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COPY ITEM CG9
SUPPLEMENT

CABINET – 21 JUNE 2006

PROVISIONAL REVENUE & CAPITAL OUTTURN

Report by Head of Finance & Procurement

INTRODUCTION

1. This report presents the provisional outturn for revenue (Part 1) and capital (Part 2) and identifies variations of actuals against budgets in 2005/06. Figures shown in the report reflect those included in the Council’s Statement of Accounts 2005/06, which is to be submitted to the Audit Committee for approval on 28 June 2006, prior to audit. The report also includes proposals for the allocation of revenue carry forwards under the Council’s budget management arrangements.
2. The provisional outturn for the Council shows consolidated balances of £15.883m. This represents an increase of £4.056m from the position at the end of 2004/05 and is made up of increases of £7.105m in general reserves and a decrease of £3.049m in carry forward.
3. The detail for each Directorate is summarised within the report and individual reports for each Directorate are available in the Members’ Resource Centre.

Annexes

4. The following annexes are attached:

• Annex 1 Provisional Revenue Outturn - Summary and by Directorate (download as .xls file)
• Annex 2(a) Directorate carry forward proposals (download as .xls file)
• Annex 2(b) Virement of 2005/06 carry forwards to other budget heads (download as .xls file)
• Annex 2(c) Three year analysis of significant underspends (does not include overspends) (download as .xls file)
• Annex 3 Virements and supplementary estimates in 2005/06 (download as .xls file)
• Annex 4 Grants (download as .xls file)
• Annex 5 Revenue Balances Provisional Outturn (download as .xls file)
• Annex 6 On-Street Parking Account (download as .xls file)
• Annex 7 Provisional Capital Outturn (download as .xls file)

5. Annex 1 shows the provisional revenue outturn by Directorate, a net overspend of £0.470m, less than 1% variation to the budget. For financial reporting purposes in 2005/06, the two realigned Directorates have continued to be treated as if the realignment had not taken place, although from 1 January 2006 management responsibility for some of those budgets changed. The individual directorate provisional outturn tables at Annex 1 therefore reflect the ‘Learning & Culture’ and ‘Social & Health Care’ groupings under which the 2005/06 budget was originally approved and an additional schedule is included with the annex showing a summary position for the realigned Directorates. The overall year end position is as follows:

	£m
Directorate Budgets
Gross Expenditure	746.898
Income	-195.208
Supplementary Estimates	0.519
Underspend brought forward from 2004/05 and added to 2005/06 budget	2.247
Net Final Approved Directorate Budgets	554.456
Provisional Outturn (net)	554.926
Net overspend 2005/06 (Annex 1, Column 10)	0.470

6. Of the total variation, some elements are deemed to be outside a Directorate’s control and are excluded from the Directorate carry forward.

Resources - Property Services (Annex 1, Column 11)

7. A net £0.163m overspend is carried forward by the Resources Directorate who manage and control spending on the Council’s repair and maintenance of buildings. Under/over spends by Directorate are summarised below (a minus sign represents a budget balance to be carried forward and a positive sign indicates an over spend to be recovered):

Directorate	Underspend(-)/ Overspend(+) £m
Learning & Culture	- 0.221
Social & Health Care	- 0.004
Environment & Economy	- 0.050
Community Safety	0.194
Resources	0.244
Total net overspend	0.163

Returned to Council (Annex 1, Column 12)

8. These variations are excluded from Directorate carry forwards because they represent variations to budgets which are recognised under the Council’s budget management arrangements to be outside the control of the Directorate and are therefore funded from balances.
9. The following variations are returned to balances in 2005/06 (a minus sign indicates an underspend to be returned to balances and a positive figure represents an overspend to be drawn from balances):

Directorate	Non-domestic rates £m	Other   £m	Total   £m
Learning & Culture - rates	0.120		0.120
Social & Health Care - rates	- 0.068		- 0.068
Environment & Economy
- rates	- 0.008		- 0.008
- supplementary estimate for waste tonnages not required		- 0.110	- 0.110
Community Safety
- rates	0.005		0.005
- firefighters pensions		0.364	0.364
- wholetime firefighters pay award		0.034	0.034
- retained firefighters		0.043	0.043
Resources
- rates	0.062		0.062
- audit fee		- 0.015	- 0.015
- Coroner’s Service		0.040	0.040
- Magistrates’ Court Service		- 0.055	- 0.055
- Council elections		- 0.020	- 0.020
Total overspend to be drawn from balances	0.111	0.281	0.392

10. These transfers are reflected in the additions to and calls on balances shown in Annex 5 of this report. Changes since the last financial monitoring report are highlighted in the Annex.

Directorate Variations

11. After deducting variations outside Directorates’ control, the net underspend (excluding the City Schools planned overspend) is £3.020m. This compares to a forecast overspend (excluding the City Schools planned overspend) of £0.087m as reported in the most recent monthly monitoring based on the period to the end of February 2006, a change of £3.107m. The movement in the forecast position is summarised below by Directorate, with explanations of major variances for each Directorate given in the subsequent paragraphs (a minus sign represents a balance to be carry forward and a positive figure represents an overspend).

Directorate	February MMR Variance	Provisional Outturn	Change from Feb. MMR
	£m	£m	£m
Learning & Culture	3.000	1.335	- 1.665
Less City Schools’ Reorganisation	3.125	3.098	-0.027
	- 0.125	- 1.763	- 1.638
Social & Health Care	0.626	0.373	- 0.253
Supporting People	0.496	0.471	- 0.025
Environment & Economy	- 0.765	- 1.567	- 0.802
Community Safety	0.225	0.055	- 0.170
Resources	- 0.370	- 0.589	- 0.219
Total	0.087	- 3.020	- 3.107

Learning & Culture

12. After deducting variations outside this Directorate’s control, the net overspend for the Directorate is £1.335m. This compares to a forecast over spend in the February financial monitoring report of £3.0m, a decrease in overspend of £1.665m. There are amounts recoverable in future years totalling £4.092m. £3.098m of this is the planned overspend on the City Schools’ Reorganisation, and the remainder relates to the 2003/04 overspends on Statementing and Fees to Independent Schools, which are repayable over three years until 2006/07, and the variation in transport days on the Home to School Transport service. Excluding these amounts gives an in-year underspend of £2.757m. The movement in the forecast position for non-delegated budgets is summarised below (a minus sign represents a balance to be carry forward and a positive figure represents an overspend):

Service Area	February MMR Variance	Provisional Outturn	Change from Feb. MMR
	£m	£m	£m
School Development	- 0.419	- 1.865	- 1.446
Children’s Services	- 0.461	- 0.864	- 0.403
Community Learning	- 0.167	0.171	0.338
Cultural Services	- 0.134	- 0.229	- 0.095
Resources	0.207	0.244	0.037
Systems & Performance Management	- 0.145	- 0.231	- 0.086
Schools	0	0.017	0.017
	-1.119	- 2.757	- 1.638
Plus: Recoverable in future years
Children’s Services – Statementing & Fees to Independent Schools Children’s Services – Transport Days	0.680 0.314	0.680 0.314	0 0
City Schools’ Reorganisation	3.125	3.098	-0.027
Directorate total Non-Delegated Budgets	3.000	1.335	- 1.665

13. The increase in the School Development underspend since the February Monitoring Report relates primarily to Standard Funds Grant, with an increase in underspend of £1.343m. The table below sets out the movement in the forecast position. The Standards Fund grant allocation for 2005/06 may be spent up to 31 August 2006, and the underspend will need to be carried forward to 2006/07 when it is expected to be spent in full.

    Standards Fund Grant	February MMR Variance	Provisional Outturn	Change from Feb. MMR
    	£m	£m	£m
    School Development Grant	-0.078	-0.119	-0.041
    Primary Strategy	-0.164	-0.412	-0.248
    Key Stage 3	-0.164	-0.273	-0.109
    Vulnerable Children	0	-0.015	-0.015
    Children in Care	0	-0.017	-0.017
    Advisory Service for the Education of Travellers	0	-0.102	-0.102
    National Grid for Learning broadband connectivity/Corporate ICT	0	-0.811	-0.811
    Total	-0.406	- 1.749	- 1.343

14. Of the increase in the Children’s Services underspend, £0.310m relates to Standards Fund Grant which can be spent up until 31 August 2006. In addition there has been a £0.106m increase in the in-year underspend on statementing as a result of parents and playgroups not claiming funding that had been earmarked for supporting individual children in independent non-maintained settings.
15. The two main areas of change for Community Learning relate to Early Years and Adult Learning. After viring £0.289m to the Adult Learning budget and £0.100m to the Capital Programme for Foundation Stage projects, the final underspend on the Early Education Funding for 3 & 4 year olds budget is £0.097m. The overspend on Adult Learning is £0.188m after taking into account the virement from Early Years. The main change from the February Monitoring Report relates to £.0193m income included in the previous forecast which was received in 2005/06 but relates to projects being undertaken in 2006/07.
16. The increase in the Cultural Services underspend relates to delayed production of Cultural Loans for Learning material and slippage in a number of small projects.
17. The main change for Systems & Performance Management relates to the Realignment Project budget where accommodation costs built into the original estimate have not been incurred.
18. In respect of Schools Delegated Budgets, there has been very little movement between the opening and closing balances for both revenue and capital reserves and there have been no significant changes in balances for each sector. Schools’ revenue reserves have reduced from £8.275m at the start of the year to £8.111m at year-end, a decrease of £0.164m. The year-end figure is £4.943m above school’s own forecasts and is mainly due to slippage on Repair & Maintenance programmes and the ability to spend Standards Fund allocations up to the end of the academic year on 31 August.

Social & Health Care

19. After deducting variations outside this Directorate’s control, the net overspend for the Directorate (excluding Supporting People) is £0.373m. This compares to a forecast overspend of £0.626m as reported in the most recent monthly monitoring based on the period to the end of February 2006, a decrease in overspend of £0.253m. The overspend on Supporting People is £0.471m, compared to a forecast overspend of £0.496m in the last monitoring report. The movement in the forecast position is summarised below (a minus sign represents a balance to carry forward and a positive figure represents an overspend):

 

Service Area	February MMR Variance	Provisional Outturn	Change from Feb. MMR
	£m	£m	£m
Children & Families	1.296	1.132	-0.164
Older People	-0.931	-0.886	0.045
Mental Health	-0.043	-0.082	-0.039
Learning Disabilities	0.443	0.454	0.011
Physical Disabilities	0.156	0.166	0.010
Directorate Management Team	-0.008	-0.040	-0.032
Business Support & Performance Management	-0.174	-0.432	-0.258
Commissioning, Planning & Partnership	-0.113	0.061	0.174
Sub-total	0.626	0.373	-0.253
Supporting People	0.496	0.471	-0.025
Directorate total	1.122	0.844	-0.278

20. The reduction in the Children & Families overspend is due to the allocation of a supplementary estimate of £0.250m agreed by Cabinet on 18 April. Other increases relate to a £0.020m early retirement cost and other small variations throughout the budget.
21. The increase in the Business Support & Performance Management underspend is mainly due to staff time on projects chargeable to the revenue budget being £0.060m less than forecast, £0.150m slippage on training programmes into 2006/07, increased capitalisation of IT costs £0.031m, and £0.020m reduction in bank charges.
22. The year end variance for Commissioning, Planning & Partnership has moved from a £0.113m underspend to a £0.061m overspend as a consequence of an over forecast on vehicle capitalisation and £0.075m expected funding from the Modernisation Fund not being received in 2005-06.

Environment & Economy

23. After deducting variations outside this Directorate’s control, the net under spend for the Directorate is £1.567m. This compares to a forecast under spend of £0.765m as reported in the February Financial Monitoring Report, an increase in under spend of £0.802m. The movement in the forecast position is summarised below (a minus sign represents a balance to be carry forward and a positive figure represents an overspend).

	February MMR Variance	Provisional Outturn	Change from Feb. MMR
	£m	£m	£m
Transport	-0.080	-0.196	-0.116
Sustainable Development	-0.522	-1.031	-0.509
Trading Standards & Registration	-0.054	-0.088	-0.034
Business Support	-0.109	-0.252	-0.143
Directorate total	-0.765	-1.567	-0.802

24. The increase in the Sustainable Development underspend is due in part to a £0.051m supplementary estimate for the Minerals & Waste and Structure Plans, which was approved by the Cabinet on 18 April. The main area of movement, however, is £0.454m on Waste Management, the majority of which relates to Waste Recycling Centres (WRC’s). The increase in underspend within WRC’s is due to final tonnage figures being lower than predicted in February and changes in contract management costs.
25. The increase in the Business Support underspend is mainly due to final recharges for negotiable support services being lower than previously forecast, with underspends of £0.074m on Legal, telephone and property services.

Community Safety

26. After deducting variations outside this Directorate’s control, the net overspend for the Directorate is £0.055m. This compares to a forecast over spend of £0.225m as reported in the most recent monthly monitoring based on the period to the end of February 2006, a decrease of £0.170m. The movement in the forecast position is summarised below (a minus sign represents a balance to be carry forward and a positive figure represents an over spend).

	February MMR Variance	Provisional Outturn	Change from Feb. MMR
	£m	£m	£m
Fire & Rescue Service	-0.195	-0.165	0.030
Emergency Planning	0	-0.004	-0.004
Community Safety	0.420	0.279	-0.141
Traveller Sites	0	-0.055	-0.055
Directorate total	0.225	0.055	-0.170

27. The Community Safety overspend is £0.141m less than reported in the last monthly monitoring report. This is due to the successful implementation of the management action plan to address the Youth Offending Service budget shortfall (-£0.112 m) and underspends on the Stronger & Safer Communities and Community Safety budgets of £0.029m.
28. The Traveller Sites under spend of £0.055m is due to slippage on premises site works and an increase in rental income.

Resources & Chief Executive’s Office

29. After deducting variations outside this Directorate’s control, the net under spend for the Directorate is £0.589m. This compares to a forecast underspend of £0.370m as reported in the last monthly monitoring report, an increase in underspend of £0.219m. The movement in the forecast position is summarised below (a minus sign represents a balance to be carried forward and a positive figure represents an overspend).

	February MMR Variance	Provisional Outturn	Change from Feb. MMR
	£m	£m	£m
ICT	0.194	-0.091	-0.285
Property Services	-0.049	0.145	0.194
Repair& Maintenance of Buildings	-0.200	-0.324	-0.124
Chief Executive’s Office	-0.195	-0.230	-0.035
Other	-0.120	-0.089	0.031
Directorate total	-0.370	-0.589	-0.219

 

30. There are four reasons for the ICT variance

• Section 31b grant, although fully committed was not spent by 31 March (-£0.141m)
• Social & Community Services has not yet spent the Project Link (ex Abacus) Project budget in full (-£0.133m)
• The SAP Revitalisation Project budget was expected to have a balance at year-end but was in fact spent in full and was unable to fully cover the additional pay costs of the Competency Centre (+£0.113m)
• The overspend on the core budgets was less than forecast (-£0.124m)

27. The level of slippage on project work by Mouchel Parkman was less than estimated and, excluding the Castle Project, Property Services was close to break-even. The underspend on health and safety work was greater than estimated.
28. The February forecast for the Chief Executive’s Office budget did not allow for slippage in projects paid for from the Democratic Initiatives’ budget.
29. The variation for RC3 Legal Services (£0.034m) includes expenditure on counsel and legal fees of £0.041m, arising from Trap Grounds case going to the House of Lords. This is a cost which is not in the control of Legal Services. Costs incurred by this case in 2004/05 (£0.025m) were met from balances as agreed by the Leader of the Council and Deputy Leader on 8 April 2003 and members were warned that there may be further costs if the appeal for the case to be heard in the House of Lords were to be successful. The Cabinet is therefore recommended to approve that the £0.041m cost be met from balances.

Carry Forward Arrangements

30. Under the Council’s Financial Regulations, the Cabinet is responsible for approving all carry forwards and will, as last year, look carefully at the allocation of carry forwards to consider whether previous patterns of spending indicate that carry forwards will be used in 2006/07 or whether they should be withheld in order to strengthen Council balances and enable resources to be allocated to areas where there is a need for spending in the next financial year. Annex 2(c) provides a comparison of outturn positions over the last three years for areas where there has been significant under spending.
31. Directorates are required to carry forward all overspends to be recovered in the following year with the exception of certain budgets deemed to be outside the control of Directors which are a call on balances and centrally controlled budgets such as property repairs and maintenance. Underspends may be carried forward subject to Directors providing the Cabinet with an explanation of the reasons for the underspends and stating the case for the application of the resources in the following year. Directorates can propose application of carry forwards to the service in which they were generated or request a virement of the carry forward in 2006/07 to meet pressures in other areas.
32. Details of Directorate variations and proposed carry-forwards are shown in Annex 2(a). Proposed virements of 2005/06 carry-forwards to different budget heads are summarised in columns 6 and 7 of Annex 2(a) and detailed at Annex 2(b).
33. The 2006/07 budget already takes into account previously forecast under and overspends for service areas within Social & Health Care, as set out in the table below:
    
    

Service Area	Underspend(-)/ Overspend(+) £m
Children & Families (now part of CYPF)	0.565
Older People	-0.510
Mental Health	-0.025
Learning Disabilities	0.495
Directorate Management Team	0.160
Business Support	-0.077
Commissioning, Planning & Partnership	-0.155
Total	0.453

34. Based on the amounts shown above, the 2006/07 budget includes provision to repay the overspends and includes deficit budgets to be offset by the carry-forward of underspends. The Social & Health Care carry-forward proposals at Annex 2(a) reflect the amounts agreed in the 2006/07 budget.
35. As part of the realignment of the Learning & Culture and Social & Health Care directorates, agreement had been reached in principle that overspends on transferring services would be dealt with by the originating directorate, so that the receiving directorate would not be left with an expenditure pressure in the new year. The two services transferring between directorates which have been forecasting overspends during the year are Children & Families and Adult Learning. The February monitoring report included proposals to deal with both of these overspends. However, increases in overspends for both services (particularly Adult Learning) and reductions in underspends elsewhere means that there are now insufficient resources to fully meet the overspends within the originating directorates.
36. As outlined at para 38 above, £0.565m of the £1.132m Children & Families overspend has been provided for within the 2006/07 budget. In 2006/07 it is proposed to vire on a one-off basis carried forward underspends of £0.376m on Older People and £0.097m on Early Years to Children & Families to meet part of the overspend. In the Financial Monitoring report elsewhere on this agenda the Cabinet is asked to approve supplementary estimates of £0.094m to repay the remainder of the Children & Families overspend and £0.188m to repay the Adult Learning overspend.
37. The Learning & Culture proposals include the carry-forward of overspends on Children’s Services (Statementing and Fees to Out County Schools) and the City Schools Reorganisation where there is agreement to repayment in future years. There is provision with the 2006/07 budget to repay all of the remaining £0.680m overspend for Children’s Services. The City Schools Reorganisation overspend is being repaid at a rate of approximately. £0.5m each year and is due to be fully repaid by 2012.
38. The Environment & Economy carry-forward proposals include using £0.253m of the Waste Management underspend to create a Waste Management earmarked reserve to provide funding to cover penalties for exceeding our landfill allowance or preferably for future landfill waste reduction initiatives to enable us to meet our landfill allowance or at least reduce the excess, thereby reducing or eliminating the need to pay any penalty.
39. In respect of Community Safety, there is provision within the 2006/07 budget to meet £0.252m of the £0.308m overspend for the Youth Offending Service.
40. The Resources proposals include the carry-forward of a £0.437m underspend on Health & Safety Work. Approximately £0.060m is already committed contractually, leaving a balance of £0.377m. A review will be undertaken to identify the resources required for the continuing programme of health and safety work. However, any budget that cannot be spent on health and safety could be used for repair and maintenance planned work where the budget is only 11% of assessed need and the proportion of planned to reactive work is 50:50. Increasing spend on planned work will reduce the amount of reactive work that has to be undertaken. It is also proposed to use £0.012m to pay for improvements to the accommodation for Property Services for which there is no budgetary provision. The Cabinet is asked to approve the use of the uncommitted health and safety underspend on planned repair and maintenance and accommodation work.

Virements and Supplementary Estimates in 2005/06

41. Annex 3 details changes from the original estimate approved by Council in February 2005, highlighting new virements and supplementary estimates since the February monitoring report.

Government Grant Funding

42. Details of government grants received in 2005/06 and associated expenditure are included at Annex 4.

Earmarked Reserves

43. In year movements on earmarked reserves held by Directorates are summarised below. The position on corporate earmarked reserves and provisions has yet to be finalised and will be reported as part of the Statement of Accounts.

Earmarked Reserve	Balance as at 31 March 2005	Movement	Balance as at 31 March 2006
	£m	£m	£m
Learning & Culture
Schools	15.554	0.027	15.581
Non- Schools	1.824	0.961	2.785
Social & Health Care	- 0.136	0.384	0.248
Environment & Economy
On Street Car Parking	2.006	0.788	2.794
Oakley Wood		0.300	0.300
Landfill Allowance Trading Scheme		0.632	0.632
Other	0.469	0.202	0.671
Community Safety	0.836	0.087	0.923
Resources
Modernisation Fund		0.740	0.740
SAP for Schools	0.688	- 0.037	0.651
Other	0.057		0.057
Total earmarked reserves	21.298	4.084	25.382

44. The On-Street Parking revenue surplus for 2005/06 was £0.920m. The accumulated surplus at 1 April 2005 was £2.006m. £0.067m of this balance has been used to offset the reduction in income following the removal of charges at the Council’s Park & Ride sites and a net £0.065m to fund capital works during the year. The accumulated surplus on the account at the end of 2005/06 is £2.794m. A statement of actual income and expenditure for the account is included at Annex 6 of this report. The Cabinet is requested to approve the carry-forward of the net surplus on this account.
45. The balance on the Landfill Allowance Trading Scheme relates to a notional (not real cash) value of the surplus in trading that the directorate achieved by landfilling less tonnes than allocated under the recently introduced government scheme. This is distinct from the new Waste Management reserve to be created in 2006/07 mentioned at paragraph 42.
46. The balance on the Modernisation Fund has been moved into a reserve to be applied in future years in accordance with the agreed terms for use of the Fund.

Strategic Measures

47. The provisional outturn position on strategic measures is an expected surplus of £2.692m. This compares to an estimated surplus of £2.300m previously reported. The main reason for this improvement relates to a reclassification of the interest payable on some developer contributions. More contributions were classified as being subject to the 7 day market rate of interest rather than the Baxter Index.
48. The additional surplus will be added to County Fund Balances at 31 March 2006.

Efficiency Savings

49. The Annual Efficiency Statement (AES) system requires all local authorities to meet efficiency targets that are broadly 2.5% of their 2004/05 adjusted budgets each year up to 2007/08. Oxfordshire's first target was to find £8.140m of savings in 2005/06, with a further £8.062m in 2006/07 and £8.102m in 2007/08 - giving a total of £24.304m of AES savings by the end of the three year period. At least half of the target (£4.070m in 2005/06, £4.031m in 2006/07 and £4.051m in 2007/08 ) must be cash releasing AES savings - where cash can be released from service budgets without affecting service outputs and quality. As a concession the government has said that AES savings made in the year before 2005/06 - 2004/05 - can be counted towards the 2005/06 AES target. Savings that can count towards the 2005/06 AES target from 2004/05 have already been identified and reported to the government.
50. A 'backward looking' AES return for 2005/06 must be made to the government by 6 July 2006. This return will consider whether the £4.070m AES cash releasing target and the overall AES £8.140m target has been met for 2005/06. Figures for this return are currently being assembled but an overall position is not yet available.
51. Only two Directorates reported difficulties in achieving savings during 2005/06. Social & Health Care identified a shortfall generated by delays in the telecare project, although this has in the main been replaced by increases in other savings. The Resources Directorate identified that planned savings on employee costs in Human Resources have not been achieved and that an action plan is being developed to recover the shortfall and achieve the 2006/07 efficiency savings.

BVPI8

52. 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 and is monitored throughout the year from information generated within SAP, the Councils’ financial management information system. The target for 2005/06 was 95% and the table below shows performance for March 2006 and the cumulative for the year. In addition a sample of invoices is selected each year from which the published BVPI figure is calculated.

	March 2006 %	2005/06 %	Sample %
Learning & Culture	98.6	93.5	84.2
Social & Health Care	91.4	91.4	87.9
Environment & Economy	98.7	98.3	100.0
Community Safety	96.2	95.2	88.9
Resources	95.2	88.4	82.6
Chief Executive’s Office	96.4	96.9	100.0
	94.4	91.5	86.7

53. The sample indicated a significant number of input errors in the SAP data, however error rates dropped during the year as awareness of proper procedures increased. Small sample sizes can also distort results. Overall performance in 2005/06 indicated by the sample is marginally down on the previous year’s figure of 87.0% although there is evidence of improvement across most of the Council.
54. There have been problems in meeting targets in certain areas of Resources, in particular Mouchel Parkman, the Council’s property consultants who pay all property contractor invoices (and their predecessors, Atkins), but the figures for March demonstrate a significant improvement, which should carry on into the new financial year.

Consolidated Revenue Balances

55. There have been a number of changes affecting general reserves during the year. These have been reported as part of the monthly financial monitoring and are shown in full at Annex 5. The provisional outturn position for general reserves is £12.863m (net of City Schools overspend). The position for general balances gross of City Schools is £15.961m. This represents an increase of £7.105m from the balance as at 1 April 2005. The main factor for the improved position is additional interest on balances of £2.692m. This increase was anticipated and recognised as part of the Council’s budget for 2006/07.
56. Cabinet approval is requested for additional calls on balances in relation to the legal costs of the Trap Grounds High Court Case (£0.041m) and overspends on non-domestic rates (£0.111m).
57. The carried forward overspend on the City Schools’ Reorganisation now stands at £3.098m. This is being repaid on an annual reducing balance basis until 2012 from the savings resulting from the reorganisation.
58. The provisional outturn position for consolidated revenue balances is shown below:

	£m
Revenue Balances (net of City Schools) per last forecast	12.601
Rates overspend	-0.111
Add back previously reported Cultural Services rates overspend	0.017
External Audit Fee	0.015
Increase in Firefighters’ pension overspend	-0.164
Decrease in Retained Firefighters’ overspend	0.017
Return of supplementary estimate for breaching minimum tonnages	0.110
Trap Grounds Case legal costs	-0.041
Additional interest on cash balances	0.392
Reduction in City Schools Reorganisation overspend	0.027
	12.863
Directorate Carry Forward as per Annex 1	3.020
	15.883

Conclusion

59. The provisional outturn position on revenue balances (net of the City Schools’ Reorganisation) is £12.863m. This is £3.555m more than the projection set out in the Revenue Budget and Capital Programme for 2005/06 which was agreed by Council on 15 February 2005. The improved position means that the Council has met its target of increasing balances to 2% of the net revenue budget. For future years, the budgeted for position for balances has been based on a risk assessment, rather than on a percentage budget target.
60. The Directorate carry forward position stands at £3.020m (net of City School), an increase of £3.107m from the projections in the February financial monitoring report. This compares to a carry forward position of £6.596m at the end of 2004/05 and reflects tighter budgetary control.

PART 2 – PROVISIONAL CAPITAL OUTTURN

61. For the first time the Council’s Capital Outturn has been funded on an accruals basis in line with the Statement of Recommended Practice. The Provisional Capital Outturn summary at Annex 7 shows an underspend of £8.5m compared to a capital programme of £85m as identified in the monthly Financial Monitoring report to Cabinet on 18 April.
62. The main areas of underspending are on the Learning and Culture schools programme £4.1m, Social and Health Care £1.8m Environment & Economy £1.0m and £0.8m on Cultural Services. These areas are considered further below:
    
    
1. Learning & Culture – Schools Programme
   
   The main reasons for the underspend of £4.1m relates to slippage on minor works projects (£2.1m) and on schools Devolved Formula Capital (£1.6m). In both areas it is difficult to assess the likely outturn position as the budgets are either outside our direct control or have a mix of funding sources.
   
   
2. Social & Health Care
   
   The main reasons for the underspend of £1.8m relate to the delay in acquiring two sites (£1.2m) due to legal issues.
   
   
3. Environment & Economy
   
   The main reason for the underspend of £1.0m is slippage on the Bicester Skimmingdish Lane (£0.8m).
   
   
4. Cultural Services
   
   

The main reason for the underspend of £0.8m is due to delays across a range of projects.

63. In the course of the capital closedown the opportunity was identified to make a revenue/capital switch of £7.1m by capitalising some structural maintenance expenditure, in order to make a number of transactions to meet current and future requirements, as follows:
    
    

1. It enables access to capital surpluses to establish a temporary reserve to fund the set up costs of the shared service centre (£4.2m) as set out in the report to the Cabinet in February 2006.
2. It enables access to capital surpluses to make a contribution to a Homes for Older People reserve, to be used to make a contribution to the revenue budget to meet the increased costs of the HOPS contract (£2.1m).
3. The balance (£0.8m) enables the Council to have sufficient capital spend to avoid losing time-limited resources available to fund the capital programme. The consequent revenue underspending is available for use to make a contribution to the capital reserve to fund the capital programme in future years.
   
   
64. At 1 April 2005 the Council had £16.081m of unutilised capital receipts on the balance sheet. In 2005/06 the Council sold assets and obtained further capital receipts of £13.020m, giving total available receipts of £29.101m. Of this some £6.239m of receipts were used to fund the capital programme leaving £22.862m of capital receipts as unutilised and available to fund the capital programme in future years (including a potential repayment to the DfES as a share of the excess capital receipts arising from the City Schools Reorganisation project).
65. In the Council’s budget for 2005/06 contributions were made to the capital programme for two items. Firstly £1.5m to the Transport Capital Programme to repay resources that were used to assist the revenue budget in earlier years and secondly a general contribution of £1.0m to provide additional resources to the capital programme. Neither of these contributions was required to fund the capital programme in 2005/06 and have been carried forward via the capital reserve to fund the programme in future years.

RECOMMENDATIONS

66. The Cabinet is RECOMMENDED to:

1. note the provisional revenue and capital outturn set out in the report;
2. approve the Directorate carry-forwards as set out in Annex 2(a), including the virement of carried forward underspends to other budget heads in 2006/07 as set out in Annex 2b);
3. approve the use of the uncommitted health and safety underspend on planned repair and maintenance and accommodation work;
4. approve the use of balances to meet the overspend of £0.111m on non-domestic rates;
5. agree that the £0.041m legal fees arising from the Trap Grounds case be met from balances;
6. agree that the surplus in the On-Street Parking Account at the end of the 2005/06 financial year, so far as not applied to particular eligible purposes in accordance with Section 55(4) of the Road Traffic Regulation Act 1984, be carried forward in the account to the 2006/07 financial year;
7. approve the capitalisation of structural maintenance expenditure and application of the resultant resources as set out in paragraph 67 of the report.

SUE SCANE
Head of Finance & Procurement

Background Papers: Detailed Directorate reports and annexes

Contact Officers:
Part 1 Stephanie Skivington, Strategic Finance Manager (Financial Accounting) Tel 01865 815426
Part 2 Mike Petty, Strategic Finance Manager (Capital & Treasury Management) Tel 01865 815622

June 2006

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