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ITEM CA5

CABINET – 20 DECEMBER 2005

FINANCIAL MONITORING

Report by Head of Finance & Procurement

1. This report covers the period up to the end of October 2005 for revenue and capital. The consolidated forecast position to date shows a balance of £10.686m. This is an increase of £0.865m since the last report, which is primarily the result of a reduction of £0.715m in the forecast Directorate overspend. The movement in the projected outturn position is summarised below (a minus sign represents a balance to carry forward and a positive figure represents an overspend):

	Sept 05 £m	Oct 05 £m	Change £m
Learning & Culture	4.392	4.508	0.116
Less City Schools’ Reorganisation	3.125	3.125	-
	1.267	1.383	0.116
Social & Health Care	0.738	0.593	-0.145
Supporting People	0.650	0.399	-0.251
Environment & Economy	-0.258	-0.693	-0.435
Community Safety	0.400	0.400	-
Resources & Chief Executive’s Office	-0.074	-0.074	-
	2.723	2.008	-0.715

2. Action Plans are in place for Directorate overspends which have arisen in year and it is anticipated that the forecast overspend will reduce before the year end as a result of management actions identified by these plans.

Introduction

3. This report covers the period up to the end of October 2005 for both revenue and capital. The detail for each Directorate is summarised within the report and individual reports for each Directorate are in the Members’ Resource Centre.

Annexes

4. The following annexes are attached:

Revenue

Annex 1 Estimated Year End Position Directorate Summary (Annex 1 - download as .xls file)

Annex 1a-1e " " " by Directorate (Annex 1 - download as .xls file)

Annex 2a Summary of Virements (Annex 2 - download as .xls file)

Annex 2b Summary of Supplementary Estimates (Annex 2 - download as .xls file)

Annex 3 Latest Grants Position (download as .xls file)

Annex 4 Forecast Revenue Balances at Year End (download as .xls file)

Annex 5 Forecast Reserves Position (download as .xls file)

Annex 6 Learning & Culture Action Plan (download as .doc file)

Annex 7 Changes to Debt Portfolio (download as .xls file)

Capital

Annex 8 Capital Monitoring Summary (Annex 8 - download as .xls file)

Annex 8a-8g Capital Monitoring by Directorate (Annex 8 - download as .xls file)

Grant Income

5. An additional £0.562m has been notified to the Social & Health Care Directorate in relation to Leaving Care – Unaccompanied Asylum Seekers.

Earmarked Reserves

6. Annex 5 shows the estimated year end position for the Council’s earmarked reserves. These reserves are held by the Council to fund specific items of revenue expenditure which occur on an irregular basis and thus to assist in setting a balanced budget. Current projections suggest that, with the exception of the carry forward reserve, the level of reserves at the end of 2005/06 will be similar to that brought forward from 2004/05. The level of reserves held is reviewed regularly to ensure that reserves for which there is no longer any need do not remain on the Council’s balance sheet.

PART 1 – REVENUE

7. The main issues on the revenue budget for each Directorate are set out below:

Learning & Culture (£0.679m)

8. The Learning & Culture Directorate is predicting an in-year overspend of £0.679m, an increase of £0.116m since the previous report. In addition there are amounts recoverable in future years totalling £3.829m, of which £3.125m is the planned overspend on the City Schools’ Reorganisation and the remaining £0.704m relates to the 2003/04 overspends on Statementing and Fees to Independent Schools (£0.390m), which are repayable over three years until 2006/07, and the variation in transport days on the Home to School Transport Service (£0.314m). The movement on the non-delegated budgets since the last report is as follows:

	Sept 05 £m	Oct 05 £m	Change £m
School Development	0.418	0.422	0.004
Children’s Services	-0.053	-0.104	-0.051
Community Learning	-0.067	0.008	0.075
Cultural Services	0.091	0.100	0.009
Resources	0.174	0.253	0.079
	0.563	0.679	0.116
Plus: Recoverable in Future Years
Children’s Services – Statementing & Fees to Independent Schools	0.390	0.390	-
Children’s Services – Transport Days	0.314	0.314	-
City Schools’ Reorganisation	3.125	3.125	-
	4.392	4.508	0.116

9. The forecast position includes commitments of £0.406m in relation to expenditure that has been identified but which will not be incurred until the 2006/07 financial year. This primarily relates to the Standards Fund grant in the School Development Service, which is ring-fenced and can be spent up to 31 August 2006. Current projections indicate that £0.164m will be carried forward for Primary Strategy and £0.164m for Key Stage 3. Committed items also include slippage of £0.045m on the Library Management System Replacement project and a planned carry-forward of £0.033m which has been earmarked to fund known pressures in Cultural Services. It is intended that these amounts will be carried forward under the Council’s budget management arrangements at year end and the effect of this will be to reduce the forecast overspend based on current estimates of expenditure to £0.273m.
10. An updated version of the Director for Learning & Culture’s action plan to address the pressures is attached at Annex 6. As a result of the actions identified it is probable that the actual year end position will show improvement from that reported here.

School Development (£0.422m)

11. There is little change in the forecast outturn position for the School Development Service. The main areas of pressure continue to be the Oxfordshire Quality Schools Association (OQSA), where the anticipated shortfall against the income target has increased by £0.044m to £0.295m, and the Oxfordshire Schools Improvement Team (OSIT) which is forecast to overspend by £0.301m, £0.090m more than reported last month. These increases are offset by increased underspends for Advisers and the Early Years Team and a reduction in the projected overspend for administration costs. Opportunities are being sought to generate additional income for OQSA, and the forecast position does not take account of activities which have been agreed but not yet carried out. There are proposals to increase the rate used to charge schools for OSIT services and to introduce paid consultancy, but pressures remain as the actions necessary to ensure that schools can leave special measures swiftly are often more than the schools themselves would be willing or able to pay for. The position is being reconsidered and the service has identified a pressure for additional funding as part of the 2006/07 budget process.

Children’s Services (-£0.104m)

12. The forecast in-year underspend for Children’s Services has increased by £0.051m since the previous report. This is the result of an increase of £0.079m in the forecast underspend on the budget for Out of County Fees after allowing for the virement of £0.209m to the Home to School Transport Service, as agreed by Cabinet on 18 October. The projection for Out of County Fees is now an underspend of £0.079m. This assumes provision for eight new cases during the year with an average cost of £0.073m per case. To date there have been ten new cases with an average cost of £0.035m per case, but there are wide variations in the cost of individual cases. Out of County Fees and Statementing are demand-led budgets and the position may change before the year end.
13. The virement of £0.370m to the Home to School Transport budget from Statementing and Out of County Fees agreed by Cabinet on 18 October has now been actioned and the projected overspend for the service has reduced to £0.220m. However, this reflects an increase of £0.021m in the underlying projected overspend, primarily as a result of a reduction in concessionary fare income reflecting a drop-off in take up of places following fare increases introduced from September. The service remains an area of concern, with a further contract renewal due in November. A Best Value Review is being carried out across the Council’s Transport services and is due to report to Corporate Governance Scrutiny Committee in January 2006.

Community Learning (£0.008m)

14. The forecast position for Community Learning has moved from an underspend of £0.067m last month to an overspend of £0.008m. Data from the Autumn Term count of pupil numbers has now been analysed and indicates that the shortfall in spending against the budget provision for Early Education Funding for 3 & 4 Year Olds is expected to be £0.472m. £0.141m of this relates to cases where children have started primary school under the single point of admission who would previously not have done so until January or April and will be transferred to the Individual Schools’ Budget in reflection of this. The net overprovision remaining is £0.331m, an increase of £0.151m since the previous report.
15. The virement of £0.050m of the 2004/05 carry forward on the Scrutiny budget to the Youth Service has now been actioned, reducing the overspend for the service to £0.053m. This takes account of management action to hold some posts vacant until the end of 2005/06 and to delay recruitment or reduce hours in a number of others which have now been filled. Budget strategies for 2006/07 are being considered by senior officers and Members.
16. As reported previously, government policy changes have led to funding reductions for the 2005/06 academic year by the Learning and Skills Council to both the Further Education and Adult & Community Learning services. Along with lower fee income, this has reduced the anticipated total income to the service for the year by £0.500m, and a programme of staffing reductions is being carried out across the service. At least twelve staff are due to take voluntary redundancy at the end of December 2005. Further redundancies are expected although the restructuring process is not sufficiently far advanced for numbers to be certain. An additional overspend of £0.200m is anticipated in relation to the salary costs of staff due to take redundancy because of the delay in achieving the required staffing reductions.

Resources (£0.253m)

17. The forecast overspend for Resources has increased by £0.079m since the previous report and now stands at £0.253m. The virement of the unallocated directorate carry forward of £0.439m has reduced the forecast overspend on the budget for Premature Retirement Compensation (PRC) to £0.428m. This represents an increase of £0.161m in the underlying overspend for the budget, which relates to redundancy costs in respect of Adult Learning and the restructuring of County Facilities Management (CFM). The restructuring of Adult Learning is not yet complete and it anticipated that there will be further pressures on the PRC budget as a result of this. Additional funding in future years is being requested as part of the 2006/07 budget process but no additional funding has been agreed for the 2005/06 overspend.
18. The forecast position for CFM remains unchanged from the last report, with a small surplus forecast for Cleaning and overspends for Primary and Secondary Catering. The overspend for Primary Catering will be met from the £0.316m additional Government funding allocated for school meals, while the £0.265m deficit position for Secondary Catering is recoverable from the schools under the terms of the service level agreement. Four Secondary sites will be leaving CFM before the end of March 2006 and a review of overheads is being carried out to ensure that a suitable cost base is in place for the start of the 2006/07 financial year.

Delegated Schools’ Budgets

19. As previously reported, three-year budget plans for 2005/06 to 2007/08 have been received from all 293 schools. As at 16 November 282 plans (96%) had been formally approved, of which 45 are deficit budgets. The original estimated year end balance for the schools whose budgets have been approved is £3.319m. Budget monitoring returns for the period 1 April to 30 September have been received from 75% of schools and show a projected increase in balances over initial estimates of £2.200m. In recent years schools’ balances have typically been around £5m higher than initial estimates due to slippage on R&M programmes and the ability to spend Standards Fund allocations up to the end of the academic year on 31 August. It is therefore likely that the actual year end position will show little movement from the March 2005 LMS Reserves figure of £8.274m.

Social & Health Care (£0.593m)

20. The forecast position for Social & Health Care is an overspend of £0.593m, a reduction of £0.145m since the last report. The movement on the individual service areas is shown below:

	Sept 05 £m	Oct 05 £m	Change £m
Children & Families	0.624	0.663	0.039
Older People	-0.510	-0.586	-0.076
Mental Health	-0.025	-0.016	0.009
Learning Disabilities	0.631	0.562	-0.069
Physical Disabilities	0.062	0.073	0.011
Directorate Management Team	0.158	0.051	-0.107
Business Support & Performance Management	-0.070	-0.050	0.020
Commissioning, Planning & Partnership	-0.132	-0.104	0.028
	0.738	0.593	-0.145

21. The financial monitoring report considered by the Cabinet on 18 October 2005 included the Director for Social & Health Care’s action plan for the recovery of the position. This assumed that an overspend of £0.500m would remain in relation to Children & Families, in line with the recovery plan for the service agreed as part of the Children’s Placement Strategy. The reported position also assumes that actions identified by the Action Plan and currently being implemented in a number of services will have the desired effect, particularly within Children & Families and Older People.

Children & Families (£0.663m)

22. There has been a net increase of £0.039m in the forecast overspend for Children & Families since the previous report. Within this there are increased overspends forecast for a number of areas which are offset by additional DfES grant in relation to Unaccompanied Asylum Seeking Children. The projected overspend for Foster Care has increased by an additional £0.062m as a result of a small increase in the number of placements and the continued payment of enhancements to Foster Plus carers in order to keep care provision in-house. The continuation of a placement which had been expected to finish and the ending of funding from Learning & Culture for another has led to a reduction of £0.071m in the underspend forecast for Leaving Care, which is now only £0.003m. The forecast overspend on the Agency Residential budget has increased by £0.180m. £0.025m of this relates to a net increase in placements and changes to rates, but the majority of the increase (£0.150m) is due to the removal of a savings target which is now judged to be unachievable.
23. An overall increase in the number of children looked after is placing pressure on the budget for Children & Families for both 2005/06 and 2006/07 and on the achievement of the targets set out in the Children’s Placement Strategy. The pressure in 2005/06 has been partially offset by the use of £0.464m surplus Performance Fund grant which was carried forward on the Directorate’s balance sheet from 2003/04. This funding was a one-off and the service has sought to identify pressures for additional resources in 2006/07.

Older People (-£0.586m)

24. The forecast underspend for the Older People service, which is being managed by the Directorate with the aim of offsetting overspending on other services, has increased by £0.076m to £0.586m. This is principally the result of a reduction in the forecast shortfall in Fairer Charging income as a result of improved information becoming available as data from the Abacus system is transferred to SAP. The forecast assumes the achievement of target savings in a number of key areas, and these are being monitored closely so that corrective action can be taken if required.
25. The forecast overspend for the Older People and Physical Disabilities Pooled Budget has increased by £0.055m since the previous report. £0.013m of this relates to the equipment element of the budget, which has recently been set up, and the remainder is primarily the result of a further increase in the health overspend relating to continuing care for older people. Management actions continue to be sought by Social & Health Care and the Health Service in order to bring the budget back into balance.
26. The continued need to control expenditure in the Older People budget to balance overspends in Children’s Services and Learning Disabilities is reducing our capacity to discharge patients from hospitals in Oxfordshire. Delayed Transfers of Care are currently at a twelve-month high with over 30 patients in the Community Hospitals waiting for Social and Health Care services. The acute hospitals have been unable to meet their Accident and Emergency targets for the past three weeks and are having to commission expensive additional capacity at a time of significant cost pressures on them.

Learning Disabilities (£0.562m)

27. The projected overspend for Learning Disabilities has reduced by £0.069m since the previous report. There has been a reduction of £0.087m in the forecast overspend for external residential homes as a result of clients transferring to Supported Living, offset by new client commitments of £0.032m. Client commitments for external Supported Living have reduced, leading to a decrease of £0.057m in the forecast overspend. Within the Supported Living service this is offset by a reduction of £0.056m in the projected underspend for internal Supported Living following the recruitment of permanent staff and agency cover. It remains unclear whether the service will realise its full efficiency savings target of £0.696m and at present it is considered possible that £0.050m of the savings may not be achieved.

Other Service Areas

28. There has been a reduction of £0.107m in the forecast overspend for the Directorate Management Team following a revision in the expected level of contingency that will be required during the year.

Supporting People (£0.399)

29. As previously reported, the Government has revised the formula for distributing the Supporting People Grant with the result that the grant allocated to the Oxfordshire Supporting People Partnership has been reduced by £1.5m, or 7%, in 2005/06. Allocations of Supporting People Grant for 2006/07 were announced on 5 December. Oxfordshire’s allocation has reduced by 2.43% with a further reduction of 5% expected in 2007/08. Due to the contract structure in place for Supporting People it is highly unlikely that it will be possible to implement the required scale of cuts in 2005/06. Work is underway to draw up a three-year financial strategy with the aim of phasing in service reductions over that period and achieving a balanced budget by the end of 2007/08. The Council administers the Supporting People programme on behalf of the Joint Commissioning Body and discussions have been taking place with partner organisations to ensure that overall reductions are achieved within the planned timescale, which may extend into 2006/07.
30. There has been a reduction of £0.251m in the projected overspend for the programme since the previous report following agreement being reached over the capping of funding for high-cost Learning Disability placements.

Environment & Economy (-£0.693m)

31. The forecast underspend for Environment & Economy has increased by £0.435m since the previous report and now stands at £0.693m. The movement on the individual service areas is summarised below:

	Sept 05 £m	Oct 05 £m	Change £m
Transport	-0.160	-0.160	-
Sustainable Development	-0.198	-0.539	-0.341
Trading Standards & Registration	0.100	0.097	-0.003
Business Support	-	-0.091	-0.091
	-0.258	-0.693	-0.435

Transport (-£0.160m)

32. The forecast position for Transport is unchanged from the previous report. At its meeting on 15 November the Cabinet approved proposals for the virement of underspends of £0.716m identified across the service, primarily as a result of recruitment difficulties and slippage on projects, into alternative high priority Transport activities. These include £0.168m for street lighting improvements, £0.330m for additional maintenance works, £0.075m for asset management developments, £0.040m for an Oxfordshire Highways project manager and £0.103m for a number of other priority spending areas. The virements were actioned during November and future monitoring reports will provide an updated position on spending against the adjusted budget.
33. The forecast underspend of £0.160m for Transport relates to the carry forward of the budget allocated for a Business Process Review of the service and will be used to fund further progress of the review in 2006/07. Pressures remain within the Transport budget, in particular in relation to the Bus Subsidy budget, where significant withdrawals of commercial services have been announced by bus operators. However, management action is being taken to ensure that spending remains within budget, albeit with the acknowledgement that there will be reductions in services.

Sustainable Development (-£0.539m)

34. The forecast underspend for Sustainable Development has increased by £0.341m since the previous report. This relates mainly to Waste Management, where it is now estimated that the purchase of the Oakley Wood site will slip into 2006/07 due to lengthy on-going legal negotiations. A potential transfer of the budget of £0.318m earmarked for the purchase and development of the site, which is funded from carry forwards, to the Capital Programme is being investigated.
35. The estimated spending in 2005/06 on the Structure Plan and Minerals and Waste Local Plan has decreased from £0.097m to £0.080m. These projects have slipped from previous years and the underspent budgets were returned to Council balances at the end of 2004/05 to be held centrally against identified future commitments. Once the spending requirement for 2005/06 is definitely known a request will be made to the Cabinet for the return of part of the underspend. No final decision will be made until a more accurate picture of the spend in year is known.

Other Service Areas

36. The overspend for Trading Standards has increased to £0.097m as a result of increased staffing costs. Management action is being taken to address the projected overspend and pressures for future years.
37. An underspend of £0.091m is now expected for Business Support, primarily as a result of staff vacancies and funds for backfilling costs of SAP revitalisation and cost centre managers’ training not being required this financial year.

Community Safety (£0.400m)

38. The forecast position for Community Safety remains unchanged at an overspend of £0.400m. As previously reported, this relates to the Community Safety Team, where a base budget shortfall of £0.258m has been identified to add to an overspend of £0.252m brought forward from 2004/05. The Youth Justice Board has agreed to provide a consultancy project to assist in restructuring the service, with manager involvement to ensure that future available finance is properly aligned to service and staffing levels. Currently, reductions in controllable variable costs are expected to reduce the year end overspend to £0.480m. The overspend position is being considered as part of the 2006/07 budget process.
39. The Firefighters’ Pension budget, which had been forecast to overspend by £0.070m at year end, is now predicted to underspend by £0.080m due to the net effect of transfer values received from other Brigades offsetting the unbudgeted retirement of two firefighters. This underspend will be returned to Council balances. It had been assumed that the overspend previously reported would be met from balances, and this therefore represents an addition of £0.150m to balances compared to the position reported last month.

Resources & Chief Executive’s Office (-£0.074m)

40. There has been no change in the forecast position for the Resources Directorate and the Chief Executive’s Office since the previous report. However, Capital Steering Group agreed on 5 December to recommend to Cabinet that the level of salaries recharged to the capital programme should be increased by £0.100m to reflect the true cost of managing the programme within Corporate Property Group and that £0.050m of health and safety work should be capitalised this year. If the Cabinet approves this recommendation, the overspend forecast for Property Services will be removed.
41. During the audit of the 2004/05 accounts, errors were discovered in the analysis of year-end variations relating to delegated and non-delegated repair and maintenance budgets. The correcting entry to the Statement of Accounts increases the carry forward for the Resources Directorate by £0.108m. This will be transferred to Directorates in accordance with the current accounting policy for delegated and non-delegated repairs and maintenance.
42. The budget for Financial Services & Procurement includes a policy plan of £0.500m to cover a potential pensions liability arising from the transfer of employees to the Order of St John. It has subsequently been decided to recover the past service deficit in the Pension Fund over time by increasing the Council’s employer’s contribution rate. This budget is no longer required and will be returned to balances. This will be actioned in the next report.

Strategic Measures

43. November saw a sharp fall in borrowing costs from the Public Works Loan Board (PWLB). This was driven principally by Pension Fund Managers buying Government Stocks with longer dates as they aim to match investments with long-term pension liabilities. We have taken advantage of the position to take further borrowing to fund the Council’s capital programme and the public debt due for redemption in 2005/06. A further £10m was borrowed from the PWLB at 4.25%. In addition a further Lender Option/Borrower Option (LOBO) loan was taken. The terms are for 60 years with interest for the first five years fixed at 3.68%. We have also borrowed a further £6m from the PWLB at 4.3% interest, with the intention of restructuring the Council’s debt. This will be done by repaying a £6m loan running at a higher rate of interest when PWLB rates have returned to higher levels. A summary of the changes to the Council’s debt portfolio is attached at Annex 7. We are still predicting that the outturn on the Strategic Measures budget will show a surplus of £2m.
44. We have sent out requests for information to five potential external cash managers. Returns are expected before Christmas and a selection process is planned for January from which the Head of Finance & Procurement will make recommendations to Cabinet as to which manager(s) to appoint and the proposed terms of the agreement. The details will be included in the Treasury Management Strategy Report to Cabinet on 17 January.

Oxford Castle Heritage Project

45. As part of the redevelopment of Oxford Castle, Oxford Preservation Trust is providing a Heritage Interpretation Centre funded in part by a Heritage Lottery Fund Grant. The Trust has a timing problem between the payments due to the contractors and the receipt of instalments of grant from the Heritage Lottery Fund. It is proposed that the Council makes an interest free loan of £0.300m to the Trust, which will enable them to manage the cashflow timings while the project is in progress. The Council will enter into an agreement with the Trust to secure repayment of the loan once the work is completed. The loan will be made under the wellbeing powers in the Local Government Act 2000 Section 2. This approach has been agreed by the Council’s external auditor. The loan will be a call on balances in 2005/06 and will be repayable in 2006/07, with repayment expected by the middle of 2006.

Invest to Save Budget – Round 8

46. In July the Council submitted two expressions of interest to the Government for potential funding from the Invest to Save Budget Round 8. These were for the Creative Credits Project and Increasing Investment to Promote Placement Matters. The Government announced the results of the bidding round on 26 October. Neither of the Council’s bids was successful. The total bids received were for around ten times the amount available in the Invest to Save budget, so a very rigorous evaluation process was undertaken and the Council’s bids were not considered innovative enough when compared to those which were selected for the next round.

Walter Biggs Trust

47. The Council is the custodian for the Walter Biggs Trust and currently holds the funds on behalf of the Trustees (£3.347m at 31 March 2005). The Trustees now wish to invest these funds and the Council has to apply for those investments on behalf of the Trustees. The Cabinet is recommended to give authority to the Head of Finance & Procurement to act on the Council’s behalf in regard to the investments of the Trust.

Efficiency Savings

48. Following the decision of the Cabinet to return the £0.250m telecommunications procurement savings included in the 2005/06 budget to Directorates pending a review of telephony operations throughout the Council, a further supplementary estimate was agreed at the Cabinet meeting on 15 November to return the £0.102m efficiency saving on telephony operations, which has also been judged to be unachievable, until the review is completed.
49. A risk remains that the savings targets allocated to the Learning Disability Service and the corporate HR function may not be achieved in full, with Learning Disabilities expected to fall up to £0.050m short of target and the unmet savings in HR likely to be £0.044m. The savings target on Children’s Agency placements has been withdrawn. Additionally, overspend pressures in Trading Standards mean that it is possible that savings targets in this area will not be achieved. Where budgeted savings cannot be achieved the Council will need to find alternative sources to ensure that the overall savings target can be met. The position continues to be monitored closely.

BVPI8

50. BVPI8 measures the percentage of undisputed invoices paid within 30 days of receipt. Performance against this target contributes to the Council’s Comprehensive Performance Assessment. The target for 2005/06 is 95% and performance for the year to date is as follows:

	%
Learning & Culture	93.8
Social & Health Care	91.7
Environment & Economy	98.3
Community Safety	95.6
Resources	89.3
Chief Executive’s Office	98.0
	92.0

51. The key areas of concern for Learning & Culture continue to be Adult & Community Learning and the Music Service. Adult Learning invoices currently have to be authorised in the field, often by part time staff, before being forwarded to Macclesfield House for input and authorisation. It is planned to increase access to SAP for staff in this service in the next few months and it is anticipated that this will improve the situation. Music Service performance was particularly poor over the summer and it is thought that this reflects concentration of staff efforts on the implementation of a new invoicing system which will improve debtor control within the service.
52. The performance of the Resources Directorate has improved since the previous report. The performance of Mouchel Parkman, the Council’s property consultants, is now above target but there are still some areas of weakness and action continues to be taken to improve performance in these areas.

Consolidated Revenue Balances

53. There has been an increase of £0.150m in the forecast position for general balances as a result of a change in the forecast position for the Firefighters’ Pension scheme, which has moved from an overspend of £0.070m to an underspend of £0.080m as a result of transfer values received from other Brigades. The forecast position for consolidated balances is shown below:

	£m
Revenue balances per last report	12.544
Movement in forecast outturn for Firefighters’ Pension	0.150
	12.694
Directorate Carry Forward as per Annex 1	-2.008
	10.686

54. As reported above, the budget of £0.500m allocated to Financial Services & Procurement in respect of pension costs arising from the transfer of employees to the Order of St John has been deemed surplus to requirements and will be returned to balances, offsetting the supplementary estimate of £0.102m agreed by the Cabinet on 15 November in relation to unachievable telecommunications efficiency savings. The net effect of these changes will be to increase the position on general balances to £13.092m and the consolidated forecast to £11.084m. If the loan to the Oxford Preservation Trust discussed at paragraph 44 is agreed this will result in a further call on balances of £0.300m, but the loan will be repayable during 2006/07 and the amount will be returned to balances at this point.
55. It is possible that some or all of the £2m surplus interest on cash balances which is expected in 2005/06 and which it is currently assumed will be added to balances may have to be returned to the capital programme in order to maintain funding levels in real terms. Additionally, it is estimated that £0.080m of the £0.724m of 2004/05 carry forward which was returned to balances by Environment & Economy on the understanding that it would be held against a risk assessed schedule of future commitments may be required in 2005/06. Even if both of these sums are required the position will remain in line with the budgeted level of balances at the year end.

Conclusion

56. The projected year end position on revenue balances (net of the City Schools’ Reorganisation) is £12.694m. This is an increase of £0.150m since the last report and represents 2.17% of net budget. There are potential calls on balances which would reduce the position to around £10.5m if required in full. This remains in line with the projections set out in the Service & Financial Planning 2006/07 – 2010/11 report considered elsewhere on the agenda.
57. The projected Directorate overspend has reduced by £0.715m since the previous report. Action Plans are being put in place to address expenditure pressures and offsetting areas of underspending are beginning to emerge. It remains likely that the position will improve as the year goes on. The arrangements for carrying forward any variations remaining at the year end will need to be considered carefully in the light of the realignment of Directorates currently taking place. Budget monitoring returns for the first half of the year have been received from the majority of schools and it is anticipated that balances at the year end will show little movement from the 31 March 2005 LMS Reserves position.

PART 2 – CAPITAL

58. The capital monitoring for October is attached at Annexes 8 to 8g. There is an overall reduction in payments in 2005/06 of £6.745m compared to £2.192m as reported to the Cabinet on 15 November. Over the period of the programme the total increase in payments is £3.032m compared to £1.941m reported in November. This position is analysed below:

	Sept 05		Oct 05		Change
	2005/06	After 2005/06	2005/06	After 2005/06	2005/06	After 2005/06
	£m	£m	£m	£m	£m	£m
Learning & Culture
Main Programme	-1.114	2.662	-0.768	2.649	0.346	-0.013
City Schools	-	-	-	-	-	-
Culture	-	-	-0.617	-	-0.617	-
Social & Health Care	-0.153	-	-2.109	0.515	-1.956	0.515
Environment & Economy	-0.935	-0.741	-2.158	0.057	-1.223	0.798
Community Safety	-	-	0.029	0.029	0.029	0.029
Resources	0.010	0.020	-1.122	-0.218	-1.132	-0.238
	-2.192	1.941	-6.745	3.032	-4.553	1.091

The variations are explained below.

Learning & Culture

Main Programme

59. The additional payments of £0.346m reflect increased costs of Benson Schools’ Amalgamation (£0.090m) and changes to the minor works budget (£0.256m). These costs are funded by either additional contributions or within the overall schools’ capital programme funding.

Culture

60. The main changes are on the Central Library (-£0.280m) where funding has slipped into 2006/07 to await redevelopment, and on Thame Library (-£0.214m) where work is expected to start in September 2006.

Social & Health Care

61. The variation of -£1.956m is a combination of slippage on timings of projects (-£2.696m), an additional project (£0.493m) and cost increases on projects totalling £0.247m. The main item of slippage (£1.4m) relates to delay in appropriation of two sites for the Homes for Older People Strategy. The additional project relates to the provision of a site for a Home for Older People at Bicester and will be covered by an increased capital receipt resulting from reconfiguration of the site. The main cost increase relates to the ICT Infrastructure Phases 1&2 (£0.236m). Phases 1 and 2 are both to be completed in 2005/06, requiring the bringing forward of £0.100m of provision from 2006/07. The overall costs of the project have increased by £0.136m mainly due to the identification of more sites requiring ICT facilities.

Environment & Economy

62. The programme for 2005/06 has reduced by £1.223m since the last report. The main changes are a reduction of £0.618m in the spend on Cornmarket from the position reported last time where the final account has now been agreed with the contractor, slippage on Structural Maintenance of £0.406m and on the A40 Maintenance project of £0.207m.
63. There is an overall increase in costs of £0.798m. The main changes are on Thornhill Park & Ride Interchange (£0.613m), which reflects the changes detailed separately on the agenda, and on the A40 Maintenance project where changes to the scheme have led to increased costs of £0.471m offset by the reduction to the Cornmarket project identified above. The programme funding will be reallocated to ensure there is no underspend against credit approvals.
64. To access the full Performance Reward Grant for the Public Service Agreement the City and County Council need to have 22 loans to employees under the Affordable Housing Initiative in place at 31 March 2006. Two people who received loans have now left Council employment. It is therefore proposed that agreement is given to making a further two loans at a cost of £0.090m to ensure that the Council meets the criteria for accessing the full grant. This will be recovered in due course from repayment of the loans made to the two people who have left employment. The monitoring report reflects the additional costs.

Community Safety

65. There is an increase in payments of £0.029m on the provision for Travellers’ Sites, which will be funded by grant from the ODPM.

Resources

66. The programme for 2005/06 has reduced by £1.122m which mostly reflects slippage of payments into 2006/07.

RECOMMENDATIONS

67. The Cabinet is RECOMMENDED to:

1. note the report;
2. agree to increase the level of salary and health and safety recharges to the capital programme as described at paragraph 40;
3. agree to make a loan of £0.300m to the Oxford Preservation Trust, as discussed at paragraph 45;
4. give authority to the Head of Finance & Procurement to act on the Council’s behalf in regard to the investments of the Walter Biggs Trust.
5. approve the adjustments to the capital programme as shown at paragraph 58;
6. agree that an additional two loans under the Affordable Housing public service agreement be made at a cost of £0.090m.

SUE SCANE
Head of Finance & Procurement

Background Papers: Detailed Directorate reports and annexes deposited in the Members’ Resource Centre.

Contact Officers: Part 1 Sadie Slater, Financial Manager (Budget Monitoring) Tel 01865 815989

Part 2 Mike Petty, Strategic Financial Manager (Capital & Treasury) Tel 01865 815622

December 2005

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