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ITEM CG5

 

CORPORATE GOVERNANCE SCRUTINY COMMITTEE

18 DECEMBER 2008

 

FINANCIAL MONITORING REPORT TO 31st OCTOBER 2008

 

COMMENTARY BY THE CABINET MEMBER FOR FINANCE

 

Introduction

 

  1. This report provides a commentary on the Council’s forecast financial position for the 2008/09 financial year.  It is based on seven months of actual expenditure and income to the end of October 2008 and is consistent with the position reported to Cabinet on 16th December 2008. 

 

  1. The in year overspend for Directorates is forecast to be £0.567m as shown in Annex 1 (download as .xls file).  This forecast excludes the variance relating the City Schools reorganisation (£1.369m) where the repayment is planned over a number of years.  £1.000m of the £3.000m ICT Investment Fund will be used in 2009/10 as planned.

 

  1. The forecast position takes into account supplementary estimates totalling £0.124m agreed in 2008/09 along with a further £0.250m for the one off costs arising from the closure the Print and Design Unit.  Local Authority Business Growth Incentive (LABGI) allocations of £0.672m were approved by Council in September 2008.

 

Children, Young People & Families

 

  1. The directorate is forecasting an in year underspend of -£0.290m. 

 

  1. Within Children and Families there is an unachievable efficiency saving of £0.150m relating to Children’s Homes.  £0.200m pressure on placements, allowances and the agency budget in Children and Families is offset by an equivalent underspend in out of county placements in Young People and Access to Education. 

 

  1. An underspend of -£0.500m is forecast on home to school transport as a result of tendering and route savings.  The remaining contract for Chipping Norton will be retendered in March 2009.

 

  1. A £0.060m overspend in Commissioning, Strategy and Locality Development includes an overspend of £0.270m relating to redundancies and early retirements arising through the restructuring of the Directorate.  This will be carried forward to 2009/10 and will be offset by savings on salaries in future years.  The 2008/09 cost will be partly offset by savings relating to a reduction in the running costs to support staff working in Macclesfield House (-£0.060m) as a result of the move to Shared Services and an underspend of -£0.100m on the Premature Retirement Compensation budget.  Although much reduced from overspends in previous years, the Legal Services budget is forecast to overspend by £0.050m.  There is an underspend of -£0.100m on repairs and maintenance expenditure for Joint Use Facilities.

 

Social & Community Services

 

  1. The Directorate is forecasting a total overspend of £0.675m.  

 

  1. Community Services are forecasting an overspend of £0.071m.  Delays on the Westgate Project will impact on the ability of the Library Service to make the net savings of £0.064m included in the budget relating to the temporary closure of the Central Library. Adult Learning are forecasting an overspend of £0.455m but this will be covered by reserves held by the service.

 

  1. The total Adult Social Care underspend is -£0.112m.  Within that External Home Support are forecasting an overspend of £0.967m.  This reflects a significant increase in the number of clients receiving services as a result of the continuing efforts to facilitate hospital discharges and an increase in the number of clients receiving Direct Payments.  The overspend is partly offset by a -£0.594m underspend on Internal Home Support resulting primarily from staff transferring to the First Response Team.  The reduction in care workers’ hours will bring the spend into line with the reduced budget for the service in 2009/10.  There is also a saving of          -£0.346m on the contribution to the Older People Pooled budget.

 

  1. The forecast for Internal Learning Disabilities Services is an underspend of -£0.121m due to turnover savings whilst the Integrated Mental Health Service are forecasting an overspend of £0.051m. 

 

  1. Other areas of Adult Social Care are forecasting underspends.  These include Integrated Care Services -£0.268m, Acquired Brain Injury               -£0.082m and Older People Fairer Charging Income -£0.094m. 

 

  1. An overspend of £0.690m is projected in Strategy & Transformation and includes £0.337m relating to the transfer of budget to Shared Services.  There is an action plan in place and recruitment is being tightly controlled and capacity managed where possible. 

Pooled Budget Memorandum Accounts

 

Older People’s and Physical Disabilities Pool

 

  1. The forecast outturn for the Older People’s and Physical Disabilities’ Pooled Budget is an overall overspend of £1.703m.  The Oxfordshire County Council element of the pool is forecasting an underspend of           -£1.429m, whilst the Primary Care Trust (PCT) overspend is £3.132m. 

 

  1. The overspend is reduced from the September position but work is continuing with the PCT to develop and implement an action plan to reduce the forecast overspend. A major piece of work is being undertaken by the PCT’s Turnaround Director in conjunction with County Council staff to find the most cost effective way to support the increased number of clients and to look at how the new framework is being applied.

 

  1. The Equipment pooled budget is currently forecast to overspend by £0.205m.

 

Learning Disabilities Pool

 

  1. The forecast overspend on the Learning Disabilities Pooled Budget is £1.604m and it is being monitored closely to reduce it to £1.000m by year end.  Virements of £0.610m, approved as part of the action plan, are now included in the budget, along with savings from reviews of package costs offset by increases in client packages agreed at the October panel. The forecast does not include the cost of panel decisions to be made in the last four months of the year and the remaining efficiency savings not yet achieved.  Risk remains high in this area.

 

  1. The remaining pressure of £1.000m is being addressed as part of the Service & Resource Planning process for 2009/10 by the Directorate and PCT.

 

Environment & Economy

 

  1. The Directorate is forecasting an overspend of £0.528m.   £0.500m of this relates to energy pressures on the street lighting contract.    Flood related de-silting work on bridges is forecast to cost an additional £0.060m. 

 

  1. An estimated 313,883 tonnes of waste will be disposed of.  This is 14,512 tonnes less than budgeted, giving rise to a -£0.556m underspend on tonnage related activities. There is an offsetting overspend on the waste treatment procurement (£0.400m) and net savings of -£0.035m across other areas of Sustainable Development. The total forecast underspend for Sustainable Development is -£0.191m.

 

  1. Property Services are projecting a total overspend of £0.154m.  This includes lower than anticipated income from Staff Housing (£0.079m) and Grandpont Car Park (£0.035m).  Other variations total £0.040m.

 

Community Safety & Shared Services

 

  1. The Directorate is forecasting a -£0.170m underspend.   Of this total the whole-time firefighters’ pay budget is forecasting an underspend of            -£0.100m.  This budget has been very closely controlled this year following an overspend in 2007/08.  A planned programme of recruitment of firefighters will commence in January in order to bring the service back to full establishment. 

 

  1. The Fire & Rescue Service’s allocation of LABGI funding totalling £0.400m for additional posts in Community Safety and joint projects with Children, Young People & Families will not be spent in full this year. £0.100m will be required to be carried forward for the continued funding of projects next year.

 

  1. The overspend relating to fuel prices is now forecast to be £0.060m.  As the price of diesel continues to fall the forecast is likely to move closer to budget over the remainder of the year.

 

  1. The remaining firefighters in Abingdon whose houses were affected by the flooding last year have now moved back to their properties from temporary rented accommodation.  The cost of this accommodation to date along with other flood related costs has been met from supplementary estimates.   A final supplementary estimate for £0.010m has been agreed to cover the remaining rental and related costs.  

 

Corporate Core

 

26. The Directorate is forecasting a total underspend of -£1.176m.  -£1.000m is a planned underspend on the ICT Investment Fund which will be used in 2009/10.  The remaining in-year underspend is -£0.176m.

 

27. Legal Services have incurred costs of £0.029m in relation to the Warneford Meadow town/village green public inquiry.  Accepted practice is that exceptional legal costs over £0.025m are funded from balances, therefore, a supplementary estimate for £0.029m has been approved.  Further costs may be incurred if the decision is subject to a judicial review.

Balances

 

  1. Forecast balances are £21.352m as at the end of October.   After taking into account the forecast Directorate overspend, and the £1.000m ICT Investment Fund expenditure that will be incurred in 2009/10 the consolidated revenue balances forecast is £21.785m.  

 

Strategic Measures

 

  1. To the end of October, interest earned on the Council’s cash balances through money market investments exceeded the budget by £2.0m.  At the end of September, the average level of in-house cash balances was £234.5m and the average in-house rate of return was 5.565%.  The budgeted rate of return was 5% and balances have also been significantly higher than anticipated.  The additional £2.0m will be added to general balances. Following the reduction in the bank base rate on 6 November to 3.0% on 6 November and to 2.0% on 4 December, the position for the remainder of the year is expected to be more in line with the budget, although it will be closely reviewed in the coming months.

 

  1. The two deposits with the Icelandic bank, Landsbanki, which total £5m, were due to be repaid on 28 November and 5 December respectively. The bank’s assets are currently frozen and the council is waiting for the outcome of a meeting with the administrators to assess the likelihood of recovery of that sum.  The Government are now putting in place legislation to defer the impact so that the net effect is nil in 2008/09.   

 

Capital

 

  1. The projected in-year commitment on capital is estimated at £100.4m, compared with the updated October Capital Programme of £100.7m, a variation of -£0.3m. Actual expenditure to the end of October was £42.7m, 43% of projected spend.

 

  1. A new Capital Programme Manager has been in post from October 2008 and efforts continue to ensure that further slippage is minimized and scheme progress is controlled and monitored more closely.  Challenge Panels have been held throughout November and have identified estimated in-year movement within schemes of over £2m. This is mainly due to the Flexibility of Childcare programme (-£1.3m) where the three years of allocated funds have been revised in light of bids to accurately reflect the annual spend profile however variation to report. In addition to this four schemes (-£1.0m) due to start in the last quarter of the financial year have slipped into 2009/10 due mainly to delays in the planning process.

Conclusion

 

  1. Directorates are, in the main, controlling expenditure in line with budgets and I expect that year end variances to be small in relation to total budgets. Any overspends will be carried forward to 2009/10 unless specific provision is made through the Service and Resource Planning Process.   The main areas of significant variation are the Pooled Budgets in Social and Community Services.

 

  1. The allocation for pay inflation in the 2008/09 budget was 2.50%. The pay offer from the Employers of 2.45% has now been implemented, although the Unions have not agreed this as the full settlement for the year.  If there is subsequent agreement to increase this amount beyond 2.50% Directorates would have to absorb the additional cost.  

 

  1. Inflationary pressures on fuel and energy costs are reducing from the previously reported position and will need careful monitoring.

 

  1. The effect of the Baby P case has led to an increase in the number of children in care nationally. The position in Oxfordshire is being monitored closely but to date the effects are being managed within current budget provision.   The risk of further pressure in this area remains.

 

 

Charles Shouler

Cabinet Member for Finance

 

December 2008.

 

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