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ITEM EX5

EXECUTIVE – 18 MARCH 2003

BUDGET MONITORING

Report by Director for Business Support & County Treasurer

 

Introduction

  1. This report updates the budget monitoring position for 2002/03 to the end of January 2003. The major variations since the last report are set out with potential variations for the rest of the year. Annex 1 (download as .xls file) and Annex 2 (download as .doc file) to the report set out the overall position on the programme area carry-forward reserves and the overall position on balances respectively.

  2. Members are reminded in considering the report that an administrative holdback of £1.4m in total is subsumed within the figures reported. This contributes to the underspending in some areas – and is at the instigation of the Executive on advice I issued at the beginning of the year. More detailed reference is made in the body of the report.

  3. Individual reports from each of the Executive Programme Areas form the background documents to this report and are placed on file in the Members’ Resource Centre. The position for each of the programme areas is considered below:

    4. Learning & Culture

  4. The underspending for Learning & Culture has stayed constant overall moving slightly downwards from £1.151m to £1.140m. This deminimus change overall (-£0.011m) is explained by increased underspending in Cultural Services of £0.082m and a decrease in the Education underspending of £0.093m.

  5. For the Education element of Learning & Culture the change arises from an overspending on ICT (£0.130m) and increase in premature retirement contributions (£0.103m) partly offset by a further decrease in the overspending on out of county placements (£0.140m). The net increase in spending is £0.093m overall. The detail is set out in the individual report for the programme area referred to above.

  6. The forecast underspending on Culture has increased from £0.442m as reported previously to £0.524m at the end of January. This is an increase in underspending of £0.082m. This is mainly due to further slippage on the new Library Management System (-£0.050m).

  7. Education are contributing £0.500m and Culture £0.050m to the administrative underspending instigated by the Executive earlier in the year. These amounts are contained within the total underspending of £1.140m.

    8. Social & Health Care

  8. The last report to the Social & Health Care Budget Working Group held in February reported the forecast position to the end of December 2002. The report showed a potential overspend of £2.734m compared to £2.886m as reported at the end of November. This is an improvement of £0.152m. In addition there is an underspending of £0.494m on the pooled budget. This latter budget is jointly managed with health, the underspending will be carried forward to meet commitments in 2003/04.

  9. Whilst the small improvement (-£0.152m) is welcome, there remains a degree of risk around some areas of the budget. This mainly relates to the learning disability budget and transitional housing benefit in this area. Therefore, there is a margin of error around the current forecast in the region of £0.300m either way. Members should also remain alert to the fact that unallocated Preserved Rights Grant of £1.005m is assumed to be available in achieving the forecast position. There is no reason at this point in time to change this assumption though it cannot be totally guaranteed and is being kept under review.

  10. The Youth Offending Team Budget forecast overspend at 31 March 2003 remains at £0.100m as previously reported. The overall position for Social & Health Care is a forecast overspending of £2.834m.

    11. Environment, Roads and Transport

  11. There is a forecast underspending of £1.414m on Environment, Roads and Transport, which is a small increase on the previous forecast of £1.377m. This figure subsumes an administrative holdback of £0.850m. Changes to the previously reported position are not significant.

    12. Community Safety

  12. There are two items of overspending which will be a call against the Council’s general balances. These are £0.232m forecast overspending on the fire fighter’s pension budget due to transfer values payable to other brigades and £0.040m on the retained fire fighters budget, an increase of £0.020m. There is overall slippage on the controllable Fire Service Budget of £0.070m. This is as previously reported.

  13. Other changes in spending within Community Safety are not significant within the virement rules. However, there is a forecast overspend of £0.112m in the registration service which management action will need to address next year.

  14. The overall position on Community Safety is a forecast overspend of £0.016m, which was reported as a £0.099m forecast underspending last time.

    15. Corporate Governance

  15. The latest position for Corporate Governance shows a forecast underspend of £0.789m compared to £0.692m in the last report. This assumes that the balance on the modernisation fund of £0.0102m will not be spent, and will be carried forward to 2003/04. The increase mainly comes from increased underspending in Strategy Directorate and External Policy and Partnerships, an increase of £0.133m bringing the total underspending on these headings to £0.300m, which it is planned to carry forward, and spend next year. It is assumed (awaiting confirmation) that the strategic ICT budget will contribute £0.350m to writing off part of the overspending on the OCN/Broadband project previously reported – otherwise this would become an additional call on general reserves. The position will be updated next time.

    16. Virements

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

    17. Balances

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

    18.  

     

    Estimated County Fund Balance at 31 March 2003 as reported to Executive in February

    Retained Fire fighters – increase in overspend

    Fire fighters Pension Fund

    Revised Estimated County Fund Balance at 31 March 2003

    £m

    4.356

     

    -0.020

    -0.232

    ____

    4.104

     

    Programme Area Carry Forward Reserves

  18. The projected Programme Area Carry forward Reserves at 31 March 2003 as outlined in the report are shown at Annex 1. The estimated position shows a potential deficit of £2.972m, which is made up of a planned overspend on City Schools Reorganisation of £3.465m, an overspending on Social & Health Care of £2.834m, offset by underspending on other programme areas of £3.327m 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).

    19. Consolidated Position

  19. The overall position on balances based on the projections shown in this report shows an estimated £1.132m 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:

    20.  

     

     

    Revenue Balances

    City Schools Planned Overspend

    Projected Programme Area Carry Forwards

    At 31.3.2003

    £m

    4.104

    -3.465

    0.493

    Potential Year End Position

     

    1.132

    Outstanding Pressures

  20. The only known outstanding pressure is the firefighters pay award. It was earlier estimated on a staged pay offer of 11%, being 4% in 2002/03 and 7% in 2003/04 that the costs to the County Council would be £0.039m in 2002/03 and £0.250m in 2003/04 if the offer were accepted. Subsequently a latest pay offer of 16% over 3 years has been rejected. There is also a proposal to introduce parity in pay for retained firefighters, which would cost £0.085m in 2002/03, and £0.200m in 2003/04.

    21. Schools Revenue Balances

  21. 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 to repay this.

    22. The Capital Programme

  22. The Capital Programme funding for 2002/03 is still very tight. However, the forecast position at end of year should be in balance.

  23. The next monthly report is due on the 29 April 2003. This will address both the old year 2002/03 and the new year 2003/04. Likewise a major review of the Capital Programme is due at the meeting of the 29 April. I can also confirm that the Provisional Outturn Report will come to the Executive on 24 June 2003 for both Revenue and the Capital Programme.

    24. Conclusion

  24. The updated position is set out above. There is no significant change in the overall forecast position. However, it remains important that Directors continue to proceed cautiously. Any further overspendings or substantial erosion of balances would impact on the robustness of the budget, which has been agreed by Council for 2003/04. Given that the position this year is reliant on the holdback then there is no room for complacency albeit we are nearing year end. 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.

    25. RECOMMENDATIONS

  25. 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 deposited in Members Resource Centre

Contact Officer: Jenny Hydari Tel 01865 815401

March 2003

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