MD2153 GLA Financial and Performance Outturn for 2016-17

Type of decision: 
Mayoral decision
Code: 
MD2153
Date signed: 
18 July 2017
Decision by: 
Sadiq Khan, Mayor of London

Executive summary

This decision form sets out the Greater London Authority Financial and Performance Outturn for 2016-17, including details of transfers to and from earmarked reserves and proposals for a number of carry forward items from 2016-17 to 2017-18 for Mayoral approval.

Decision

That the Mayor:

1. Notes the financial and performance outturn for 2016-17 set out in this decision form, including details of transfers to and from earmarked reserves; and
2. Approves the carry forwards from 2016-17 to 2017-18 set out in this decision form.

Part 1: Non-confidential facts and advice

Introduction and background

1. Outturn 2016-17

1.1 This decision form sets out the Greater London Authority (GLA) Financial Outturn for 2016-17, including details of transfers to and from earmarked reserves and proposals for a number of carry forward items from 2016-17 to 2017-18 for Mayoral approval.

1.2 In terms of financial outturn, the summary position is:
• A revenue overspend of £1.7m on directorates;
• A revenue underspend of £30.6m on corporate items; and
• Capital slippage of £146.0m.

1.3 Further detail, including information on performance, is included in the annexed report. The highlights are summarised below.

Revenue

1.4 Overall there was a net underspending of £29m against the revenue budget. The most significant elements of this favourable variance were in respect of Corporate Items and include:

• £7m due to a reduced level of funding required by the Mayoral Development Corporations (LLDC £2m, OPDC £5m). The LLDC’s own financial performance was, generating addition income while maintaining expenditure broadly within budget. The OPDC underspend reflected a pause in its activities due to a strategic review of this newly created development corporation and other slippage;

• £6m as the Authority will meet its forecast business rates growth levy payable to the Government from its Business Rates Reserve;

• £4m from GLAP for shared service arrangements; and

• £3m of additional investment interest generated. This reflects effective cash management within strict risk parameters and includes the benefits of cash pooling arrangements where short term cash balances are invested through the GLA Group Investment Syndicate (“GIS”), as well balances invested independently of the GIS which are available for longer term investment.

Capital

1.5 Overall capital spending equated to 78 per cent delivery against the budget for the year.  The most significant elements of this favourable variance were:

• £42m on the main affordable housing programme.  With the launch of a new bidding programme, following the Mayor’s successful negotiations with Government to secure over £3bn of funding to 2021, there were significant movements in the programme including Housing providers using other resources available to them resulting in a reduction in grants drawn down;

• £32m in the level of payments to Transport for London for the NLE due to timing changes; and

• £32m in the level of payments to LLDC reflecting mainly timing differences on its capital projects.
 
Reserves

1.6 As a result of the financial performance for the year and changes in respect of GLA Group items, there was a decrease of £123m in General Fund Reserves from £471m to £348m (General Fund balance £10m, earmarked reserves £338m). The major earmarked reserves within this latter figure include the:

• Business Rates Reserve (£115m), which exists to manage any adverse impact on the GLA’s finances following the introduction of the business rate retention scheme from 2013-14 and its volatility due to the level appeals by business ratepayers. In 2016-17 £79m of this reserve was applied to meet prior year deficits as the amounts collected by billing authorities, taking into account changes in provisions for appeals, were lower than their forecasts on which instalments were paid to the GLA.;

• Capital Programme Reserve (£70m) which is a new reserve funded by a transfer of £49m from the General Fund Balance and balances from redundant earmarked reserves. This reserve is to provide a source of funding for potential projects which fall outside of the Government funded schemes.

• Revenue Grants Unapplied Reserve (£38m), which includes grants that have been received in advance of the expenditure being incurred;

• Development Corporations Reserve (£29m), which is applied to meet spend in the Mayoral Development Corporations; and

• New Homes Bonus LEP Grant Reserve (£18m) which represents amounts to be spent by London Boroughs on regeneration schemes in future years from a one-off allocation made to the GLA in 2015-16.

Budget carry forwards

1.7 During the year, improvements were made to budget forecasting and re-profiling, including fuller consideration of the budgetary impact of slippage in developing the GLA budget for 2017-18.  This has resulted in directorate outturn to being much closer to the revised budget compared with recent  years and a lower level of budget carry forwards presented now for approval of £2.2m (revenue) and £59.6m (capital).

Performance

1.8 In terms of performance outturn, five projects were rated red at year end.

Equality comments

2.1 there are no specific equality issues arising.

Financial comments

3.1 Financial issues are integral to this decision form.

Appendices and supporting papers

Annex: Greater London Authority Financial and Performance Outturn for 2016-17 with the following appendices:

  • Appendix 1: Revenue Outturn 2016-17
  • Appendix 2: Capital Outturn 2016-17
  • Appendix 3: Carry Forward Approvals from 2016-17 to 2017-18
  • Appendix 4: Programme Performance.