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ITEM CG16

EXECUTIVE – 16 JUNE 2004

FINANCIAL MONITORING

Report by Head of Finance

Introduction

1. This report is the first combined revenue (part 1) and capital (part 2) monthly monitoring report and sets out the financial position for 2004/05 to the end of April. This report is on an exceptions basis only, highlighting known significant variations which may affect the revenue budget for 2004/05 or the capital programme.
2. The Annexes to the report are as follows:

Part 1 Revenue	Annex 1 Annex 2 Annex 3	Estimated year end position Updated grants position Virement proposal from Social & Health Care
Part 2 Capital	Annexes 4 to 7 Annexes 8 to 10	Capital Monitoring for April Learning & Culture proposed additions to the Capital Programme


Annex 1
Annex 2 (download as .xls file)
Annex 3
Annexes 4-7 (download as .xls file)
Annex 8 (download as .doc file)
Annex 9-10 (download as .xls file)

3. The individual service directorate reports, which make up the background documents to this report, are in the Members’ Resource Centre. The position for each directorate is considered below.

Part 1: Revenue Monitoring

4. The Directorates have assessed their outturn position and their budgets for 2004/05 and highlighted key issues for the budget. At this stage in the year, relatively little spending has actually been incurred so this report concentrates on known changes or emerging trends. Annex 1 sets out the position overall for consolidated balances.
5. The latest position on grants allocated in 2004/05 is attached at Annex 2 (download as .xls file). The total movement in grants since the Budget was approved in February 2004 is £13.3m. The major variations within this total are the addition of £9.4m School Standards Grant within Learning & Culture along with an increase of £2.2m to grants received from the Learning & Skills Council relating to sixth form funding. For Social & Health Care the biggest change relates to the addition of £3.8m Residential Allowances. Other minor variations reflect additional information received from the Government since the budget was agreed. New Opportunities Fund grant and Lottery funding were both reclassified as Other Grants and Contributions in the budget book, as they are not specific government grant funding. We are currently reviewing any areas where additional or new grants will require formal virements. This will be reported in the next monthly financial monitoring report.

Learning & Culture

6. Learning & Culture Directorate is highlighting a number of issues, of which the main points are as follows.
7. The Out of County budget was overspent by £0.909m in 2003/04 and the statementing budget by £0.784m. It has been agreed that the overspending can be repaid over three years. Both of these areas will need careful management and monitoring. The Out of County budget is fully committed at 1 April 2004. There is an uncommitted budget for statementing outside of the ISB which is around £0.470m which would be available to allocate against new cases if needed. There is also an uncommitted budget for statementing within the Individual Schools Budget of £0.409m.
8. £0.750m was added to the Premature Retirement Contributions budget for 2004/05. This was specifically ring fenced for redundancy costs in schools. Where a school proposes to make a teacher redundant with effect from September it has until 31 May to commence the process. There are fourteen known redundancies in prospect at a cost of £0.329m. There are likely to be some further redundancies from January. The provision will be reviewed when this information is known, to see whether any of the provision is surplus and could be returned to balances.
9. There was a decision taken as part of the budget settlement for 2004/05 to implement SAP in schools subject to further evaluation. After consultation with the schools involved in the pilot projects, it has been agreed that the FMS6 system should replace the existing LRM4 system in the short term, rather than implement SAP. This means that the £0.784m agreed for the one off costs of implementing SAP will not be required in 2004/05. There is an additional £0.159m in the budget for 2005/06. There will need to be a business case submitted for the way forward so that it can be assessed to how much will be needed to fund the project and to what timescale. The budget also included £0.346m for the recurrent costs of implementing SAP. This budget is being used to fund the cost of implementing FMS6, which will also need to be fully costed and compared with the original budget allocation for supporting SAP to substantiate that it is the correct budget to fund the interim replacement costs.
10. The forecast outturn for Learning & Culture as set out at Annex 1 is a deficit of £1.478m. This is mostly the SEN overspend carried forward from 2003/04, to be repaid over 3 years. The amount outstanding at the end of 2004/05 will be £1.280m. The Music service also has an over spend carried forward of £0.198m which will be repaid over the next 2/3 years. However this will be partially offset by carry forward on the Standards Fund , which can be spent up to 31 August 2005. This will reduce the projected overspending but cannot be quantified at this stage. This is a cash flow adjustment and the real underlying overspend is the forecast £1.478m.

Carry Forward from 2003/04

11. The provisional outturn report identifies a residual overspend to be carried forward of £0.650m. An action plan to recover the position is being prepared by the Directorate Leadership Team. This will be reported to the 20 July meeting of the Executive.

Social & Health Care

12. The provisional outturn report elsewhere on the agenda is forecasting a carry forward for Social & Health Care of £0.869m plus unringfenced grant available to allocate of £1.032m. The majority of the unringfenced grant (£0.991m) is proposed to be allocated to the Older People budget for increasing market capacity in 2004/05 as set out in the Provisional Outturn report. The remainder of the carry forward is still to be allocated, awaiting further information. Social & Health Care have highlighted a number of pressures for 2004/05. These now need to be confirmed as realistic with the Head of Finance. The Director is looking at how any emerging pressures might be funded from within available resources. An updated position will be brought to the 20 July meeting of the Executive.
13. An additional contribution of £0.500m was made to the pooled budget in 2003/04. This results in a saving of £0.500m in 2004/05, when the contribution to the pooled budget will be £0.500m less. It was agreed as part of the budget settlement for Social & Health Care that this sum would be available to allocate to the budget for 2004/05. The proposed allocation for £0.378m of the saving is set out at Annex 3 for approval.
14. The Director for Social & Health Care wishes to earmark funding within his budget for the ICT Development Plan. A report needs to be brought to the Executive in September, which sets out the plan and funding requirements for ICT development in Social & Health Care as a priority. At that stage, the actual outturn position may be known and a clearer picture of the actual pressures may have emerged have emerged, so that any unallocated resources available to fund the ICT Development Plan can be identified. It will be essential to consider this issue in the context of the Council’s overall ICT strategy, which is currently being prepared.

14. For 2005/06 Social & Health Care are indicating that a number of the potential pressures this year are recurrent for 2005/06 (and some have a greater full year effect than this year) and are not included within the future budget provision assumed in the MTFP. Early work needs to take place as part of the budget process for 2005/06 and the medium term to ensure that these pressures can be contained as far as possible within the budget provision assumed in the agreed MTFP.
15. There is ongoing work in Social & Health Care to confirm the figures for debtors and income. A project team is now in place to complete this work.

16. It is too early in the year for the Directorate to predict with any certainty the year end position, as much of the work is influenced by weather, consultation processes and other external factors (e.g. waste tonnages).
17. The Structure Plan Examination in Public is taking place later this year. It is anticipated that most of the costs will be incurred before March 2005 but some work will be carried into 2005/06. It is not possible to quantify this at this time. The Minerals and Waste Local Plan Review cannot start until the current Planning Bill becomes law later this year so it is unlikely that the budget provision will be fully spent in 2004/05. It is not known how much will be spent this year.
18. At this time it is anticipated that other budgets will be fully spent including the variations brought forward from 2003/04.

19. There are no significant issues emerging at this stage in the year.

Resources and Corporate & Democratic Core

20. Priorities for the 2004 communications work programme have now been agreed. Additional costs incurred will be met by virements from all directorates, totalling £0.280m.
21. The modernisation fund has a budget this year of £0.525m plus carry forward of £0.336m, a total of £0.861m. Bids of £0.274m have been agreed so far, of which the largest is £0.215m for Business Process Re-engineering. After repayments into the fund, the balance available to allocate in year is £0.638m.
22. The Directorate carry forward of £1.979m is available to allocate as set out in the provisional outturn report elsewhere on the agenda. The proposed allocation will be reported to the 20 July Executive.
23. Supplementary Estimates
24. There are some supplementary estimates to take into account. Two of these have been reported previously, namely: £0.104m to fund permanent staff in Social & Health Care; and £0.204m to fund the project team from March to September. Supplementary estimates have been agreed for the financial management review and the SAP/MIS review referred to in previous reports. There is currently a request for £0.069m for Cogges Manor Farm, which is the subject of a report elsewhere on the agenda.
25. The effect of these on Revenue balances is shown in the table below.

Estimated Revenue balances at 1 April 2004 Less Social & Health Care permanent appointments Social & Health Care project team Cogges Manor Farm Financial Management Review SAP/MIS Review Estimated Revenue balances at June 2005

£m 7.679     0.104 0.204 0.069 0.050 0.050 _____ 7.202

 

Conclusions

26. Learning & Culture will present their action plan on how to address their residual deficit brought forward to the 20 July meeting of the Executive. At the same meeting Social & Health Care will present a latest position statement on any emergent pressures in the budget and identify how these might be met from within available resources. The Director for Social & Health Care will bring a report with the Head of ICT on ICT Development for the Service to the Executive in September.

Part 2: Capital Monitoring

Explanation of Capital Monitoring Information

27. The monitoring report will show the month-on-month movement of directorate total planned capital spend for the financial year. Details of the month-on-month variations in spend will be provided, together with significant variations in total scheme costs. The monitoring information for April is set out in Annexes 4-7 (download as .xls file). Annexes 4 to 6 include explanations of the information contained within the tables.
28. Capital spend is paid for in the main by borrowing, capital receipts, grants and contributions. The most difficult to predict are capital receipts, which can vary due to timing, value and potential use for other capital programme schemes. The month-on-month movement of the available capital receipts will be reported as part of the monthly monitoring information as shown in the fourth annex. To avoid disclosure of exempt information the details of the variations will not be reported. It is the intention to build upon this initial position of limited reporting on available resources to more fully report on available resources as monthly monitoring reporting becomes more established.

29. The capital monitoring for April 2004 is presented at Annexes 4-7 (download as .xls file). Only significant variations to the capital programme have been reported at this time. The monitoring information does not include slippage from 2003/04. This is reported as part of the Provisional Outturn Report elsewhere on the agenda. The annual roll-forward of slippage from 2003/04 into 2004/05 will be included in the capital programme update in July.
30. The monitoring report shows the total capital programme for each Directorate. It does not include planned payments awaiting project appraisals, which are included in the capital programme financing summary only. £7.4m of planned payments awaiting project appraisals was included in the capital programme reported in May, all relating to Learning & Culture. Some of these planned payments have now been included in the Learning & Culture main programme (see below).
31. Annex 4 sets out the summary planned spend position. The overall variation from the original capital programme is £4.1m. This is mainly due to the inclusion of additional schemes as reported at Annex 5 and outlined below. All of these additional payments are matched by resources to fund them apart from some minor variations (£0.1m) on Learning & Culture which will be absorbed within the resources available to Directorates. No variations have been reported for Community Safety or Resources.

32. Learning & Culture have added £3.6m for schemes that were included in the original capital programme as planned payments awaiting project appraisals. The project appraisals for these schemes have now been approved but were exempt items due to capital receipts confidentiality. £0.7m of the Modernisation Scheme programme has been allocated to specific schemes and there is a further £0.2m for minor additional schemes. There is slippage of £1.7m relating to two Opportunity Funding schemes and further minor variations to scheme costs totalling £0.1m.

35. The only variation for Social & Health Care relates to an addition of £0.2m to the IT Strategy Grant Funded scheme arising from the receipt of Local Information Plan (LIP) Grant in 2004/05.

36. Environment & Economy have added one new scheme costing £1.6m. On 31 March 2004 the Department for Transport issued a Supplementary Credit Approval (SCA) of £1.6m for structural maintenance and improvement on the recently detrunked A41 between the M40 and the Buckinghamshire boundary. The approval is ring-fenced to that specific project and must be used by the end of the 2004/05 financial year. As an appropriate engineering solution to the problem has not yet been identified it may not be possible to spend that amount effectively within the time frame. Discussions are underway with GOSE on the issue.

Available Resources

37. The capital receipts summary position is attached at Annex 7. There are no known variations to the position reported in the Capital Programme update to the Executive on 18 May 2004. There are regular officer meeting to review position on capital receipts and the outcome of those meetings will be reported regularly to the Executive.
38. The main change to available resources is the receipt of the £1.6m SCA reported above.

39. The Capital Programme update to the Executive in May indicated that there was an overall surplus of £1.7m in 2004/05 but that Learning & Culture were expecting to bring forward further schemes totalling £6.5m in line with resources available to this service. The Capital Programme and Asset Management Steering Group were asked to consider the funding position on the programme for 2004/05 and bring forward proposals as to how this position could be resolved to an Executive meeting in June.
40. A report setting out the Education schemes to be brought forward into the capital programme for 2004/05 to 2007/08 is attached at Annex 8 (download as .doc file), together with a resources statement at Annex 9 and a detailed list of schemes at Annex 10 (Annex 9-10 (download as .xls file)).
41. Due to rephasing of schemes there is now expected to be a £7.9m surplus of Education resources in 2004/05 and the L&C additional programme is in balance over the medium term. The surplus on the Council’s overall capital programme has increased by £1.4m (£7.9m -£6.5m) to £3.1m in 2004/05 after taking into account the additional surplus on Education resources.

RECOMMENDATION

42. The Executive is RECOMMENDED to note the report and:

1. approve the proposals to allocate funding in Social & Health Care set out at Annex 3 to the report;
2. approve the variations and additions for Learning & Culture to the capital programme shown in Annex 10 (Annex 9-10 (download as .xls file))..

CHRIS GRAY
Head of Finance

Background Papers: Nil

Contact Officer:
Jenny Hydari (part 1) Tel. 01865 815401
Mike Petty (part 2) Tel. 01865 815622

June 2004

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