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ITEM EX5

EXECUTIVE – 18 FEBRUARY 2003

BUDGET MONITORING: MONTHLY REPORT

Report by the Director for Business Support & County Treasurer

Introduction

  1. This report updates the budget monitoring position for 2002/03 to the end of December 2002. The major variations since the last report are set out with potential variations for the rest of the year. Annexes 1 and 2 to the report set out the overall position on the programme area carry-forward reserves and the overall position on balances respectively. There is no change in the position on reserves as reported to the Executive in October. The position for each of the programme areas is considered below. (Individual reports for each of the Executive Programme Areas form the background documents to this report; copies have been placed in the Members’ Resource Centre.)

  2. In recognition that the budgetary position in 2002/03 was extremely tight, the Executive has implemented a "holdback" budget of £1.4m, under which certain elements of planned expenditure have been deferred. Without these planned underspends, Programme Area Carry Forward reserves would be in deficit by the year end. It is however anticipated that the holdback will be available for spending within the respective Programme Areas during 2003/04.

    3. Learning & Culture

  3. The overall underspend/holdback for Learning & Culture has increased from £1.100 to £1.051m. There has been no change to the year end position on the Education elements of Learning & Culture since the last report, although there are a number of variations, none of which is significant within the rules of virement and which make the position for Education unchanged since the last report. The forecast underspend/holdback on Culture has increased from £0.391m as reported at the end of October to £0.442m at the end of November.

    4. Social & Health Care

  4. The last report to the Social & Health Care Budget working Group held in January reported the forecast position to the end of November 2002. The report showed a potential overspend of £2.886m compared to £2.748m as reported at the end of October. (However whilst we have included this position in this report, the latest budget monitoring position to the end of December shows a further reduction to the £2.886m overspending of around £0.2m. This is being discussed at the Social & Health Care Budget Working Group on 11 February. An oral update will be given at the meeting).

  5. The net overspend position assumes the unallocated preserved rights grant of £1.005m is available to offset other costs. There is a risk that we may not be able to legitimately claim the unallocated element of this grant to offset other costs. However, whilst the position of the Department of Health remains unclear, there is a reasonable degree of confidence that the guidance does allow for such an offset. We will continue to monitor this position. The Directorate is maintaining pressure to bring down costs within individual divisions.

  6. The Youth Offending Team Budget forecast overspend at 31 March 2003 has increased from £0.085m to £0.100m. The overall position for Social & Health Care is a forecast overspending of £2.986m.

    7. Environment, Roads and Transport

  7. There is a £1.377m forecast underspend/holdback on Environment, Roads and Transport compared to £1.332m as reported in January. This is an increase of £0.045m.

    8. Community Safety

  8. The forecast underspend on Community Safety has increased from £0.084m reported at the end of October to £0.099m now, an improvement of £0.015m. This reflects a number of minor variations.

    9. Corporate Governance

  9. The latest position for Corporate Governance shows a forecast underspend of £0.590m compared to £0.595m in the last report.

    10. Broadband/OCN Project

  10. The last report set out the latest net costs of the Broadband project this financial year and how those costs should be dealt with. That report identified £0.350m of additional expenditure for which an application is being made to the New Technology Fund for funding. If it is not possible to fund the £0.350m from here, it will need to be met either by Education within Learning & Culture or will be a further call on balances.

    11. Virements

  11. There are no new virements to report this month.

    12. Balances

  12. The impact of these changes on the estimated revenue balances at 31 March 2003 is shown below:

    13.  

     

    Estimated County Fund Balance at 31 May 2003 as reported to Executive in January

    Retained Firefighters – Reduced overspend

    Magistrates Courts Overspend

    Coroners Service Overspend

    Revised Estimated County Fund Balance at 31 March 2003

    £m

    4.311

     

    0.080

    -0.029

    -0.006

             

    4.356

     

    Programme Area Carry Forward Reserves

  13. The projected Programme Area Carry forward Reserves at 31 March 2003 as outlined in the report are shown at Annex 1. (download as .doc file) The estimated position shows a potential deficit of £3.234m, which is made up of a planned overspend on City Schools Reorganisation of £3.465m, an overspend on Social Services of £2.786m, offset by underspend on other programme areas of £3.117m which includes the administrative holdback of £1.4m implemented earlier in the year (this is made up of £0.550m in Learning & Culture and £0.850m in Environmental Services).

    14. Consolidated Position

  14. The overall position on balances based on the projections shown in this report shows an estimated £1.122 m remaining in reserves to meet all other potential and outstanding pressures arising in the year. This position is analysed in Annex 2 and summarised below.

    15.  

     

     

    Revenue Balances

    City Schools Planned Overspend

    Projected Programme Area Carry Forwards

    Potential Year End Position

    At 31.3.2003

    £m

    4.356

    -3.465

    0.231

              

    1.122

  15. The 2002/03 holdback is included within the figures shown above. Without the implementation of the holdback budget Programme Area Carry forward reserves would be overdrawn.

    16. Outstanding Pressures

  16. The only known outstanding pressure is the firefighters pay award. Based on a staged pay offer of 11%, being 4% in 2002/03 and 7% in 2003/04 the costs to the County Council would be £0.039m in 2002/03 and £0.250m in 2003/04 if the offer were accepted. There is also a proposal to introduce parity in pay for retained firefighter which would cost £0.085m in 2002/03 and £0.2m in 2003/04.

    17. Schools Revenue Balances

  17. Schools revenue balances deposited with the Council currently stand at £2.1m, of which around £1.6m is required to help the cashflow on the Education Capital Programme. The balance remaining (£0.5m) is already earmarked for the revenue budget in 2002/03. An amount has been included in the 2003/04 budget.

    18. The Capital Programme

  18. The Capital Programme was updated in a report to the Executive on 21 January 2003. The funding position for 2002/03 remains extremely tight.

    19. Conclusion

  19. I have set out the updated position above. It is important that Directors continue to proceed cautiously. Any further overspendings or substantial erosion of balances would impact on the robustness of the budget for 2003/04 being proposed to Council on 11 February by the Executive. Given that the position this year is reliant on the holdback then there is no room for complacency. We must continue to closely monitor spending and maintain balances this year as far as possible to ensure that the budget proposals for 2003/04 remain sound.

    20. RECOMMENDATIONS

  20. The Executive is RECOMMENDED to receive the report and to strongly reiterate to Directors the continued need to proceed cautiously and to continue to monitor expenditure closely.

CHRIS GRAY
Director for Business Support & County Treasurer

Background Papers: Detailed Reports and Annexes for Individual Programmes Areas

Contact Officer: Mike Petty Tel 01865 815622

February 2003

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