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ITEM EX5

EXECUTIVE 28 OCTOBER 2003

MONTHLY MONITORING REPORT

Report by Head of Finance

1. The report sets out the budget monitoring position to the end of August 2003. Individual reports from each of the Executive Programme Areas are in the Members’ Resource Centre.
2. The position for each Programme Area is considered below:

Learning & Culture

3. Learning & Culture are predicting an overspend of £2.255m. This is an increase in overspending of £1.004m since the report last time. The main components of the overspend are shown below.

Children’s Services

4. The budget for fees to independent schools has a forecast overspend of £0.750m. This reflects inflation on the cost of placements which have risen by an average 23% and that a further 8 children have been placed in independent schools since the budget for 2003/04 was agreed. There could be a further pressure of £0.5m on this budget dependant on the outcome of forthcoming tribunals. The situation is being closely monitored by the Head of Service.
5. The costs of statementing are expected to exceed the budget by £0.884m. The base budget understated the additional costs arising in 2002/03 and had no provision for in-year growth.

Learning & Culture Resources

6. The costs of voluntary redundancies is forecast to exceed the budget by £0.250m. This reflects an abnormal demand for voluntary redundancy in schools arising from overall school budget problems.

Music Service

7. The Music Service overspend is now forecast to be £0.218m by the end of 2003/04. An action plan is being implemented which will aim to bring the service back in balance over the next three years.

Cultural Services

8. The budget is currently expected to come in on target apart from job evaluation costs for casual staff, which is addressed later in the report.

Social & Health Care

9. There is an overall forecast underspend of £2.166m which includes an overspend of £0.016m in relation to the Education part of Social & Health Care.
10. For Social Services the current forecast for 2003/04 shows that £2.182m is uncommitted to date, this compares to £3.400m uncommitted in the last report. The financial situation reflects the cautious approach by Service Managers in committing the budget for 2003/04, following a number of years when there has been severe restraints on spending. It also reveals an incapacity to purchase care in the market and to fill vacancies in home care so far, despite job evaluation. A small number of controlled actions have been undertaken resulting in the commitment of around £1.2m since last month, as follows: £0.25m for recruitment in Home Support, £0.242m in Business Support to address key audit/infrastructure issues, £0.404m for increased capacity in Children and Families and £0.300m anticipated additional income from the Oxfordshire Learning Disability Trust has been discounted due to the change in classification of accommodation following de-registration.
11. Social & Health Care have been working with the PCTs to help safeguard services to clients in the community and who are awaiting release from hospital. These talks involve an additional contribution to the pooled budget of £1m this year, on the basis that we reduce our contribution by £1m next year. A report was presented to the Executive on 14 October but consideration was and the decision deferred until the meeting of 11 November, pending advice from me on the overall finances of the Council. This decision was taken as more information emerged on the problems around school deficit budgets and Children’s Services overspending on SEN as set out elsewhere in the report.
12. The YOT element of Social & Health Care budget is forecast to be in balance at 31 March 2004. An overspend of £0.102m was carried forward into 2003/04 and management action has been taken to bring the budget into balance.

Environment, Roads & Transport

13. The Environment, Roads & Transport programme area is forecasting an underspend of £0.520m at 31 March 2004. This compares to a carry forward underspend from 2002/03 of £1.574m. The main changes to the carry forward reserve are on Transport Development £0.241m, Public Transport £0.165m, Waste Management £0.476m and Management Support Services £0.132m. The major part of the Management Support Services change relates to unfunded pressures on the appointment of the Business Manager and some restructuring costs. The changes on Transport Development and Waste Management reflect mainly the anticipated commitment of the underspending from 2002/03. The change on Public Transport reflects mainly the use of the carryforward from 2002/03 due to withdrawal of commercial services and increased tender prices.

Community Safety

14. The Community Safety budget is forecast to overspend by £0.165m. This reflects mainly a predicted underspend of £0.064m on the Fire Service and an overspend of £0.228m on the Registration Service. The overspend on the Registration Service will be reduced significantly by the application of the net capital receipt from the sale of the old Banbury Registration Office.
15. The retained firefighters budget is now expected to underspend by £0.150m which will be returned to balances. The budget for increased Control Room Staffing is expected to underspend by £0.030m due to delays in appointing staff. This underspend will be returned to balances. The Emergency Planning service is expected to receive £0.057m extra grant in 2003/04 and this will be returned to balances. There are also minor adjustment to previous calls on balances identified by the Coroners Service and Magistrates Courts service.

Corporate Governance

16. There is a forecast overspend of £0.190m assuming that the unallocated balance of £0.390m on the modernisation find is fully allocated. The overspend has reduced from the last report due to predicted underspendings on Members Services, Scrutiny, Chairs Allowances and Democratic Initiatives totalling £0.127m.
17. The variation to the carry forward balance from 2002/03 reflects the commitment of most of the underspending of £1.565m.

Schools Balances

18. The Schools have submitted their budgets for 2003/04, which show a potential overall deficit of £2.8m. This represents 35 schools with positive balances of £3.6m and 160 schools with deficits of £7.2m. Of the 160 schools with projected deficits, 13 are City Middle Schools which have closed with accumulated deficits of £0.775m. It is suggested that the deficits on the City schools are offset against any excess capital receipts from sale of City schools. However, if overall schools’ balances are in deficit, these will need to be offset against balances held elsewhere.

Job Evaluation

19. Job Evaluation costs are predicted to exceed the budget by £0.980m. Of this some £0.651m relates to Social & Health Care, which has been subsumed within their predicted underspending for 2003/04.
20. This leaves a balance of £0.329m, of which £0.110m was approved as a supplementary estimate by the Executive on 8 July. The Executive is asked to approve a further supplementary estimate of £0.219m to meet the unfunded balance of Job Evaluation costs. The impact of Job Evaluation in future years is still being worked on and will be reported to a future meeting of the Executive.

Value Added Tax

21. The Council included in its revenue budget for 2003/04 a provision of £0.120m to reflect that we would not be able to reclaim VAT on car mileage under an EU directive. This directive is not likely to be implemented until 2005/06 and so this provision is not needed this year and can be returned to balances. This will also produce a saving of £0.120m in the 2004/05 base budget.

Balances

22. The revised position on County Fund Balances is shown below:

23. The forecast position for the Programme Area Carry Forward Reserves is summarised at Annex 1 (download as .doc file).. Currently these reserves are forecast to be around £0.076m at 31 March.

Consolidated Position

Revenue Balances Less Programme Area Carryforward Reserves Less City Schools Overspends	£m 7.647 0.076 -3.989
Total	3.734

Other Issues

24. The report on the Transport Capital Programme 2003/04 to 2005/06 elsewhere on the agenda provides an update on the programme approved by the Executive in April 2003 and considers the implications on the programme of making a contribution of £1m to balances in 2003/04. This £1m along with the £2m contributed in 2001/02 is due to be returned to the Transport Capital Programme through the revenue budget in equal instalments over the next two years.
25. When the programme was approved performance over recent years suggested that slippage would delay some 10% of the schemes included. To allow for this £2m of "over programming" was introduced and at the same time efforts were concentrated on improving service delivery through the better application of programme and project management. Service delivery has improved and the degree of slippage envisaged has not occurred. The cost of implementing schemes has risen and a number of projects are individually exerting a significant influence on the programme. As a consequence some schemes which could have been built this year will have to be carried over into 2004/05. The report identifies those schemes that will have to be delayed and the effect on the programme of not making the £1m contribution to reserves. The report recommends the Executive not to take payment of the £1m contribution to balances subject to the advice of the Head of Finance regarding the effect of this on the County Council’s overall position.

Capital Programme

26. The Executive will receive a report on the Capital Programme at its meeting on 11 November 2003. This report will indicate whether there are any surplus capital resources available including Schools Devolved Capital, which might provide cover for the proposals for an additional payment to the pooled budget and mitigate the need for £1m revenue/capital switch in Environment & Economy.

Conclusion

27. This report shows that forecast balances based on information to date are £3.734m. If we were to proceed with making an additional contribution to the pooled budget then this would reduce balances further to £2.734m. Given that schools budget deficits might be £2.8m at year end, then the potential situation is that balances could reach nil or become negative. Once the capital programme report has been completed I will be in a position to judge the overall resources available to the Council this year. However, until this is concluded, I am not able to give any assurances either to the Director of Social & Health Care on the potential additional payment to the pooled budget, or to the Director of Environment & Economy on the possibility of withdrawing the revenue/capital switch due this year.
28. The Council needs to proceed with caution for the rest of this financial year. The Learning & Culture position is worrying and a plan should be produced to show how they expect to balance their budget next year. Given that the potential deficit position for schools is £2.8m –then we need to ensure we are adequately covering this. My advice is therefore that any additional payment to the PCTs should be revisited at the Executive meeting of 11 November 2003 and that the Director of Environment and Economy should continue to plan for the revenue/capital switch, until that position can be resolved on 11 November 2003 too.

County Council Staffing

29. An analysis of the Council’s workforce at 30 September will be included with the next report.

RECOMMENDATION

30. The Executive is RECOMMENDED to:
    
    
1. note the report;
2. approve a supplementary estimate of £0.219m for the additional costs of job evaluation;
3. ask the Director for Learning & Culture to produce a plan showing how the overspend in 2003/04 will be rectified;
4. ask for a position statement showing the position on schools balances in 2004/05;
5. note that it is hoped to bring forward sufficient further information at the 11 November meeting to enable determination of:
   
   
1. the proposal to make an additional payment to the Social & Health Care pooled budget in 2003/04; and
2. whether it will be possible to set aside the requirement for the transport revenue/capital switch of £1m in 2003/04.`

CHRIS GRAY
Head of Finance

Background Papers: Individual Programme Area reports.

Contact: Mike Petty Tel. 01865 815622

October 2003

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