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ITEM EX5

EXECUTIVE – 28 MAY 2002

BUDGET MONITORING

Report by Director for Business Support & County Treasurer

Introduction

  1. This report is the first monthly monitoring report for 2002/03. Anticipated variations are set out, together with some potential variations later in the year. However, at this stage of the financial year only a few variations have been identified and the report is therefore by way of a preliminary outline. More detailed information will be produced for subsequent reports.

  2. The report is presented to reflect the current areas of Executive responsibility. The term "Executive Budget Area" is used in place of the former committee-based budget divisions; "Budget Area Carryforward" is used in place of "Committee Carryforward".

    3. Provisional Outturn 2001/02

  3. The Provisional Outturn position for 2001/02 will be reported to the Executive on 25 June 2002. At this stage the estimated Committee Carryforwards are as reported to the Executive on 30 April 2002. The chart attached at Annex A sets out the provisional balances and projects the position forward to 31 March 2003.

    4. 2002/03 Budget Monitoring

  4. The position for each of the Executive Budget Areas is discussed below.

    5. Social & Health Care

  5. The Social Services Budget for 2002/03 includes a repayment of £5.0m to the Budget Area Carryforward Reserve, whilst the estimated outturn is a £5.856m overspend. The implications of this position for 2002/03 will be reported to the Social Services Budget Working Group on 24 May. There will be an update at the meeting of the Executive on 28 May.

  6. Additional costs have been identified resulting from the extra bank holiday for the Queen’s Golden Jubilee. The anticipated extra costs are £0.021m. It is recommended that these costs be managed within the existing budget.

    7. Learning & Culture

  7. There is an estimated overspend of £0.2m on the Education Transport budget. This reflects an increase in the cost of contracts which have been renewed. Some of this pressure appeared in 2001/02 and will be reported as part of the provisional outturn report. The costs in 2002/03 will be met from the Education carryforward.

    8. Community Safety

  8. There is an expected saving of £0.045m resulting from an increase in the Civil Defence Grant allocation. The new grant funding formula has given an increase of £0.076m for 2002/03, supporting £0.031m additional expenditure and leaving £0.045m to be returned to balances.

  9. The pay award for the uniformed Fire Service has yet to be determined. The budget for 2002/03 allows for a 3% increase. Each additional 1% pay increase awarded will cost the Council an extra £0.038m in 2002/03. The full year costs of each extra 1% from 2003/04 will be £0.091m. The current claim is considerably in excess of the budgeted figure.

  10. Additional costs have been identified resulting from the extra bank holiday for the Queen’s Golden Jubilee. The anticipated extra costs are £0.013m. It is recommended that these costs are managed within existing budget.

    11. Environment, Roads and Transport

  11. Environmental Service have signalled their intention to spend their carryforward from 2001/02 on planned works in-year. No variations have yet been identified for 2002/03.

    12. Corporate Governance

  12. The agreed budget for 2002/03 included a cost of £0.120m resulting from potential change in the ability to reclaim VAT on car mileage rates. The UK is deferring implementation of this EU directive and the costs are unlikely to impact this year. The saving of £0.120m will be returned to balances.

  13. Following the events of September 11, the insurance market has been increasing premiums to recognise an increase in risks. The Council’s insurances are renewable in July and initial negotiations indicate increases in premiums of at least £0.462m per annum of which at least £0.347m will be the estimated increased cost in 2002/03. It is recommended that the increased costs in 2002/03 be met from the Insurance Fund on the balance sheet. This sum may need to be reinstated to the Insurance fund in 2003/04, together with the increased premium costs in that year. More details will be included in the Forecast Report to the Executive in July when a clearer impact on the Insurance Fund is known.

    14. Oxford City Schools Reorganisation

  14. The estimated transitional revenue costs of the City Schools Reorganisation are planned to increase from £3.0m to £3.4m by the end of 2002/03, as explained below.

  15. Net expenditure on City Schools Reorganisation will rise by £0.3m by the end of 2003/04 to be recovered along with other costs by long term formula savings. Additional expenditure of £0.559m will be incurred over 2002/03 and 2003/04 of which £0.259m will be met from the residual balances of closing schools in September 2003. The breakdown of the additional costs is as follows:

    16.  

    2002/03

    £000

    2003/04

    £000

    Management & support to schools

    £5,000 and £10,000 to primary and secondary schools respectively, discussed by the steering group at its meeting on 18 February 2002 and with members in late March. This expenditure will all be incurred in 2002/03.

    180

    		 

    Transitional funding of year 5

    Executive on 22 January 2002 considered the transitional funding issue of the expanding city schools. It will cost £151,000 in 2002/03 and £0.108m in 2003/04 and be met from the residual balances of closing schools.

    151

    108

    Recruitment, retention and central and school based staff costs

    These have been recalculated in line with original committee approval, the additional costs all being incurred in 2002/03

    120

    		 
     

    451

    108

  16. It is proposed that the increased costs should be recovered from balances of closing schools and through savings in future years.

    17. Balances

  17. The Council budget for 2002/03 includes a contribution of £3.0m to balances.

  18. In putting the final budget together for 2002/03, the final rates budgets had to be increased (these are ring fenced) and although these costs were partly offset by a saving on the final flood defence levies, a deficit of £0.023m resulted. This will need to be offset against balances.

  19. The issues raised in this report affect the County Fund Balances as shown below:

    20.  

     

    Provisional County Fund Balance at 31 March 2002

    Civil Defence Grant

    VAT Mileage Reclaim

    Contingency Provision in 2002/03

    Contribution from Revenue Budget in 2002/03

    Estimated County Fund Balance at 31 March 2003

     

     

     

    0.045

    0.120

    -0.023

    £m

    3.048

     

     

    0.142

    3.000

    6.190

  20. The actual County Fund Balance at 31 March 2002 will not be known until the Council’s accounts for 2001/02 have been finalised. The actual balance will be reported in a future monitoring report.

    21. Capital Programme

  21. There has been no change in the financing position on the Capital Programme since the last monitoring report to the Executive in April. A fully revised Capital Programme will be produced for the Executive in June. In summary, the Capital Programme is fully allocated, including provision for slippage, and therefore the reserve will be fully utilised.

    22. Budget Area Carryforward Reserves

  22. The projected Budget Area Carryforward Reserves at 31 March 2003 are outlined at Annex A. The estimated position at 31 March 2002 amounts to -£2.8m, which includes the Social Services projected overspend of -£5.8m, offset by the aggregated balances on the other Committees of around £3.0m. My assessment of the budget areas in credit at the end of 2002 is that a significant proportion of the carryforwards will be drawn down in-year (exemplified by the Education Transport overspend, and the planned spending of carryforward by Environmental Services). The Social Services budget for 2002/03 planned for an overspending of £5.0m to be carried forward and repaid. The estimated additional £0.856m will be discussed at the Social Services Budget Working Party on Friday 24 May. My overall view is that it would be unwise to assume a net aggregate balance on the Budget Area Carryforward Reserve at 31 March 2003.

    23. Consolidated Position

  23. The strategic overview of corporate reserves and balances produced for the Executive on 22 January 2002 has been updated based on the latest assessment, and is included at Annex B.

  24. The position on overall finances still appears extremely tight. There is around £2.8m available in balances to meet all other unfunded pressures and uncertainties arising in year, not withstanding the Local Government pay award which is budgeted for at 3% but is not yet settled. Each additional 1% would cost the Council £1.1m. We are therefore continuing managerially to operate holdback arrangements, and to update our assessment of financial risks facing the Council, carried out as part of the budget process.

    25. Medium Term Financial Plan

  25. The Medium Term Financial Plan 2002/03 to 2005/06 parts 1 and 2 is now available, and is being distributed to all members.

  26. At the meeting on 30 April , the Executive requested that future monthly monitoring reports include an update on the issues around departments’ connectivity to MIS. It is intended to introduce this as part of the next monthly report on 25 June.

    27. RECOMMENDATION

  27. The Executive is RECOMMENDED to:

          1. note the report;

          2. agree that the costs of the Queen’s Golden Jubilee in Social Services and the Fire Service should be managed within their existing budgets;

          3. agree that the increased transitional revenue costs for the City Schools Re-organisation outlined at paragraph 15 of the report should be repaid from savings in future years.

CHRIS GRAY
Director for Business Support & County Treasurer

Background Papers: Nil

Contact Officer: Mike Petty Tel. 01865 815622

May 2002

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