Return to Agenda

Division(s): N/A

ITEM EX5

EXECUTIVE – 20 JULY 2004

FINANCIAL MONITORING

Report by Head of Finance

Summary

  1. This reports covers the period up to the end of May for capital and revenue. There is little significant movement on the revenue budget because it is still too early in the year to predict accurately the outturn position. The overall change between the April and May forecast balances is de minimis, a movement of £0.061m. The consolidated balances position is forecast as £6.657m. Potential and known changes to this position are highlighted in the report.

    2. Introduction

  2. This report covers the period to the end of May 2004 for the revenue and capital budget. The Annexes are as follows:

Revenue:

Capital:

  1. The individual Directorate reports are lodged in the Members’ Resource Centre.

    2. PART 1 - REVENUE

    Learning & Culture

  2. The forecast outturn is an over spend of £2.249m. This is made up of £1.434m recoverable in future years (£1.050m SEN overspend repayable in 2005/06 and 2007/08, £0.146m transport day variation, £0.238m music service deficit recoverable over 3 years) and is broadly in line with the figure reported last time of £1.478m. However, it now includes £0.815m overspend to be addressed in year, and the Directorate Leadership has considered a draft action plan which will be finalised and submitted to the Executive with the June financial monitoring report. This sum is included in the forecast outturn position subject to the action plan being delivered.

  3. The residual deficit brought forward from 2003/04 is £0.651m (part of the £0.804m provisional outturn). There are potential overspends on Home to School/College Transport of £0.157m and the Youth Service of £0.175m, based on the outturn position for 2003/04. There are other minor overspends.

    4. Learning & Culture

     

    Recoverable in Future Years

    £m

    Children’s Services

     

    Fees to independent schools

    0.585

    Statementing

    0.465

    Transport Day variation

    0.146

    Cultural Services

     

    Music Service

    0.238

    Sub Total

    1.434

    Overspends to be addressed in 2004/05:

     

    Overspend brought forward from 2003/04 (excl SEN)

    0.651

    Home to School Transport

    0.157

    Youth Service

    0.175

    Early Education Funding

    -0.232

    Other various*

    0.064

    Sub Total

    0.815

    Total forecast outturn 2004/05

    2.249

    * Some budget heads will under spend and the carry forward will be spent in future years. For example, the Standards Funds which can be spent up to end of August 2005. Another example is the one off costs of implementing SAP in schools as set out below. These sums are not included in the £0.815m overspend to be addressed in year, because they would disguise (i.e. offset) the real position. A copy of the individual report for Learning & Culture, lodged in the Members’ Resource Centre, shows the comprehensive position.

  4. The major area of under spending identified to date is on Early Education Funding for 3 & 4 year olds. This budget under spent by £0.260m in 2003/04 due to take up being lower than budgeted for by around 1%. It is forecast to under spend by £0.232m for 2004/05 based on take up for the summer term. A report to the Executive in March 2004 on the Early Years Development and Childcare/Sure Start Delivery Plan for 2004-2006 stated that should there be a lower than 85% take up of places, in year surpluses will be used to support the sustainability of small voluntary settings, particularly in rural areas, which may be at risk during the transition to the single point of admission starting in September 2004. Even with such measures being taken, an under spend for the financial year is predicted. However, since the current level of under spend is offsetting pressures elsewhere, further spending would worsen the overall position shown in the table, so compensating savings would need to be found as part of the Directorate Leadership action plan.

    5. SEN

  5. £0.879m of the statementing budget remains uncommitted at the start of year. Of this £0.409m is in the Individual Schools Budget. Since the pattern for growth is reported as £0.400m per year, then there is a potential carry forward available on this budget of around £0.470m. This would be available to alleviate pressures on the Out of County budget in year, which was fully committed at 1 April 2004.

    6. Financial Management System in Schools

  6. Learning & Culture was awarded £0.346m for the annual running costs of rolling out SAP to schools. The costs of implementing FMS6 (Financial Management System upgrade 6) instead of SAP this year are around £0.326m based on the project plan and are all one off. This means that the £0.346m allowed in the base budget is still available to allocate to implement SAP from next year. There are one off allocations of £0.784m in 2004/05 and a further £0.157m in 2005/06 which are not needed until the SAP implementation proceeds. The timetable for when it would be appropriate to proceed is under review. This is a very high priority area for the Director.

    7. Schools

  7. The picture on schools’ submitted budgets is complicated by the allocation of targeted transitional grant this year to 187 schools with planned deficits and recovery plans. The outturn position for 2003/04 was better for a number of schools than forecast, consequently 103 of these are subject to revised allocations based on their better than expected outturn. From the other 107 schools, 97 submissions have been received, 33 of these have been approved and the Finance Team are in discussions with the remainder. No new deficit budgets have been agreed for 2004/05 at this stage. The Executive will be updated monthly on the overall position.

    8. Grants 2004/05

  8. Last month it was reported that schools had received £9.4m in Schools Standards Grant which is payable directly from DfES to schools and £2.2m from the Learning & Skills Council for Sixth Form Funding. There is a further increase of £1.1m relating to Standards Fund grants for Specialised Schools and Workforce Remodelling.

    9. Social & Health Care

  9. The year end accounts for Social & Health Care in 2003/04 will be finalised in mid July. This will give a clearer indication of the pressures for 2004/05. However, a number of known and potential pressures are set out below:

    10.  

    Children and Families

    Older People

    Mental Health

    Learning Disabilities

    Physical Disabilities

    Directorate Management Team & Contingency

    Business Support & Performance Management

    Commissioning, Planning & Partnership

    Total projection 2004/05

    Provisional carryforward 2003/04 (confirmed mid/late July 2004)

    Provisional forecast outturn 2004/05

    £m

    1.211

    1.089

    0

    0.220

    -0.104

    -1.964

    0.115

    -0.201

    0.369

    -0.869

    -0.500

    Children and Families

  10. Children and Families is currently forecasting an overspend of £1.211m. This is mainly accounted for by Children Looked After and Leaving Care Agency Placements forecast at £0.618m (provisional outturn for 2003/04 was £0.361m) and Agency Residential Care forecast overspend £0.813m (provisional outturn for 2003/04 was £1.0m overspent). However, for 2003/04 there were compensating savings on other budget heads which meant that the overall outturn position for this service area was only £0.178m. The Leaving Care budget includes a number of children who are likely to leave in year, and this would relieve pressure on the budget. The Head of Service is currently looking at ways of containing and reducing these pressures.

    11. Older People

  11. The Older People budget is forecast to overspend by £1.089m. The provisional outturn 2003/04 for older people is an under spend of £1.566m. Until the final outturn has been determined no allocations of carry forward have been made to the 2004/05 budget. However, £0.991m relating to unallocated grant at the end of 2003/04 has been added to the older people’s budget for 2004/05.

  12. The main reasons for the projected overspend are as follows: the Homes for Older People strategy for West Oxfordshire £0.480m; the S117 provision requires an addition of £0.324m (£0.716m is hoped to be provided for and carried forward from 2003/04) giving a total provision therefore of around £1m. The Fairer Charging income budget is forecast to overspend by around £0.700m in 2004/05. The provisional outturn position was a £0.950m overspend. The shortfall in income is due to raising the level at which charges become payable. This was estimated to cost £1.1m in reduced income in 2003/04 and this was added into the budget as part of policy plans. Actual downturn appears to be nearly double this at an additional £0.950m. This will be confirmed as part of final outturn. The current estimated pressure for 2004/05 includes an estimate for a number of clients awaiting assessment.
  13. The Care Management Teams are forecast to under spend by £0.379m which helps alleviate the pressures elsewhere.

    14. Directorate Management Team & Contingency

  14. There is a forecast carry forward of £1.964m. The main reason for this is that the residential allowances grant allocation for 2004/05 is £3.779m of which £1.465m is allocated and £2.314m is available to fund other services and pressures as outlined above, subject to approval by Executive (and Council where the commitment continues into future years).

  15. The recommendation for the current year is at paragraph 51 (b) below. It is too early to say what the implications will be for 2005/06 and whether any of the current pressures continue beyond 2004/05. The Director for Social & Health Care should ensure that Heads of Service take action in year to contain the pressures and reduce the impact for 2005/06 and beyond. The outcome, once it becomes clearer, will need to be consistent with the Budget Strategy for 2005/06. The Social & Health Care budget for 2005/06 already includes an additional £6.3m policy and budget plans, not all of which is committed.

    16. Business Support & Performance Management

  16. The Director believes that any unallocated amounts in the budget should be used to fund the ‘Time for Change’ ICT programme for which there is an unmet pressure of £1.033m – not included in the figures above. This will help meet the urgent need to invest in new computer hardware and systems to ensure the Government targets for all Social Services to have the Single Assessment Process and the Electronic Social Care Record are met, as well as developing the client record system (SWIFT) to improve data collection. The costs to be met within Social & Heath Care including the unfunded pressure represent the ‘soft’ costs of implementing ‘Time for Change’ like training and back fill. There would need to be a significant contribution to these developments from the corporate ICT budget to cover the technical and hardware costs. The Executive is due to consider the ICT needs for Social & Health Care and cross Council at its meeting on 7 September.

    17. Income and Assessment Investigative Work

  17. Further work is being carried out regarding client accounts to ensure that proper procedures have been followed and correctly applied in assessing and charging clients. This work has already started and is currently scheduled to finish in October. The cost of employing a team to carry out this work will require a supplementary estimate from balances. This is due to be brought to Executive in September.

    18. Pooled Budget

  18. The pooled budget with the PCTs for older people and physical disability has a forecast overspend of £2.2m if activity and costs continue at the current rate due to continuing care charges which are the responsibility of Health. An action plan has been put in place to bring back this overspend. Action is being taken to reduce expenditure on Continuing Care in respect of the actual cost of care. No new restitution cases will be paid from the pool as it will be picked up by the PCTs directly and PCTs are setting aside £0.500m additional contribution, the need for which will be assessed in October. This budget is being closely monitored with monthly reports to the Senior Management Team.

    19. Environment & Economy

  19. Environment & Economy had a provisional outturn of £2.567m for 2003/04. It is still too soon to predict accurately the year end position as much of the work is influenced by weather, consultation processes and other external factors (e.g. waste tonnages). The Structure Plan Examination in Public is taking place later this year and most of the budget brought forward from 2003/04 will be used in connection with this. The Minerals and Waste Local Plan Review cannot start until the regulations for the new Planning Act are introduced later this year, so it is unlikely that the budget provision will be fully spent in 2004/05. At this stage it is anticipated that £0.210m will be carried forward to 2005/06 to fund work in that year but this projection may change when the timing of the review is clearer. At this time it is anticipated that other budgets will be fully spent, including the variations brought forward from 2003/04.

    20. Community Safety

  20. Current expenditure trends indicate that the budgets are expected to come in on target. Notification has been received that the grant allocation for Emergency Planning will be £0.202m as opposed to the budgeted figure of £0.149m, an increase of £0.053m. Expenditure pressures on Premises, Transport, Supplies and Services and Agency Services total £0.018m leaving £0.035m to be returned to balances.

    21. Resources and Corporate & Democratic Core

  21. The provisional outturn for 2003/04 was a carry forward of £1.979m. Annex 3 shows how the carry forward is to be allocated in 2004/05. £1.810m is carried forward to the same budget head and £0.169m is carried forward to establish a Development Fund for Resources Directorate.

    22. ICT

  22. The ICT carry forward to 2004/05 is £0.721m, which is all committed to funding IEG projects in year.

    23. Human Resources

  23. £0.100m has been carried forward to fund the job Evaluation review of senior managers, a review of project management and other one off pressures. Any costs arising from re-evaluation will be met within the Directorates’ existing budgets. There is a separate report elsewhere on the agenda.

    24. Modernisation Fund

  24. The uncommitted balance in the Modernisation Fund stands at £0.638m.

    25. Strategic Measures

  25. The rise in interest rates should improve the Council’s net income on interest on balances. It is too early in the year to assess any impact arising. The base budget for capital financing assumes that the Council will borrow from the PWLB to fund the capital programme at an average interest rate of 5%. Current PWLB rates are above 5% and although we have refrained from borrowing so far this year, if we have to borrow at rates above 5% there would be an unbudgeted cost. The situation is being monitored but the overall variance should be insignificant.

    26. RSG Settlement - Consultation on Grant Amendments for 2003/04 and 2004/05

  26. There is a report elsewhere on the agenda. Any changes to our grant settlement for 2003/04 and/or 2004/05 which might arise would not impact on this year’s budget but on our settlement for 2005/06.

    27. Invest to Save Schemes

  27. There is a report elsewhere on the agenda relating to a potential Invest to Save Scheme for Social & Health Care. This could potentially require a temporary call on balances although the scheme, if approved, would be self-financing quite quickly.

    28. Consolidated Balances

  28. The forecast position for consolidated balances is shown below:

    29.  

     

    Revenue Balances as per last report

    Add:

    Additional Emergency Planning Grant

    Sub Total

    Directorate Carry Forward

    Consolidated Position

    £m

    8.196

    0.035

    8.231

    -1.539

    6.692

    Conclusion

    Revenue Balances

  29. The Financial Management Review and SAP/MIS Review are due to report later in July. The latter is expected to identify the need to invest further in developing SAP to improve the performance of our financial systems. This would potentially be a call on balances in 2004/05. A full report on ICT plans and priorities will be presented to the Executive in September. There will also be a request to fund the additional work being carried out in Social & Health Care referred to in paragraph 19. The latest position on Revenue Balances is £8.231m.

    30. Directorate Carry Forwards

  30. It is too early in the year to predict accurately the forecast outturn. Learning & Culture has a brought forward residual deficit of £0.651m from 2003/04, which potentially rises to £0.815m in year. A Directorate Leadership Team action plan to contain and reduce the deficit is being prepared. This will be applied to the outturn position once received. Social & Health Care will have finalised their outturn position in mid July. This will allow more certainty in forecasting their year end position. At this stage both Environment & Economy and Resources are assuming that their brought forwards will be largely consumed in year. However, based upon previous years and the action plan being prepared by Learning & Culture, it is much more likely that the overall Directorate carry forward will be positive at year end rather than the £1.539m deficit currently shown.

    31. PART 2 – CAPITAL

    May Capital Monitoring and Updated Capital Programme

  31. The capital monitoring for May 2004 is presented at annexes 4 to 7, with an updated programme booklet attached at Annex 8. The main variation since April is the inclusion of the brought forward underspendings from 2003/04. Details of the brought forward were reported as part of the Provisional Outturn Report to the Executive on 16 June 2004 and are not repeated here.

  32. The monitoring report shows the total capital programme for each directorate. It does not include planned payments awaiting project appraisals, which are included in the capital programme financing summary only.

  33. Annex 4 sets out the summary planned spend position. The overall variation from the April Review is £16.605m. The detailed analysis of the variations is shown in Annex 5. This can be summarised as follows:

    34.  

     

    Brought forward from 2003/04

    Additional Schemes

    Variations to scheme costs

    Slippage/rephasing to future years

    £m

    21.528

    4.097

    -0.624

    -8.396

    Total

    16.605

  34. The additional Education capital programme agreed at the Executive on 16 June 2004 has been treated as planned payments awaiting project appraisals and has not been included in the Learning and Culture main programme at this stage. As project appraisals for specific schemes are approved these will be included in the main programme.

    35. Additional Schemes (£4.097m)

  35. These are itemised in Annex 5, and include a net £3.559m as new schemes within Learning & Culture and £0.5m for Loans for Key Worker Housing as part of the Public Service Agreement.

    36. Variations to Scheme Costs (-£0.624m)

  36. These are itemised in Annex 5.

    37. Slippage on Existing Scheme (-£8.396m)

  37. These are itemised in Annex 5 and reflect projects where payments have been rephased into later years.

    38. Total Scheme Variations

  38. Annex 6 shows two projects where scheme costs have changed. The most significant relates to costs and funding for the Oxford Transport Strategy which had been overstated in the previous programme and these have now been restated.

    39. Capital Receipts

  39. A summary of the capital receipts being used to fund the 2004/05 capital programme is given at annex 7. Overall there is a net increase in capital receipts of £0.570m.

    40. Updated Capital Programme

  40. The adjustments outlined above have been incorporated into the updated capital programme booklet accompanying these papers.

  41. An analysis of the Capital Programme funding position is set out below.

    42.  

    2004/05

    2005/06

    After 2005/06

     

    Gross Payments

    Repayment to City Schools Reserve

    Repayment of City Schools Deficit

    Transfer to / from HOP’s Reserve

     

    Total Payments

    Funded by:

    Credit Approval

    Grants & Contributions

    Capital Receipts

    Direct Revenue Financing

    Capital Reserve

    Total Funding

    Balance Surplus/Deficit (-)

    Cumulative Surplus/Deficit (-)

    £m

    104.1

    2.4

    1.0

    0.8

    £m

    40.4

     

    0.5

    £m

    26.5

     

    -1.3

     

    108.3

     

     

    54.7

    37.3

    16.1

    2.3

    0.1

     

    40.9

     

     

    27.8

    7.4

    15.0

    0.3

     

     

    25.2

     

     

     

    8.7

    8.2

     

     

    110.5

    2.2

    2.2

    50.5

    9.6

    11.8

    16.9

    -8.3

    3.5

  42. The programme allows for the planned repayment of £2.4m for the remainder of the City Schools Reserve, which couldn’t be paid last year due to insufficient expenditure in the revenue accounts that could be capitalised. A further £1.0m has been set aside in 2004/05 to repay the deficit balances arising from the closed City schools.

  43. In addition £0.8m has been set aside in 2004/05 as being the surplus capital resources on the Homes for Older People contract. This surplus is expected to increase to £1.3m in 2005/06. This will allow the establishment of a reserve to offset the date at which the full costs of the HOP’s contract will have to be met from the revenue budget. This position will need to be reviewed when the Executive consider the West Oxfordshire Strategy later this year.

  44. The programme shows a potential surplus of £2.2m in 2004/05 rising to £11.8m by the end of 2005/06. This chiefly relates to the profile of surpluses on the Learning and Culture main programme, which is as follows:

    45.  

     

    Surplus/Deficit (-)

     

    Cumulative Surplus/Deficit (-)

     

    £m

    £m

    2004/05

    8.6

    8.6

    2005/06

    3.7

    12.3

    After 2005/06

    -12.3

    0.0

  45. The majority of the surplus resources in 2004/05 and 2005/06 are used up in later years, leaving a potential surplus of £3.5m on the programme as a whole.

  46. Against the surplus there are commitments of £0.1m for Standlake Store and £0.8m for the Pegasus Theatre for the Council contribution into schemes which attract lottery funding.

  47. There are two innovations in 2004/05 as follows. The Council has approved an additional £2m per annum for unsupported borrowing through Prudential Guidelines. The Executive has agreed that projects funded through Prudential Guidelines should be on an invest to save basis. As part of the budget approval in February a provisional allocation under Prudential Guidelines was made for a Modern Workstyle Project in Central Offices and Energy Conservation. To date no business case has come forward for approval.

  48. The Council is making loans to key workers as part of a Public Service Agreement agreed with the Government. Loans to a value of £0.5m are anticipated and will be funded by an unsupported supplementary credit approval. The revenue costs have been built into the Medium Term Financial Plan.

    49. RECOMMENDATION

  49. The Executive is RECOMMENDED to:

          1. agree the application of the identified uncommitted grant of £2.314m against potential service pressures in Social & Health Care arising in year as set out in the report;

          2. approve the adjustments shown in the updated Capital Programme at Annex 8.

CHRIS GRAY
Head of Finance

Background papers: Individual Service Area Reports

Contact Officers:
Jenny Hydari (part 1) Tel. 01865 815401
Mike Petty (part 2) Tel. 01865 815622

June 2004

Return to TOP