults and Children’s IT staff following disaggregation of tri borough arrangements and ongoing staffing pressures across ICT due to increased levels of demand for technology and difficulty in recruiting and retaining permanent technical IT staff.

6.8.22 There was also a £90,000 overspend in Microsoft Enterprise Agreement licence costs. This is a combination of increased demand and price changes. Work is ongoing to manage demand.

Innovation and Change Management (£127,000 underspend)

6.8.23 The Bi-Borough arrangement for this service ended last year. This budget has been re-aligned and as agreed through Forward 2020 report will be used to fund the Council’s re-structure of Corporate Services.

Legal Service (£165,000 underspend) 6.8.24 Demand for legal advice in excess of planned levels has resulted in an over recovery of costs.

Capital (variance to budget £2.570m)

6.8.25 The total Resources and Customer Delivery Capital Programme for 2019/20 was budgeted at £6.792m against which there was spend of £4.222m. A summary of the main variations (greater than £0.5m) arising since the Quarter 3 Monitor report is set out below:

Kensington Town Hall Cyclical Works Phs2 - £1.533m re-phased to 2020/21 6.8.26 The delivery of works was delayed whilst the new Workplace and Facilities Department and Project Delivery model was established, and a full establishment of officers put in place to deliver the schemes.

6.9 Grenfell Corporate Costs (Overspend £927,000)

6.9.1 The budget for Grenfell corporate costs funds services such as the legal support for the public and criminal inquiries, communications and finance as well as some compensation costs. The position at year end is an overspend of £927,000. This relates primarily to legal costs in support of the public inquiry being more than budgeted for and one-off expenditure on communications.

6.9.2 Expenditure on specialist legal support in respect of the Public Inquiry and the MPS investigation totalled £2,920,770 at year end.

6.10 Corporate Items and Levies

6.10.1 Corporate Items and Levies are reporting an underspend of £10.5m. The main variances were an underspend of £3.8m on the interest budget. This was due to less borrowing being required due to re-phasing some capital spend to the following year and improved investment returns following full implementation of the Council’s Treasury Management Strategy. A £2.4m pension fund budget provision was not required in year. Budgets have been adjusted for future years and therefore these underspends are one off in 2019/20. The remainder of this underspend was due to corporate contingency budget not being required during the year.

7 Council Tax and Business Rates Collection 2019/20

7.1 Collection performance for council tax in 2019/20 is set out Table 9. The total amount due for the year was £120.6m of which 97.07% was collected by the end of the year. This is marginally down on the previous year. This drop is due to the Council not taking any recovery or enforcement action during the final weeks of the March at the start of the Coronavirus pandemic.

Table 9: 2019/20 Council Tax in-year collection Council Tax 2019/20 % £'000 Amount due to be collected 120,566 100.00% Amount collected for the period 117,030 97.07% 2018/19 comparator 97.56% -0.49%

7.2 In terms of business rates, the total amount due during 2019/20 was £365.2m of which 97.16% was collected by the end of the year. This compares to 99.17% for the same period last year. Collection is down by 2.01% due to the closure of the old system from 21 August and the service being brought back in-house with effect from 1 October 2019.

Table 10 2019/20 Business Rates in-year collection NNDR 2019/20 % £'000 Amount due to be collected 365,561 100.00% Amount collected for the period 355,163 97.16% 2018/19 comparator 99.17% -2.01%

8 Housing Revenue Account

Revenue Outturn (£8.9m Overspend)

8.1 The HRA business plan sets out plans to invest in the Council’s housing stock over a 7-year period. The HRA is operating within a tight funding envelope. The working balance at March 2020 was £7.5 million and it has been accepted that the Council should not budget for the working balance to drop below £5m. There is therefore a real risk of falling below prudent levels. The Council will continue to review the business plan and mitigating action may be required in year if significant pressures are identified.

Table 11 Housing Revenue Account Outturn Position Housing Revenue Account Outturn Budget Adjusted Over/(Under) Position Outturn Spend £'000 £'000 £'000 £'000 Gross Management Cost 15,945 16,351 406 Repairs and Maintenance 13,394 16,776 3,382 Capital Charges 8,939 8,788 (151) Depreciation 3,080 3,283 203 Heating and Hot Water 2,799 4,750 1,951 Cleaning Services, Refuse Collection and 3,297 3,626 329 Pest Control Insurance Costs 1,815 1,786 (29) Recharges from Corporate Services 771 1,100 329 Surveys 400 274 (126) New Homes Programme 500 0 (500) Fire Related Expenditure 1,600 1,748 148 Provision for Bad Debts 500 697 197 Other Expenditure 2,525 2,370 (155) Total Gross Expenditure 55,565 61,549 5,984

Income Dwelling Rents (41,207) (40,431) 776 Non Dwelling Rents (Commercial (4,914) (4,928) (14) Properties and parking facilities) Service Charges (tenants/leaseholders) (8,079) (8,007) 72 Charges for Heating and Hot Water (1,267) (1,340) (73) Insurance Charges - Leaseholders (1,056) (1,080) (24) Other Income (744) (681) 63 Total Income (57,267) (56,467) 800

Contribution to (-) or from (+) HRA (1,702) 5,082 6,784 working balance (excluding Capital)

Transfer to Capital Transfer to Major repairs reserves 0 0 0 Abortive capital cost 0 2,074 2,074 Contribution to (-) or from(+) Working (1,702) 7,156 8,858 Balance

Working Balance b/fwd (14,690) (14,690) Contribution to (-) or from(+) Working (1,702) 7,156 Balance Working Balance c/fwd (16,392) (7,534)

Management (£406,000 Overspend) 8.2 This budget mainly comprises the costs of employing staff (except those within the Repairs and Community Alarm Services) and the associated accommodation and office expenses. The budget for 2019/20 was set before a number of staffing structures were agreed and implemented.

8.3 The gross cost of employing staff was higher than originally budgeted, this mainly reflects the new structure needed to support the enhanced HRA Capital Programme. However, given the nature of the works undertaken, many of these costs have been capitalised. Overall, net spend on staffing has been contained within budget.

8.4 The overspend on management (2.5%) reflects higher than budgeted spend on equipment, printing, legal and hotel/removals.

Repairs and Maintenance (£3.382m Overspend) 8.5 This budget line comprises the costs of running the in-house responsive repairs service, which is demand led, together with provision for both planned and responsive repairs to specialist areas which are solely provided by external contractors.

8.6 Overall, expenditure on repairs in 2019/20 is similar to that in 2018/19. However, a one-off budget increase of £2.5 million had been agreed for 2018/19 following the transfer of functions back to the Council.

8.7 This overspend is mainly due to an under accrual of around £600,000 in the 2018/19 accounts, the establishment of a handy person’s service, and works arising from fire risk assessments being undertaken by the Repairs Service. Excluding the fire assessment works, an overspend in excess of £2m had been predicted in the quarter 3 forecast.

8.8 The repairs service has undertaken some works on acquired properties. In future, the costs of these repairs will be identified and transferred onto the General Fund.

8.9 The budget for 2020/21 is based on the staffing structure for the repairs service and includes provision for works arising from fire risk assessments. The budget assumes that recruitment to the new structure will be successful and reliance on agency and contract staff will be significantly reduced. However, COVID-19 has caused delays in this process and some cost pressures in 2020/21 should be anticipated.

Depreciation (£203,000 Overspend) 8.10 The higher charge is due to the increase in property valuations.

Heating and Hot Water (£1.95m Overspend) 8.11 At the time these budgets were set, it was assumed that the heating systems at The Walkways would have reverted to gas rather than oil. However, there were some technical difficulties in implementing these changes. Much of the overspend is due to the cost of oil that was required during this period.

8.12 However, other budgets for heating and hot water services were overspent. It is likely that some of this overspend is due to invoices being based on estimated readings. An Energy Officer has been established which will oversee the energy budgets and identify the ongoing budget requirements.

Cleaning Services (£329,000 Overspend) 8.13 An overspend of £329,000 (10%) which reflects the cleaning services being procured in addition to the main contract. The ongoing budget may need to be amended to allow for reactive works which are outside the scope of the main contract.

Recharges from Corporate Services (£329,000 Overspend) 8.14 This increase reflects the transfer of posts from the Housing IT team to the Corporate IT team. The costs of these posts are now recharged to the HRA rather than being funded from the management budget. There is a corresponding reduction in expenditure against the management budget which has been offset by other cost pressures.

Surveys (£126,000 Underspend) 8.15 The budget for 2019/20 contains provision of £400,000 to undertake surveys. However, costs in year are lower than anticipated and the provision will be carried forward to 2020/21.

New Homes Programme (£500,000 Underspend) 8.16 Costs associated with this Programme are initially being charged to the General Fund and many of which are then capitalised.

8.17 The HRA will incur costs as homes for social rent are completed and acquired by the HRA.

Fire Related Expenditure (£148,000 Overspend) 8.18 Expenditure on fire marshals was higher than budgeted.

Provision for Bad Debts (£197,000 Overspend) 8.19 This reflects the provision made for major works charges to leaseholders.

Dwelling Rents (£777,000 Overspend)

8.20 A budget shortfall of £777,000 (1.9%) arose in the year. There was a major programme of void works on the Lancaster West Estate and some delays occurred due to a change in contractor which resulted in a higher level of void properties than had been assumed when the budget was set.

Abortive Capital Costs (£2.074m Overspend) 8.21 The costs incurred on the former redevelopment scheme at Treverton were charged to the Capital Programme. However, a review has indicated that these costs should be considered abortive and as such should no longer be categorised as capital.

8.22 This ‘accounting’ treatment essentially charges the HRA with the costs incurred but frees up the capital finances which were used to fund the expenditure previously. Capital Programme Outturn

8.23 The total capital budget for the HRA was originally set at £37.790m. This was revised during the year to £17.379m. This reflected the timing of some major projects and is based on advice from professional consultants, the resident consultation process, the outcome and timing of stock condition surveys and the procurement arrangements. Details of the HRA Capital Programme outturn are set out in Table 12.

Table 12 – Capital Outturn HRA 2019/20. Service 2019/20 2019/20 Variance Over- Under- Slippage Budget Outturn £’m spend Spend £’m £’m £’m £’m £’m HRA Capital 13.979 16.781 2.802 2.802 0 0 Programme Lancaster West 2.500 2.175 (0.325) 0 0 (0.325) Main Refurbishment Environmental 0.650 0.309 (0.341) 0 0 (0.341) Improvements ICT 0.250 0.077 (0.173) 0 0 (0.173) Total 17.379 19.342 1.963 2.802 0 (0.839)

8.24 A capital programme totalling £267m was created to undertake works to the housing stock over a 7-year period. The level of budget provision was determined after a number of stock condition surveys.

In 2019/20, overall spend amounted to £16.781m. Table 13 provides a high-level breakdown.

Table 13 – Capital Programme £000’s Mechanical and Electrical Works 4,981 Fire Related 4,500 Building Envelope 2,036 Capitalised Repairs 2,031 Aids and Adaptations 355 Major Works 1,285 Other 1,593 Total 16,781

Expenditure in the later months of the year was higher than anticipated and therefore resulted in an overspend against the revised budget. However, these costs will be contained within the overall 7 year budget.

The capital budget for 2020/21 has been set at approximately £45m. However, the impact of Covid-19 is currently being ascertained and the budget for 2020/21 will need to be amended as part of the Quarter 1 budget monitoring process.

Lancaster West Estate (£325,000 Underspend) 8.25 Expenditure was lower than forecast, this unspent budget will be carried forward to 2020/21.

Environmental Improvements (£341,000 Underspend) 8.26 The use of these budgets is determined by local Resident Associations.

In 2019/20 expenditure was lower than the budget provision. However, these funds will be earmarked for future use by the associations.

ICT (£173,000 Underspend) 8.27 The underspend reflects delays caused by the contractor in migrating to the new housing system, and therefore the resourcing of the project.

9 2019/20 Dedicated Schools Grant and schools

9.1 The 2019/20 Dedicated Schools Grant (DSG) is a ringfenced fund administered by the Council and governed through the Schools Forum. This funds Schools, Early Years education and alternative educational provision for children with high needs. Expenditure for 2019/20 totals £70.9m. The expenditure is £638,000 more than the DSG income received, mainly due to overspends within the high needs block. The year-end deficit balance on the DSG reserve has consequently increased by £638,000 to £4.9m deficit.

9.2 The majority of the cumulative deficit relates to pupils with high needs. In accordance with the DfE requirements, a deficit recovery plan has been produced in partnership with schools and agreed with Schools Forum. However due to the

size of the cumulative deficit and ongoing high needs pressures, particularly in relation to post 16 pupils, the recovery plan is not expected to balance within the three years as required by the DfE. The DfE are carrying out a high needs review because nationally significant numbers of Local Authorities are also in deficit. A local review is underway, and the deficit recovery plan will be updated in consultation with Schools Forum in 2020/21.

9.3 The DSG reserve balance movement is highlighted in table 14:

Table 14 DSG Reserve DSG Reserve £’000 Deficit brought forward 01/04/2019 4,263 DSG Reserve Applied 2019/20 638 Deficit carried forward 31/03/2020 4,901

10 Reserves transfers/carry forward requests

10.1 Table 15 summarises the movements in the Council’s earmarked reserves during 2019/20. A full list of transfers in and out of reserves during the year is shown in Appendix 2.

10.2 The following proposed year-end adjustments – carry forwards and transfers to/from reserves are included in the figures and are presented for Leadership Team approval as required by the Council’s Financial Procedure Rules.

Table 15 Use of Reserves Reserve Classification 01/04/2019 Movements 31/03/2020

£'000 £'000 £'000 Grenfell* (48,713) 18,603 (30,110) Special Projects (22,299) 6,502 (15,797) Car Parking (24,386) 865 (23,521) Budget Carry Forward (2,517) (316) (2,833) Budget Stabilisation (11,482) (13,941) (25,423) Reorganisation (10,000) 1,275 (8,725) Schools Reserves (5,465) 395 (5,070) Insurance (5,267) 1,488 (3,779) Public Health (4,908) 515 (4,393) London Residuary Body (3,984) (55) (4,039) Notting Hill Carnival (375) 0 (375) Street Trading (341) 69 (272) Dedicated Schools Grant 4,263 638 4,901 Capital Expenditure 0 (9,900) (9,900) Staff Welfare Reserve 0 (341) (341) Local Projects 0 (175) (175) Troubled Families 0 (539) (539) Proceeds of Crime 0 (110) (110) GF Working Balance (10,000) 0 (10,000)

Total GF Reserves (145,474) 4,973 (140,501) *The Council has made a commitment to ring-fence £50m over 5 years from 2019/20 to fund recovery services for the bereaved, survivors and the local community. A proportion of this funding has been set aside within the reserves, but there is also provision in the annual base budget to meet these costs. Any underspends against budget will be placed into the reserves for use in future years within the ring-fence to ensure the funding is only used for Grenfell recovery initiatives.

Budget Carry Forward 10.3 The Council holds a Budget Carry Forward reserve for balances that have been put aside but for which there is planned use over the next two years. A sum of £1.5m has been transferred into the reserve and £1.2m transferred from the reserve. There has therefore been a net increase of £316,000 and this has been earmarked for planned use in 2020/21.

10.4 National Assessment Accreditation System (NAAS) Grant received in 2018/19 had been transferred into the Carry Forward reserve. A sum of £31,000 was used in 2019/20 to deliver training of social workers within Children’s Services with the remaining £113,000 carried forward into future years.

10.5 Funds were brought forward from previous years to fund spend within Facilities Management (£500,000) following cost pressures from changing contractor during the year.

10.6 The Council received £505,000 One Public Estate grant that is being used to facilitate work on the New Homes Development Programme. Of this, £443,000 is requested to be carried forward into 2020/21.

Other Reserves 10.7 The remainder of the transfers to and from reserves are mainly in relation to the Grenfell Reserve and the Budget Stabilisation Reserve.

10.8 The Grenfell Recovery Strategy was funded largely from the Grenfell Reserve as expected during the year. There were also some transfers into the reserve during the year relating to the Dedicated Service Budget (£454,000) and Digital Skills Grant (£258,000) received but due to be spent in future years.

10.9 A sum of £175,000 was transferred into a new Local Projects Reserve. This is where the Council Tax from those who are bereaved and survivors of the Grenfell Tower fire will be paid each year. The money will be ringfenced and focussed on supporting opportunities for disadvantaged young people or those who need help with employment and skills; mainly, but not exclusively, for those who live in social housing in the borough.

10.10 The Council received £5.8m at the end of March 2020 to support additional costs due to the Coronavirus pandemic. This was not spent during 2019/20 and has been transferred to the Budget Stabilisation Reserve for use in 2020/21.

10.11 The additional costs for the compensation paid to registered providers of social housing following the Grenfell Fire will be funded from the Special Projects Reserve.

10.12 Income from parking can only be used for certain specified purposes. These include public transport, concessionary fares, roads and highway maintenance and environmental improvements. Any surplus income above that is held in the parking reserve. The amount transferred to the parking reserve was £381,000.

11 Capital Funding

11.1 Capital Expenditure can be funded from a number of different sources and Delegated Authority for final funding decisions is with the Executive Director of Resources. The funding of the programme is as set out in Tables 16 and 17:

Table 16 – Capital Funding General Fund 2019/20 2019/20 2019/20 Budget Outturn Variance £’m £’m £’m

Capital Grants Reserve (1.675) (5.317) (3.642) Capital Grant and Contributions (7.788) (6.005) 1.783 Use of S106/CIL Contributions (4.064) (1.151) 2.913 Use of Earmarked Reserves 0 (0.915) (0.915) Capital Receipt Reserve (19.803) (10.792) 9.011 Revenue Contributions (7.503) (1.874) 5.629 External Borrowing (30.985) (21.723) 9.262 Total (71.818) (47.776) 24.042

Table 17 – Capital Funding HRA 2019/20 2019/20 2019/20 Budget Outturn Variance £’m £’m £’m

Capital Grants Reserve (2.500) (2.073) 0.427 Capital Receipt Reserve (11.799) (11.911) (0.112) Major Repairs Reserve (3.080) (5.357) (2.277) Total (17.379) (19.342) (1.963)

Capital Programme Contingency 11.2 The balance of Capital Programme Contingency at the end of 2019/20 was £5.443m and it is proposed that this be carried forward to 2020/21 to meet any future needs. In addition, there is an identified net underspend on the General Fund Capital Programme of £506,000 which is recommended be transferred to the Capital Contingency increasing the balance to £5.949m to set against any future additional requirements on the programme.

S106 Outturn Position 11.3 The spending of S106 money is linked to the three legislative tests and in particular the terms of the legal agreement. The itemised contributions link to Council service areas such as Housing, Economic Development and Education. Once monies have been received by the Council, the monies must be spent on projects that align with service area priorities and are in compliance with the terms of the legal agreement. This process is managed and reported through the Capital Asset Board. Service areas priorities are also agreed with relevant Lead Members.

11.4 A total of £1.151m of S106 Agreement was utilised in the funding of 2019/20 expenditure.

12 OPTIONS AND ANALYSIS

12.1 The outturn position is for noting by the Leadership Team however, the proposed use of reserves not previously agreed during the year requires approval by the Leadership Team. There is an option to not agree the proposed use of reserves as set out in Appendix 2, but the Leadership Team must be mindful of the Council’s financial position and the advice and recommendations of the statutory Section 151 Officer.

13 HUMAN RESOURCES AND EQUALITIES IMPLICATIONS

13.1 There are no specific equalities implications which need to be taken into account when considering the recommendations in this report.

14 LEGAL IMPLICATIONS

14.1 The Accounts and Audit (Coronavirus)(Amendment) Regulations 2020 have extended the period during which the Council must publish its statement of accounts for 2019/20. Any other legal implications are set out in the report. The report is produced as part of the requirements for managing the Council’s spending within budget.

15 FINANCIAL, PROPERTY AND ANY OTHER RESOURCES IMPLICATIONS

15.1 As a financial report the key implications are laid out within. At time of writing the Council is facing the challenges posed by the COVID-19 Pandemic which is causing significant financial pressures in the new financial year 2020/21. The Period 2 Monitoring and Financial Position update report also included on this agenda provides further detail on this.

Taryn Eves Director of Financial Management

Contact officer(s):

Nicholas Pyne, Head of Financial Strategy, [email protected]

Mandatory clearance requirements for all Key and Executive Decision reports Cleared by Finance (officer’s initials) [NP] Cleared by Corporate Finance (officer’s initials) [TE] Cleared by Director of Law (officer’s initials) [LP] Cleared by Communications (officer’s initials) [NTP]

Appendix 1 - Understanding the Outturn Report

1. The Outturn Position is comprised of a number of components:

1.1. The Revenue outturn considers the councils Revenue expenditure (day to day expenditure including salaries, running costs, contracts, funded by income (council tax, business rates, grants, investment interest, commercial income fees & charges etc.) for 2019/20. The Outturn is compared with the budget set in March 2019, adjusted for decisions made during the year to utilise reserves and contingency budget due to planned changes in service delivery. Further reserve and contingency movements are proposed at the end of the year.

1.2. The Capital outturn considers the Councils Capital expenditure (purchase of new and improvements to existing assets such as buildings funded through capital receipts, borrowing, reserves, planning contributions) for 2019/20 compared with the budget set in March 2019 and outlines slippage of capital projects and proposed carry forward of unspent budget into future years to fund the re-phased schemes.

1.3. The distinction and relationship between capital can be complex but in simple terms whilst revenue income can be used to fund capital expenditure, capital receipts (sale of an asset) cannot be used to fund revenue expenditure, however income derived from the asset (e.g. rent is classed as revenue income). Some revenue costs can be capitalised but to do so requires direct relationship to capital projects i.e architect staffing costs. There is also a distinction between maintenance and refurbishment. To qualify as capital expenditure works must for example improve the asset life or its value.

1.4. Most services are funded from the Councils General Fund, and this includes a number of ringfenced/restricted elements including the use of Parking Income and the Adult Social Care Precept. In addition, there are a number of specific ringfenced service areas whereby the council must administer separate accounts to ensure income is only spent in a specific way and monitors and reports separately:

1.4.1. The Housing Revenue Account (HRA) manages the Council’s activities as a housing provider where income (rental income, service charges etc.) is used to fund associated expenditure the council incurs in its role as landlord (e.g. Management, repairs, heating provision) and is managed independently of other council activities. As above the outturn considers performance across revenue and capital plans. (Working balance definition)

1.4.2. The Dedicated Schools Grant (DSG) funds Schools, Early Years Services, and additional services and alternative educational provision for children with high needs and is funded through government grant and governed through the Schools Forum. Recent guidance requires the Council to develop a 3yr recovery plan if the DSG falls into deficit

1.4.3. The Public Health grant is limited in use to deliver Public Health related outcomes with expenditure on preventative services such as Substance Misuse, Sexual Health, Obesity etc.

1.5. Whilst every attempt is made to set an accurate budget and spend accordingly through the year to deliver planned activity there will invariably be underspends and overspends cause by variances in levels of expenditure and income. To manage these unforeseen circumstances, the Council includes contingency provisions when setting its budget, maintains working balances, and holds reserves

Appendix 2 – All Transfers to/from Reserves, including those agreed in year Reserve Transfers may be agreed in year as circumstances arise with enough certainty to put forward for decision and adjust budgets, whereas some transfers occur as part of the outturn reporting process.

Service Reserve Description Amount Amount (£000) (£000) Children's Carry Carry forward of grant income received 45 Services and Forward from DfE for Partners in Practice that will Education be used to fund provision in 2020/21 Children's Carry Unspent Controlling Migration Fund top 54 Services and Forward up carried forward for use in 2020/21 Education Children's Carry Use of funds from the National (31) Services and Forward Assessment Accreditation System grant Education for 2019/20 spend Children's DSG As required, transfer of deficit on the (638) Services and Dedicated Schools Grant to the ring Education fenced DSG reserve. Children's Local Contribution to the reserve held for 174 Services and Safeguardin partner contributions and for funding Education g Children's future serious case reviews. Board Children's Parking Use of the parking reserve to fund eligible (293) Services and SEN Transport spend in 2019/20. Education Children's Re- Use of the reorganisation reserve to fund (247) Services and organisation redundancy costs from the re-design of Education youth services. Children's Reorganisat Use of the reorganisation reserve to fund (56) Services and ion redundancy costs following the re-design Education of Pupil Support Service. Children's Special Use of Special Projects Reserve to fund (2) Services and Projects one off costs for the ParentChild+ Education Programme Children's Troubled Carry forward of unspent money in 539 Services and Families 2019/20 on the Troubled Families Education Programme to fund ongoing and committed spend in 2020/21 (454) Environment and Carry Carry forward of Activate Grant received 29 Community Forward in 2019/20 for funding ongoing and committed spend in 2020/21 Environment and Carry Carry forward of MCHLG grant (Private 31 Community Forward rented sector innovation& enforcement)

Service Reserve Description Amount Amount (£000) (£000) received in 2019/20 for funding ongoing and committed spend in 2020/21 Environment and Parking Use of Parking Reserve to fund one off (38) Community consultancy costs for Kensal Transport project Environment and PH Underspent Healthy Catering Public 38 Community Health funding transferred to reserve for use in 2020/21 Environment and Reorganisat Use of Reorganisation Reserve to fund (226) Community ion one off redundancy costs associated with departmental re-structures Environment and Special Use of Special Projects Reserve for one (70) Community Projects off costs associated with the re-tender of the Waste Management contract Environment and Street Use of ring-fenced Street Trading (69) Community Trading Reserve to fund eligible budget pressures in 2019/20 (306)

Corporate Capital Section 31 Grant received in year from 9,900 Expenditure MHCLG for contribution towards funding of Lancaster West refurbishment. Corporate Budget Section 31 Grant received from MHCLG 5,835 Stabilisation to fund spending pressures from COVID - 19 in 2020/21. 15,735 Grenfell Corporate Grenfell Use of reserve to Grenfell Costs funded (4,650) from reserves Grenfell Corporate Grenfell Finance budgeted compensation to (10,000) Registered Providers of Social Housing Grenfell Corporate Insurance Re-imbursement of costs received from 68 insurance providers paid into the Insurance Reserve Grenfell Corporate Special Use of Special Projects Reserve for one (2,114) Projects off increased costs from the compensation to Registered Providers of Social Housing following the Grenfell Tower Fire (16,696) Housing and Carry Carry forwards of grant received from 233 Social Investment Forward MHCLG in 2019/20 to fund committed costs in 2020/21

Service Reserve Description Amount Amount (£000) (£000) Housing and Carry Use of previous carry forward of grant (56) Social Investment Forward received to fund committed spend for homeless intervention in 2019/20 Housing and Carry Use of previous carry forward of grant (23) Social Investment Forward received to fund committed spend for homeless new burdens in 2019/20 Housing and Carry Use of previous carry forward of grant (35) Social Investment Forward received to fund committed spend for Landlord Insurance in 2019/20. Housing and Carry Use of previous carry forward of grant (187) Social Investment Forward received to fund committed spend for One Public Estate in 2019/20 Housing and Carry OPE grant received in 2019/20 carried 443 Social Investment Forward forward for committed spend on the New Homes Development Programme. Housing and Carry Use of Carry Forward Reserve to fund (134) Social Investment Forward Property Feasibility Studies Housing and Special Use of Special Projects Reserve to fund (110) Social Investment Projects one off costs for additional staffing in housing. Housing and Special Use of Special Projects Reserve to fund (380) Social Investment Projects one off costs for support to deliver the Temporary Accommodation project. Housing and Special Use of Special Projects Reserve to fund (64) Social Investment Projects one off projects costs for the Pembroke Road Office Refurbishment Housing and Special Use of Special Projects Reserve to fund (110) Social Investment Projects one off costs for additional staffing to deliver the Housing Transformation Project (422)

Public Health PH Transfer of 2019/20 unspent Public (553) Health Grant to the ringfenced Public Health Reserve

Resources and Budget Use of 2018/19 underspend on the (2,800) Customer Delivery Stabilisation Facilities Management budget to fund the increased costs of the new service following termination of the contract as pressure following change in contractor Resources and Carry Carry forward of 2019/20 budget to fund 60 Customer Delivery Forward committed 2020/21 spend for Adult and Family Learning

Service Reserve Description Amount Amount (£000) (£000) Resources and Carry Use of 2018/19 underspend on the (500) Customer Delivery Forward Facilities Management budget to fund the increased costs of the new service following termination of the contract as pressure following change in contractor Resources and Carry Use of Carry Forward Reserve to fund (35) Customer Delivery Forward Software product to enable for digital mailouts. Resources and Carry Transfer to the Carry Forward Reserve of 297 Customer Delivery Forward 2019/20 unspent budget for City Living Local Life for spend in 2020/21 Resources and Insurance Planned use of Insurance Reserve for (1,556) Customer Delivery self-funded insurance provision including for range of eventualities including for example Tree Root damage and Employers Liability Resources and London Transfer of 2019/20 interest and unused 55 Customer Delivery Residuary ringfenced balances to the Reserve for Body London Residuary Body Resources and Proceeds of Transfer of surplus 2019/20 income from 60 Customer Delivery Crime the Proceeds of Crime Act to fund future fraud initiatives. Resources and Reorganisat Use of the Reorganisation reserve to fund (701) Customer Delivery ion redundancy costs from the re-structure of the department Resources and Reorganisat Use of Reorganisation reserve for one off (96) Customer Delivery ion costs to support the Pay and Grading Review Project. Resources and Special Use of Special Projects Reserve to fund (471) Customer Delivery Projects one off costs to deliver the Council’s Medium Term Financial Strategy Programme and Review of governance on the Capital Programme. Resources and Special Use of Special Projects Reserve to fund (51) Customer Delivery Projects one off costs to deliver the Council’s Change Programme Resources and Special Use of the Special Projects Reserve to (90) Customer Delivery Projects fund one off costs for the IT Portfolio and Digital Programme automation Resources and Special Use of Special Projects Reserve to fund (194) Customer Delivery Projects the review of staffing structures through Decision Making Accountability project. Resources and Special Use of Special Projects Reserve to fund (425) Customer Delivery Projects second phase of one-off costs to support

Service Reserve Description Amount Amount (£000) (£000) delivery of the Council’s Medium-Term Financial Strategy Resources and Special As agreed as part of the budget in March (383) Customer Delivery Projects 2019, use of the Special Projects Reserve to fund the 2019/20 TMO Management Fee. Resources and Special Use of Special Projects Reserve to fund (113) Customer Delivery Projects one off costs for improvements to the Website. Resources and Staff Creation of Staff Welfare Reserve to hold 341 Customer Delivery Welfare the balance for the previously established scheme. Resources and Local Creation of Local Projects Reserve to 175 Customer Delivery Projects hold the equivalent balance of Council Tax receivable from the bereaved and survivors of the Grenfell Tower for opportunities for disadvantaged young people or those who need help with employment and skills, focused mainly for those who live in social housing in the borough (6,427) Grenfell Recovery Grenfell Carry forward of unspent 2019/20 budget 800 from the Community Grants initiative. Grenfell Recovery Grenfell Carry forward of unspent 2019/20 budget 454 for the Dedicated Service and for use in future years Grenfell Recovery Grenfell Carry forward of unspent 2019/20 budget 258 for the Digital Skills Grant received but for spending in future years. Grenfell Recovery Grenfell Use of reserve to fund additional service (166) charges for the acquired properties used to support the bereaved and survivors Grenfell Recovery Grenfell As planned, Grenfell Recovery costs (5,549) funded from the reserve. Grenfell Recovery Grenfell Carry forward Grenfell Employment and 250 Skills codesign budget which will be delivered in 2020/21 (3,953)

Children's Schools Transfer from ring fenced schools reserve (395) Services and to schools’ budgets Education

Service Reserve Description Amount Amount (£000) (£000) Capital Parking Use of Parking Reserve to fund eligible (915) 2019/20 Capital Programme Expenditure Capital Special Use of Special Projects Reserve to fund (1,874) Projects eligible 2019/20 Capital Programme Expenditure

Parking Transfer of 2019/20 surplus parking 381 Reserve income to the Parking Reserve. Budget Transfer of 2019/20 underspend to the 10,906 Stabilisation Budget Stabilisation Reserve.

Total net transfers (as per Statement of Accounts Note) (4,973)

Appendix 3 - 2019/20 Capital Outturn Position General Fund Scheme 2019/20 2019/20 Variance Over/ Slippage Revised Outturn Actual to (Under)- (Re-phased) Budget Position Budget spend to Future Years £ £ £ £ £ Adult Social Care Day Centre Re-provision 515,000 330,828 (184,172) 0 (184,172) ASC Mosaic Case Management System 10,000 14,098 4,098 0 4,098 Digital transformation Adult Social Care 0 89,261 89,261 0 89,261 1-9 St Marks Road - Health & Safety Works 43,000 0 (43,000) 0 (43,000) Adult Social Care and Public Health 568,000 434,186 (133,814) 0 (133,814) EYCF (Early Years Capital Fund) 58,000 11,236 (46,764) 0 (46,764) Children's and Early Years Provision 450,000 210,147 (239,853) 0 (239,853) New Marlborough Primary School Commercial & Retail 70,000 14,298 (55,702) 0 (55,702) Holland Park School Redevelopment 124,000 31,548 (92,452) 0 (92,452) School Kitchens 126,000 125,956 (44) 0 (44) Fox Primary School Expansion 200,000 204,365 4,365 0 4,365 Children's Services Case Recording System 98,000 35,900 (62,100) 0 (62,100) Education Management System Replacement 190,000 191,238 1,238 1,238 (0) Schools Cap Maintenance & Energy Reduction 15,000 348,113 333,113 333,113 (0) Chelsea Academy Acoustic Improvement 7,000 6,598 (402) 0 (402) Chelsea Academy Sixth Form Extension 477,000 556,864 79,864 79,864 (0) Colville Primary School Expansion 745,000 875,318 130,318 0 130,318 Bousfield Primary: Safeguarding 84,000 93,551 9,551 9,551 (0) Barlby and Special Education Needs Schools 5,218,000 7,050,378 1,832,378 0 1,832,378 Kensington Academy Costs 110,000 8,500 (101,500) 0 (101,500) Grenfell Nursery – Early Years Provision 250,000 140,264 (109,736) 0 (109,736) Schools SEN 42,000 78,513 36,513 0 36,513 Avondale Primary School 100,000 8,108 (91,892) 0 (91,892) Bevington Primary School 866,000 914,619 48,619 48,619 0 Ashburnham Primary School 223,000 113,575 (109,425) 0 (109,425)

Park Walk 80,000 13,243 (66,757) 0 (66,757) Scheme 2019/20 2019/20 Variance Over/ Slippage Revised Outturn Actual to (Under)- (Re-phased) Budget Position Budget spend to Future Years £ £ £ £ £ Oxford Gardens 50,000 281,587 231,587 231,587 0 Latimer Centre 850,000 378,154 (471,846) (333,113) (138,733) Thomas Jones Primary School 120,000 182,969 62,969 0 62,969 Christ Church Primary - Schools SEN 40,000 14,755 (25,245) 0 (25,245) St Mary's Catholic Primary - Schools SEN 30,000 34,847 4,847 4,847 0 St Quintin's Children’s Centre - Schools SEN 85,000 37,086 (47,914) 0 (47,914) St Thomas C of E Primary - Schools SEN 40,000 38,108 (1,892) 0 (1,892) Schools Summer Program 825,000 699,590 (125,410) 0 (125,410) Additional Secondary School Places 0 186,125 186,125 0 186,125 Remodelling and refurbishment of Oxford Gardens and Park 860,000 0 (860,000) (231,587) (628,413) Walk Primary Schools DFC Schools Grant 0 110,339 110,339 110,339 (0) Children’s Services and Education 12,433,000 12,995,890 562,890 254,458 308,432 Central Library Condition Work 301,000 237,682 (63,318) 0 (63,318) Public Art 0 25,601 25,601 25,601 0 Environmental Health Services on the Web 20,000 0 (20,000) 0 (20,000) Street Scene Improvements 1,793,000 793,930 (999,070) 0 (999,070) Kensington Leisure Centre - New Building 250,000 897,274 647,274 0 647,274 WMCL Asset Management Plan 168,000 75,373 (92,627) 0 (92,627) Parks Strategy 1,677,000 1,024,860 (652,140) 0 (652,140) RBEP - Environmental Schemes 39,000 38,118 (882) 0 (882) Highways Improvement Schemes:Local Safety 971,000 557,556 (413,444) 0 (413,444) S278 Highways and Transportation Schemes 98,000 146,901 48,901 0 48,901 Athlone Gardens / Wornington Green 89,000 62,499 (26,501) 0 (26,501) London Cycle Grid 20,000 0 (20,000) 0 (20,000) Golborne Road Improvements 889,000 0 (889,000) 0 (889,000)

Stanley Bridge 40,000 10,048 (29,952) 0 (29,952) Chelsea Bridge 160,000 115,958 (44,042) 0 (44,042) Scheme 2019/20 2019/20 Variance Over/ Slippage Revised Outturn Actual to (Under)- (Re-phased) Budget Position Budget spend to Future Years £ £ £ £ £ Gunnersbury Cemetery Improvement Scheme 800,000 409,887 (390,113) 0 (390,113) Paths and Fencing improvements 153,000 23,221 (129,779) 0 (129,779) Sports Pitch Improvements 35,000 14,590 (20,410) 0 (20,410) Little Wormwood Scrubs Wall 203,000 178,657 (24,343) 0 (24,343) Holland House Terrace 89,000 71,170 (17,830) 0 (17,830) South Kensington Station Flower Kiosk 99,000 0 (99,000) 0 (99,000) Street Lighting Column Replacement 946,000 860,619 (85,381) 0 (85,381) Leighton House - Phase 3 Heritage Lottery Fund 1,908,000 809,616 (1,098,384) 0 (1,098,384) Museums Art Acquisition Fund 0 40,000 40,000 40,000 0 NEW Highways IT system (Confirm) 114,000 0 (114,000) 0 (114,000) New Kensington Memorial Park sports pavilion / toilets and café 10,000 0 (10,000) 0 (10,000) buildings Implementation of Cashless Parking 320,000 306,876 (13,124) 0 (13,124) Hostile Vehicle Mitigation 650,000 273,200 (376,800) 0 (376,800) Principal Road Renewal 0 0 0 0 0 Kensington Memorial Park water play replacement 10,000 8,052 (1,948) 0 (1,948) Leisure Services Re-tender - capital investment 538,000 226,045 (311,955) 0 (311,955) Cultural Placemaking Kensington High Street 27,000 27,512 512 0 512 Replacement CCTV Cameras 115,000 115,181 181 0 181 Expansion of the Council’s fixed CCTV network 0 0 0 0 0 E&C Business Hub 100,000 98,151 (1,849) 0 (1,849) Expanding Kensal's Creative Economy 40,000 0 (40,000) 0 (40,000) Microsites for venues 17,000 17,000 0 0 0 Albert Bridge-replacement of timber fenders 50,000 0 (50,000) 0 (50,000) Holland Park - footpath 500,000 8,090 (491,910) 0 (491,910)

Holland Park - Former Ireton Lodge- Creation of new events 70,000 47,507 (22,493) 0 (22,493) space. Holland Park café 120,000 0 (120,000) 0 (120,000) Scheme 2019/20 2019/20 Variance Over/ Slippage Revised Outturn Actual to (Under)- (Re-phased) Budget Position Budget spend to Future Years £ £ £ £ £ Royal Avenue - Railings Replacement 0 0 0 0 0 Commercial Activity Libraries 40,000 10,000 (30,000) 0 (30,000) Customer self-service and library open access solutions 11,000 10,818 (182) 0 (182) Air Quality Monitoring Stations - Replacement and 100,000 0 (100,000) 0 (100,000) Refurbishment of Equipment Embankment River Wall Repairs 200,000 0 (200,000) 0 (200,000) Parking CCTV enforcement (box junctions) 170,000 0 (170,000) 0 (170,000) GULC Electric Vehicle Charging Points 400,000 432,431 32,431 32,431 (0) Improvement to Commercial Spaces 210,000 0 (210,000) 0 (210,000) Duke’s Lodge, Holland Park Footway Widening 0 2,266 2,266 2,266 0 Basing Street 0 24,282 24,282 24,282 0 Cycleways Route 2 0 96,073 96,073 96,073 0 Environment and Communities 14,560,000 8,097,046 (6,462,954) 220,653 (6,683,607) Disabled Facilities Grant 746,000 789,121 43,121 43,121 0 Renovation Grant (HRG) 100,000 51,461 (48,539) (48,539) (0) Leasehold Compensation Scheme 4,000,000 2,041,908 (1,958,092) 0 (1,958,092) Acquisition of Out of Borough Properties 20,000 20,476 476 476 (0) Acquisition of Street Properties - Dwellings 7,175,000 5,084,045 (2,090,955) (3,899) (2,087,056) Grenfell Site Costs 3,990,000 3,580,025 (409,975) (409,975) (0) Acquisition of Grainger Properties 3,838,000 3,841,423 3,423 3,423 (0) New Homes Delivery Programme 2,500,000 1,873,912 (626,088) 0 (626,088) Belvedere Restaurant Structural Repairs 100,000 83,039 (16,961) 0 (16,961) Chelsea Old Town Hall Partial Refurbishment Works 573,000 622,443 49,443 0 49,443 St Mary Abbots Church Boundary Wall Repairs 60,000 46,314 (13,686) 0 (13,686)

Acquisition of Wornington Road 500,000 0 (500,000) (500,000) 0 Barlby Treverton and Primary School redevelopment site 1,080,000 833,089 (246,911) 0 (246,911) Pop Up Units and Landscape Improvements at Thorpe Close 175,000 34,476 (140,524) 0 (140,524) Hewer Street (15-17) and 7 Exmoor Street Acquisition 27,000 0 (27,000) (27,000) 0 Scheme 2019/20 2019/20 Variance Over/ Slippage Revised Outturn Actual to (Under)- (Re-phased) Budget Position Budget spend to Future Years £ £ £ £ £ Silchester Estate Buy backs 400,000 0 (400,000) 0 (400,000) Chelsea Community Centre 140,000 140,000 0 0 0 Canalside House - Required Health and Safety Works 500,000 0 (500,000) 0 (500,000) Dalgarno Community Centre – Lift Works 91,000 86,680 (4,320) (4,320) 0 Holland Park House Structural Works 1,194,000 186,137 (1,007,863) 0 (1,007,863) Fire Compartmentation Works 500,000 81,510 (418,490) 0 (418,490) Holland Park Ave - 25 Affordable B1Units 158,000 0 (158,000) 0 (158,000) 37 Pembroke Road Office Refurbishment 2,500,000 2,132,008 (367,992) 0 (367,992) Extension and alts to Coroners Court 20,000 0 (20,000) 0 (20,000) Corporate Property Digitisation 114,000 39,704 (74,296) 0 (74,296) Lift Compliance Works 300,000 259,955 (40,045) 0 (40,045) Relocation of Shared Services Car Pound 0 0 0 0 0 Kensington Town Hall - Building Modifications 100,000 37,733 (62,267) 0 (62,267) Piper House - HSE 200,000 0 (200,000) 0 (200,000) Dalgarno Community Centre – HSE 500,000 8,046 (491,954) 0 (491,954) Tabernacle Community Centre - HSE 125,000 0 (125,000) 0 (125,000) Pembroke Road Car Park - Concrete Spalling 100,000 54,092 (45,908) 0 (45,908) Earls Court Youth Centre - HSE 20,000 0 (20,000) 0 (20,000) Ellesmere Court - HSE 75,000 72,500 (2,500) (2,500) 0 Holland Park Offices & Stable Block - HSE 100,000 27,073 (72,927) 0 (72,927) Housing and Social Investment 32,021,000 22,027,167 (9,993,833) (949,213) (9,044,620) Kensington Town Hall Cyclical Works Phase 2 2,036,000 503,190 (1,532,810) 0 (1,532,810) Implementation of WorkWell Initiative at Kensington Town Hall 300,000 85,465 (214,535) 0 (214,535)

Reception and Front of House Services 52,000 0 (52,000) 0 (52,000) Networks & Telephony Transformation 250,000 206,445 (43,555) 0 (43,555) Data Centre Maintenance 120,000 80,718 (39,282) (39,282) 0 Information Governance Case Management System 0 85,533 85,533 0 85,533 IT Information Security Management 250,000 244,521 (5,479) (5,479) 0 Scheme 2019/20 2019/20 Variance Over/ Slippage Revised Outturn Actual to (Under)- (Re-phased) Budget Position Budget spend to Future Years £ £ £ £ £ Movere/Livingstone DC Move 200,000 215,655 15,655 15,655 0 Acquisition of Mayoral Car 0 59,976 59,976 59,976 0 End User Computing (EUC) Upgrade Project 1,818,000 1,744,171 (73,829) 0 (73,829) Information Systems Projects 66,000 66,232 232 232 (0) Digital Platform 158,000 95,799 (62,201) (62,201) (0) Kensington Town Hall AV and Desk Set Up Upgrades 350,000 27,850 (322,151) 0 (322,151) Insourcing of NNDR Service 59,000 58,274 (726) (726) 0 Corporate Property Estate Life Cycle Budget 1,133,000 748,263 (384,737) 0 (384,737) Resources and Customer Delivery 6,792,000 4,222,091 (2,569,909) (31,825) (2,538,084)

General Fund Departmental Capital Programme 66,374,000 47,776,380 (18,597,620) (505,927) (18,091,693)

Capital Programme Contingency 5,443,000 0 (5,443,000) 0 (5,443,000)

Total General Fund Capital Programme 71,817,000 47,776,380 (24,040,620) (505,927) (23,534,693)

Housing Revenue Account

2019/20 2019/20 Variance Over/ Slippage Revised Outturn Actual to (Under)- (Re-phased) Budget Position Budget spend

to Future Years

Scheme £ £ £ £ £

Housing Revenue Account Capital Programme 14,879,000 17,167,381 2,288,381 0 2,288,381 Lancaster West Main Refurbishment 2,500,000 2,174,903 (325,097) 0 (325,097) Total HRA Capital Programme 17,379,000 19,342,284 1,963,284 0 1,963,284