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ITEM EX5

EXECUTIVE – 16 MARCH 2004

FINANCIAL MONITORING

Report by Head of Finance

Introduction

  1. The report sets out the budget monitoring position to the end of January. Individual reports from each of the Service Directorates are on file in the Members’ Resources Centre. The position for each Directorate is considered below:

    2. Learning & Culture

  2. The forecast outturn position for Learning & Culture shows a forecast deficit carry forward of £2.437m compared to £2.641m reported in February. This is a reduction in overspending of £0.204m.

  3. The main variation to note is the reduced forecast overspending on Statementing of £0.150m. There is a reduction in the forecast overspending on fees to Independent Schools of £0.057m. Other relatively minor changes largely offset one another.

  4. The Executive requested the Director for Learning & Culture to prepare an action plan setting out proposals to address the overspendings on Out County Placements and the Statementing budgets. A report setting out the latest position is attached at Annex 3 for information.

    5. Social & Health Care

  5. Social & Health Care is forecasting a carry forward of £0.869m. This is achieved after increasing the provision for Section 117 Clients* by £0.242m to a total of £0.301m.

  6. The movements over the last month are analysed below:

    7.  

     

    Movement since last time

    £m

     

    Forecast year end position

    £m

    Increased spend on Children & Families

    Reduced spend on Older People

    Reduced spend on Business Support

    Promoting Independence Grant

    Other Groups

    Increase in Provision for Section 117 Clients*

     

    0.232

    -0.065

    -0.106

    -0.141

    -0.162

    0.242

    0.174

    -1.406

    -0.130

    n/a

    0.192

    0.301

    Overall change

    0

    -0.869

    * These are clients with mental health problems where we have a duty to repay accommodation charges.

  7. The forecast underspending on the Pooled Budget has now reduced to £0.170m from £0.361m reported in February.

  8. The largest area of carry forward is on older people, £1.406m, due to an inability to procure suitable services in the market place for these clients. This problem is being addressed in the Commissioning Strategy for Older People which should identify how these needs are planned to be met in 2004/05 and beyond and by the budget settlement for 2004/05 which includes growth of £4.4m to cover capacity issues and market price increases.

  9. The total carry forward to 2004/05 is forecast at £1.369m, if the £0.869m can be maintained and allowing for the one off benefit of a £0.500m reduction in contribution to the pooled budget next year. It is planned that around £1m of the £1.369m carry forward should be allocated to market capacity for older people.

  10. In the 2003/04 Budget £1.1m was written off in respect of the Fairer Charging for Home Care income budget to take account of the effect of the new charging regime. The budget for 2003/04 was reset at £3.7m. During the year a further £0.950m of the £3.7m has been written off as a result of the reassessment process. This is contained within the forecast outturn of £0.869m. It has mainly been absorbed through the unused delayed discharges budget of £0.500m, which is unallocated (the costs have been met by the pooled budget), and through underspending on the internal home support trading account of £0.737m. Fairer Charging will be a pressure in 2004/05 although it is estimated at around £0.500m (less than in 2003/04 which includes retrospective refunds). This pressure and the possible funding options are being considered by management.

  11. There is an ongoing review of debtors and income in Social & Health Care which has yet to be finalised and reported on. I have referred to this more fully later in the report. However, because there is still some uncertainty around the accounting entries for income until this work is done, then the Social & Health Care Scrutiny Committee on 3 March decided that they were unable to accept the budget monitoring reports for December 2003 and January 2004 in light of the uncertain financial situation, but would consider a report on financial control in the Social & Health Care Directorate at their next scheduled meeting. I have also considered later in the report how we should deal with this uncertainty.

    12. Environment & Economy

  12. The forecast outturn position for Environment & Economy shows a forecast carryforward of £1.462m compared to £1.220m reported in February - a variation of £0.242m.

  13. The main changes are on the Waste Management budget, where a further £0.150m underspending is forecast and on Highways Management with a movement of £0.107m. The Waste Management element includes £0.140m in relation to the Public Service Agreement pump-priming grant of which it now seems likely that only £0.020m will be spent this year. £0.100m of this is payable to the district councils who it had been assumed would wish to utilise it this year, although this now seems unlikely.

  14. The major components of the £1.462m carry forward are on Sustainable Development; land use planning will under spend by £0.547m due to slippage on the Structure Plan Examination in Public, the Minerals and Waste Local Plan Review and other one-off projects; waste management will under spend by £1m mainly due to waste tonnages beings lower than expected in the hot dry summer (£0.350m); and site maintenance project work is behind schedule (possibly £0.500m). There is also a forecast under spend on Public Transport of £0.194m, of which £0.102m is due to slippage on various projects relating to the Premium Routes Network, Integrated Ticketing and Real Time Passenger Information.

  15. Areas of overspending which offset some of the above are on Transport Development, £0.138m; Registration Service £0.083m; and Business Support £0.110m.

  16. The Director for Environment & Economy is taking steps to establish why such large under spends should have emerged so late in the year and to strengthen budget management in this area next year. However, members are reminded that he was asked to ensure that the £0.547m slippage on the Structure Plan and other projects was maintained as part of the administrative holdback this year.

    17. Community Safety

  17. There is no change in the forecast outturn position for Community Safety , which remains a forecast carryforward of £0.049m as reported in February.

  18. There are, however, two minor issues which impact on County Fund Balances. Firstly a backdated rates revaluation at Rewley Road Fire Station with a cost of £0.034m which is a call on balances. Secondly the predicted underpsend on a policy and budget plan for increased Fire Control Staffing is now £0.025m compared to £0.030 previously reported. The £0.005m change is a call on balances.

    19. Corporate Governance

  19. The latest forecast outturn position for Corporate Governance shows a forecast carry forward of £1.514m compared to £1.297m as reported in January, a variation of £0.217m.

  20. The main changes are in respect of Financial Services (£0.087m), now expected to be in balance and the Corporate and Democratic Core (£0.140m), where carry forwards are now forecast on the Democratic Initiatives budget, the Local Area Working Budget, the Voluntary Sector Compact budget and the SECCE budget.

  21. The major components of the £1.514m carry forward are: £0.650m for IEG, £0.451m for Corporate & Democratic Core and £0.336m for Modernisation Fund.

    22. Rates

  22. The Council has received a further £0.089m in respect of rate refund for earlier years as a result of valuation appeals. This is added to balances.

    23. Closed City Middle Schools

  23. In the report to the Executive on 23 December, we set estimated deficits of £1m on closed City Middle Schools against the general reserves. Subsequently, we reported to the Executive on 17 February that the actual deficits were £0.700m and that £0.300m was written back to balances. Learning & Culture were asked by the Executive to find a means of repaying the total sum of £0.700m to the balances. They have secured repayment from additional capital receipts arising from the sale of the closed city school sites this year. Therefore general reserves are restored by £0.700m.

    24. Directorate Carry Forward Reserves

  24. The forecast outturn position for the Directorate Carry Forward Reserves as set out in the report is summarised at Annex 1. The latest forecast shows a carry forward of £1.457m compared to £0.794m as reported in February. This is an increase of £0.663m.

    25. Balances

  25. The revised position on revenue balances is shown below:

    26.  

     

    County Fund Balances as estimated in January

    Additional Rates Costs – Rewley Road

    Adjustment on Fire Control Staffing

    Additional Rates Refunds

    Adjustment from City School budget deficits now met from Capital receipts

    £m

    7.109

    -0.034

    -0.005

    0.089

    0.700

    Revised Estimated County Fund Balances at 31 March 2004

    7.859

    Consolidated Position

  26. The consolidated position on the Council’s key reserves is shown below:

    27.  

     

    Revenue Balances

    Add Directorate Carry Forward Reserves

    Less City Schools Planned Transitional Costs

    £m

    7.859

    1.457

    -4.082

    Total

    5.234

    Other Issues

    Social & Health Care Debtors and Income

  27. Last month’s report referred to the ongoing review both of debtors and income in Social & Health Care. This work is being carried out by a team of consultants currently funded from within Social & Health Care’s budget. It is expected that the Director for Social & Health Care will ask for a supplementary estimate for the continued costs. The exact cost will be the subject of the supplementary estimate. This could be around £0.250m to cover a period of up to six months. There may need to be some adjustments to the accounts required as a result of the ongoing work. The consultants are due to report by the end of March 2004. As soon as any further information is known it will be reported to the Executive.

    28. Forecast General Reserves 2004/05

  28. I have reviewed the forecast position for general reserves next year. At the time the budget was set the estimated starting position on general reserves was around £2.5m. This was after allowing for the planned revenue overspending on City Schools. I have reproduced the budget assumptions at Annex 2 and updated the position. The starting position is now estimated at around £3.8m, an improvement of £1.3m. The most significant part of this relates to the estimated deficits on the closed city schools, which reduced from £1m to £0.700m in the last report, and is now being repaid . This accounts for an improvement of £1m overall. Other adjustments arising on fire fighters’ pensions and retained fire fighters’ pay and rates refunds are unpredictable and variable and can as easily be negative as positive.

  29. I have outlined above that there may be some adjustments to the accounts arising from the review of debtors and income in Social & Health Care. I am minded to earmark the improvement of £1.3m in general reserves which arises mainly from the repayment of the deficit on the closed City Middle Schools for this purpose, whilst the work is being completed. I have set out the figures in full showing the improvement at Annex 2. Given that this is an improvement, there is no adverse affect on the level of balances planned in the budget for 2004/05 by doing this.

    30. Conclusion

  30. The Council’s overall financial position has improved from £3.778m reported last time to £5.234m shown above. This is a movement of £1.456m. The main reasons are set out in the report. There is still uncertainty around the outcome of the review of debtors and income in Social & Health Care and this may result in some further adjustments to the accounts. However, I have also updated the position on forecast general reserves for 2004/05 and there is an improvement of £1.3m. I am monitoring the situation closely.

    31. RECOMMENDATION

  31. The Executive is RECOMMENDED to note the report.

CHRIS GRAY
Head of Finance

Background Papers: Individual Programme Area Reports

Contact Officer: Mike Petty 01865 815622

March 2004


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