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ITEM CA5
CABINET
– 22 JUNE 2005
PROVISIONAL
REVENUE & CAPITAL OUTTURN
Report by
Head of Finance & Procurement
Summary
- This report presents
the provisional outturn for revenue (Part 1) and capital (Part 2) for
the 2004/05 financial year, as reported at the end of April 2005, and
identifies variations to be carried forward into 2005/06 under the Council’s
budget management arrangements. Figures reported at this stage are provisional
and subject to amendment up to production of the Council’s Statement
of Accounts.
- The provisional
outturn for the Council shows consolidated balances of £12.114m. This
is made up of £5.295m in general reserves and £6.819m in Directorate
carry forwards. This represents an increase of £2.906m from the position
at the end of 2003/04, which is made up of increases of £2.842m in general
reserves and £0.064m in carry forward. The increase in general reserves
is in line with the Council’s strategy to strengthen balances and to
restore the position to 2% of net budget by 2006/07.
- A further report
will be brought to the Cabinet in July giving fuller explanations of
variations to budget in terms of unit costs and activity level. This
information was not available in time to be included in the present
report. This report will also present a formal application for the allocation
of carry forwards to Directorates. A final outturn publication will
be produced later in the summer.
- The detail for
each Directorate is summarised within the report and individual reports
for each Directorate are in the Members’ Resource Centre.
Annexes
- The following
annexes are attached:
Carry
Forward Arrangements
- Under the Council’s
Financial Regulations, the Cabinet is responsible for approving all
carry forwards. Directorates are required to carry forward all overspends
to be recovered in the following year, with the exception of certain
budgets which are considered to be outside the control of Directors
and to constitute calls on balances, and centrally controlled budgets
such as property repairs and maintenance. Net underspends may be carried
forward subject to Directors providing the Cabinet with an explanation
of the reasons for the underspend and stating the case for the application
of the resources in the following year. Where there are overspends brought
forward underspends must be offset against these in the first instance.
- Directorates can
apply carry forwards to the service in which they were generated or
to meet pressures in other areas. Where carry forwards are transferred
to other areas the Council’s normal virement rules apply. Any proposed
virement of over £0.250m requires the approval of the Cabinet.
- As part of improving
financial management within the Council we are asking the Cabinet to
take longer to consider the allocation of carry forwards and, particularly
where there is a pattern of underspending within a service over several
years, to consider whether the funding will actually be used in 2005/06,
and, if it will not, whether to withhold the carry forward from Directorates
in order to strengthen Council balances and enable the County to allocate
resources to areas where there is a need for spending in the next financial
year.
PART
1 – PROVISIONAL REVENUE OUTTURN
- The provisional
revenue outturn position for each Directorate is set out below (a minus
sign represents a balance to carry forward and a positive figure represents
an overspend):
Learning
& Culture (-£0.970m)
- The provisional
outturn for Learning & Culture is a carry forward of £0.970m on
the non-delegated budgets after allowing for the planned overspend on
the City Schools Reorganisation, which is repaid on an annual reducing
basis until 2012. This currently stands at £3.625m. In addition, there
is £1.414m which it has been agreed will be carried forward and recovered
in future years. This is made up of £1.050m which relates to the 2003/04
overspend on statementing and fees to independent schools, repayable
over three years until 2006/07; the accumulated deficit of £0.198m on
the Music Service as at the end of 2003/04, which is due to be repaid
by the end of 2005/06; and the variation in transport days of £0.166m
which is due to the difference between the budgeted and actual number
of school days in the financial year and is carried forward from year
to year and will even out over time. The position for individual services
areas is summarised below:
|
Brought
Forward from 2003/04
|
2004/05
Variation
|
Change
|
|
£m
|
£m
|
£m
|
|
|
|
|
School
Development
|
-0.798
|
-0.582
|
0.216
|
Children’s
Services*
|
1.784
|
0.669
|
-1.115
|
Community
Learning
|
0.163
|
-0.276
|
-0.439
|
Cultural
Services*
|
0.103
|
-0.358
|
-0.461
|
Resources
(excluding City Schools)
|
-0.355
|
-0.498
|
-0.143
|
Systems
& Performance Management
|
-
|
-0.018
|
-0.018
|
Schools
|
-
|
0.093
|
0.093
|
|
0.897
|
-0.970
|
-1.867
|
|
|
|
|
City
Schools’ Reorganisation
|
4.110
|
3.625
|
-0.485
|
Total
Non-Delegated Budgets
|
5.007
|
2.655
|
-2.352
|
*
Include amounts recoverable in future years.
- The carry forward
position reported here includes the £1.538m that it was reported in
the March financial monitoring report would be carried forward to fund
identified expenditure commitments in 2005/06, including a number which
relate to budgets which are spent on an academic year basis and for
which sufficient budget needs to be carried forward to cover the summer
terms. As this can only be done under the Council’s budget management
arrangements, the committed amounts are reported as part of the provisional
outturn and their allocation will need to be approved by the Cabinet
in the same way as for all other carry forwards. The inclusion of these
amounts in the reported carry forward position explains most of the
apparent difference from the figure reported for March. Excluding that,
the outturn position shows an increase of £0.680m in the projected net
underspend. This relates to an underspend of £0.178m which has arisen
on the Adult Learning service due to slippage on projects and underspends
on Joint Sports Agreements (£0.277m) and premises Health & Safety
(£0.261m) which were not included in the report, offset by a reduction
of £0.167m in the amount of Standards Fund grant remaining to be spent
before the cut-off date of 31 August.
- The directorate
has identified expenditure pressures of £2.464m for which there is no
budget provision in 2005/06, and it is proposing to request that the
2004/05 carry forward be allocated to help fund these. The majority
of this will involve carrying forward underspends on the same budget
heads on which they were incurred, with only minor virements to other
budget heads proposed.
- The Directorate
was granted a supplementary estimate of £0.564m by the Executive on
25 January 2005 to meet the forecast overspend on Home to School Transport.
At that time overspends were projected on the majority of the Directorate’s
services and it was assumed that there would be no surplus available
to meet the pressure within the Directorate. In the light of the better
than expected outturn position the Cabinet may wish to consider whether
to require a repayment of this amount.
- Based on the returns
to date schools’ balances at year end are forecast to be £10.340m. This
is an increase of £5.048m since 31 March 2004 and is almost double the
balance of £5.292m at that date. Most of this increase is in the balances
of the County’s secondary schools, which have increased by £4.578m from
an overall deficit of £0.577m to a surplus of £4.000m. Primary schools’
balances have increased by £0.538m and the balances of special schools
have fallen by £0.068m.
Social
& Health Care (-£0.466m)
- Social & Health
Care are reporting a provisional outturn of £0.466m to carry forward.
The directorate has been managing a planned underspend to be carried
forward to fund a pressure of £1.000m in 2005/06 relating to 40 additional
residential places in West Oxfordshire as part of the Homes for Older
People strategy. The current provisional outturn position falls short
of this target and suggests that there will be an additional pressure
of £0.534m in 2005/06 relating to this. The position for individual
service areas is summarised below:
|
Brought
Forward from 2003/04
|
2004/05
Variation
|
Change
|
|
£m
|
£m
|
£m
|
|
|
|
|
Children
& Families and Asylum Seekers
|
-
|
2.142
|
2.142
|
Older
People
|
-0.491
|
-0.690
|
-0.199
|
Mental
Health
|
-
|
-0.105
|
-0.105
|
Learning
Disabilities
|
-0.190
|
1.010
|
1.200
|
Physical
Disabilities
|
-
|
0.019
|
0.019
|
Directorate
Management Team
|
-1.032
|
-2.261
|
-1.229
|
Business
Support & Performance Management
|
-0.838
|
-0.283
|
0.555
|
Commissioning,
Planning & Partnership
|
-
|
-0.298
|
-0.298
|
|
-2.551
|
-0.466
|
2.085
|
- The provisional
outturn carry forward position is £0.307m less than that reported in
the financial monitoring report at the end of March. This is largely
the result of an additional contribution of £0.287m made to the Older
People and Physical Disabilities Pooled Budget at the year end, partly
offset by increased underspending on support services. In addition there
have been a number of year-end adjustments relating to debtors and accrued
income which have affected revenue outturn.
- In addition to
the £0.287m contribution, it is proposed to make a supplementary estimate
of £0.446m to further increase the Council’s contribution to the Older
People & Physical Disabilities Pooled Budget. This relates to the
correction of an error in the Pool’s accounts for 2003/04 involving
a number of invoices for purchases made on behalf of the Pool which
were entered in the accounts twice. This error was discovered before
the 2003/04 Statement of Accounts was published but after Directorate
positions had been finalised for the year and the money was returned
to Council balances. In the light of the pressures emerging in relation
to the Older People service it appears reasonable to return the funding
to the Pooled Budget, and the Cabinet are asked to approve this supplementary
estimate. Following these adjustments the Pooled Budget is now expected
to be in balance at the year end.
- Following review
of the provisions for bad and doubtful debts as part of the year-end
process it appears that there will be little change in the level of
provision required. The £0.346m of unused Deferred Payments grant that
was carried forward on the balance sheet from 2003/04 has been used
to fund expenditure within the Pooled Budget. The £0.514m Performance
Fund remains on the balance sheet. Although this is subject to reclaim
by the Department of Health, they have indicated informally that they
will not be seeking to recover the money and it is intended to carry
the funding forward to support the Children’s Placement Strategy overspend
predicted in 2005/06. This will alleviate the pressures within Children’s
Services for that year but careful consideration needs to be given to
the position for the service in future years as part of the 2006/07
budget process.
Environment
& Economy (-£3.920m)
- The provisional
outturn for Environment & Economy is £3.920m carry forward. This
is an increase of £1.172m compared to last year’s figure of £2.748m.
The position for individual service areas is summarised below:
|
Brought
Forward from 2003/04
|
2004/05
Variation
|
Change
|
|
£m
|
£m
|
£m
|
|
|
|
|
Transport
|
-0.721
|
-1.288
|
-0.567
|
Sustainable
Development
|
-1.794
|
-2.283
|
-0.489
|
Trading
Standards & Registration
|
0.058
|
0.062
|
0.004
|
Business
Support
|
-0.291
|
-0.411
|
-0.120
|
|
-2.748
|
-3.920
|
-1.172
|
- The provisional
outturn position is £0.520m higher than that reported in the financial
monitoring report to the end of March. This is due to final waste disposal
costs notified by contractors being lower than anticipated and to further
slippage on site engineering works on the Waste Management service.
- Analysis of the
outturn for the directorate since 2002/03 shows that the carry forward
has been increasing year on year. In particular Transport Planning and
Waste Management both show significant increases in the underspends
carried forward. These largely relate to slippage on projects from one
year to the next and the directorate has applied to carry the underspends
on these budgets at the end of 2004/05 forward to fund project expenditure
in 2005/06. However, the trend to increasing underspends suggests that
while projects slipped from previous years may be being completed in
the following year, there is a corresponding slippage of project costs
included in that year’s budget to subsequent years.
- The Directorate
has indicated that it intends to apply to carry forward the full balance
of £3.920m, with £2.987m being used to fund slipped projects and other
expenditure on the same budget heads in 2005/06. Of the remaining £0.933m,
virement to other budget heads for specific purposes will be proposed
for £0.350m, while the remaining £0.583m will be requested as a contingency
fund for potential commitments which have been identified for 2005/06.
- The On-Street
Parking revenue surplus for 2004/05 was £0.986m. The accumulated surplus
at 1 April 2004 was £1.020m. None of this balance has been required
to fund capital works during the year and the accumulated surplus on
the account at the end of 2004/05 is £2.006m. This does not form part
of the general revenue account and a statement of actual income and
expenditure in the account is included at Annex 8 of this report.
Community
Safety (-£0.028m)
- The provisional
outturn position for Community Safety is an underspend of £0.028m. This
is after allowing for £0.324m which will be met from Council balances
and which includes £0.368m overspend on the Firefighters’ Pension budget,
mainly due to transfer values payable to other brigades, offset by an
underspend of £0.059m on the Retained Firefighters’ budget. Within the
£0.028m an overspend of £0.315m on the Community Safety Team is offset
by underspends on the other service areas within the Directorate. The
Directorate is proposing to request that the £0.269m underspend on the
Fire & Rescue Service be carried forward within the service, and
that the underspends on Emergency Planning (£0.052m) and Travellers’
Sites (£0.022m) be used to offset the deficit on the Community Safety
Team budget, which has arisen due to issues surrounding the multi-agency
funding of the Youth Offending Service. From April 2005 control of financial
management has been aligned with the management of the service and an
action plan will be developed to address the net overspend to be carried
forward.
Resources
and Corporate & Democratic Core (-£1.233m)
- The provisional
outturn for the Resources Directorate and Corporate & Democratic
Core is an underspend of £1.435m. This is £0.431m more than the underspend
forecast in the March financial monitoring report and is due to a reduction
in the overspend on property repairs and maintenance following a review
of commitments by Atkins which resulted in the cancellation of a large
number of committed items and increases in the underspend positions
on health and safety and Property Services. The Directorate intends
to request that the majority of the underspend be carried forward on
the same budget head to fund expenditure in 2005/06, with no significant
virements of carry forward proposed.
Strategic
Measures
- The outturn position
for Strategic Measures is expected to be a surplus of around £2.450m,
which is largely due to additional interest received on cash balances.
This is an improvement of £0.450m on the position reported in the March
financial monitoring report. Over £0.200m of this is due to a fall in
the Baxter index for construction services prices from 4.3% in February
to 3.6% in March. It is proposed that £0.300m be used to make the contribution
to earmarked reserves in relation to deferred developer contributions
currently budgeted for 2005/06. The budgeted contribution of £0.300m
in 2005/06 will then not be required and can be returned to balances.
Although this reduces the sum falling into balances at year end, as
can be seen from the Financial Monitoring Report for April considered
elsewhere on this agenda the overall impact is neutral.
Consolidated
Revenue Balances
- There have been
a number of changes affecting general reserves during the year. These
have been reported as part of the monthly financial monitoring and are
shown in full at Annex 7. The net effect of these changes is an additional
call on balances of £2.288m which offsets the budgeted addition to balances
of £4.645m. The provisional outturn position for general reserves is
£8.920m. This represents an increase of £2.357m from the balance as
at 1 April 2004, although it is still less than budgeted. However, the
calls on balances include £0.816m in relation to the repayment of 2003/04
Revenue Support Grant following the recent Amending Report. Provision
for this was included in the draft budget for 2005/06, but our external
auditors advised us that there was a requirement to charge the amount
to the 2004/05 accounts. The £0.816m provision will be returned to balances
in 2005/06. In addition, as reported in paragraph 26 above, although
£0.300m of the Strategic Measures surplus for 2004/05 is being transferred
to earmarked reserves and not returned to balances, this means that
the equivalent contribution included in the 2005/06 budget will not
be required and this amount will also be available to return to balances.
- Cabinet approval
is requested for additional calls on balances in relation to overspending
on non-domestic rates (£0.514m) and a supplementary estimate in relation
to the Older People and Physical Disabilities Pooled Budget (£0.446m).
- The carried forward
overspend on the City Schools’ Reorganisation now stands at £3.625m.
This is being repaid on an annual reducing balance basis until 2012
from the savings resulting from the reorganisation.
- The provisional
outturn position for consolidated revenue balances is shown below:
|
£m
|
|
|
Revenue
Balances per Annex 7
|
8.920
|
Less
City Schools’ Reorganisation
|
-3.625
|
|
5.295
|
|
|
Directorate
Carry Forward as per Annex 1
|
6.819
|
|
12.114
|
Other
Reserves and Provisions
- With the exception
of the LMS reserves position reported at paragraph 14 above, positions
on earmarked reserves and other provisions have not yet been finalised
as part of the closedown procedure. This information will be included
in the further outturn report to be brought to the Cabinet in July.
Conclusion
- The provisional
outturn position on revenue balances (net of the City Schools’ Reorganisation)
is £5.295m. This is £0.672m less than the projection set out in the
Revenue Budget and Capital Programme for 2005/06 which was agreed by
Council on 15 February but overall the trend is to increasing levels
of balances and it appears likely that no additional contribution will
be required to restore the position to around 2% of net budget by 2006/07.
Schools’ balances at year end are expected to be £10.340m, an increase
of £5.048m from the position at 31 March 2004.
- The Directorate
carry forward position stands at £6.819m, an increase of £2.823m from
the projections in the March financial monitoring report. Fuller explanations
of the variations, including analysis of unit costs and activity levels,
will be presented to the Cabinet on 19 July, along with a formal request
for carry forwards to be allocated to Directorates.
PART
2 – PROVISIONAL CAPITAL OUTTURN
- The provisional
capital outturn summary at Annex 9 shows an underspend of £4.8m compared
to a capital programme of £72.0m as identified in the Monthly Financial
Monitoring report to the Cabinet on 18 May.
- The main areas
of underspending are in the Learning & Culture schools’ programme
(£2.9m) and Resources (£1.0m). The Learning & Culture underspend
mostly reflects lower than estimated spending on Schools’ Devolved Capital.
The underspend on Resources reflects slippage on a number of schemes.
- The first priority
in utilising capital resources was to ensure that all government approved
borrowing was taken up. There were a small number of revenue contributions
totalling £1.1m and the balance of financing was made up of grants,
reimbursements and contributions. The Council had planned a £1.5m revenue
contribution to the Transport Capital Programme in 2004/05. Due to the
level of credit approvals available this funding was not required this
year and has been set aside in the capital reserve as funding for the
Transport programme in 2005/06. Learning & Culture had some £1.9m
of contributions available to fund the programme which were not needed.
These have been transferred to the Capital Reserve to fund payments
on the capital programme which have slipped into 2005/06.
- The Council received
£9.9m net in capital receipts. Of these some £4.6m is required to fund
other expenditure items within the programme. These are the repayment
of the City Schools’ Reserve which was used to fund the cashflow on
the capital programme; the Homes for Older People revenue/capital switch,
where the capital surpluses on the project are contributing to the revenue
budget; and repayment of the budget deficits on the closed City Schools.
A further £1.4m reflects the appropriation of two sites between Directorates.
Equivalent expenditure is included within the gross expenditure shown.
The balance of unused capital receipts will be carried forward to fund
the capital programme in future years.
- The balancing
line on the financing statement reflects a surplus on the capital programme
which is being carried forward to fund the programme in future years.
The figure represents unapplied capital receipts, the capital reserve
and grants and contributions required in future years.
RECOMMENDATIONS
- The Cabinet
is recommended to:
- note
the provisional revenue and capital outturn set out in the report;
- approve
the use of £0.300m of the Strategic Measures surplus to make
the contribution to earmarked reserves in relation to deferred
developer interest budgeted for 2005/06;
- approve
the use of balances to meet the overspend on non-domestic rates
of £0.514m;
- approve
a supplementary estimate of £0.446m to return the balance relating
to a late 2003/04 audit adjustment to the Pooled Budget;
- note
the Directorate carry forwards set out in Annexes 2-6 and request
the Head of Finance and Procurement to bring a further report
to the meeting of the Cabinet on 19 July containing formal requests
for allocation;
- agree
that the surplus in the On-Street Parking Account at the end
of the 2004/05 financial year, so far as not applied to particular
eligible purposes in accordance with Section 55(4) of the Road
Traffic Regulation Act 1984, be carried forward in the account
to the 2005/06 financial year.
SUE
SCANE
Head of Finance
& Procurement
Background Papers: Detailed Directorate reports and annexes deposited
in the Member’s Resource Centre
Contact
Officers
Sadie Slater, Financial Manager (Part 1) Tel: 01865 815989
Mike Petty, Principal Financial Manager (Part 2) Tel: 01865 815622
June
2005
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