Meeting documents

Cabinet
Wednesday, 22 June 2005

CA220605-05

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ITEM CA5

CABINET – 22 JUNE 2005

PROVISIONAL REVENUE & CAPITAL OUTTURN

Report by Head of Finance & Procurement

Summary

  1. 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.
  2. 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.
  3. 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.
  4. The detail for each Directorate is summarised within the report and individual reports for each Directorate are in the Members’ Resource Centre.
  5. Annexes

  6. The following annexes are attached:

Carry Forward Arrangements

  1. 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.
  2. 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.
  3. 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.
  4. PART 1 – PROVISIONAL REVENUE OUTTURN

  5. 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):
  6. Learning & Culture (-£0.970m)

  7. 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:
  8.  

    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.

  9. 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.
  10. 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.
  11. 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.
  12. 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.
  13. Social & Health Care (-£0.466m)

  14. 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:
  15.  

    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

  16. 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.
  17. 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.
  18. 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.
  19. Environment & Economy (-£3.920m)

  20. 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:
  21.  

    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

  22. 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.
  23. 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.
  24. 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.
  25. 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.
  26. Community Safety (-£0.028m)

  27. 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.
  28. Resources and Corporate & Democratic Core (-£1.233m)

  29. 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.
  30. Strategic Measures

  31. 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.
  32. Consolidated Revenue Balances

  33. 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.
  34. 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).
  35. 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.
  36. The provisional outturn position for consolidated revenue balances is shown below:
  37.  

    £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

  38. 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.
  39. Conclusion

  40. 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.
  41. 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.
  42. PART 2 – PROVISIONAL CAPITAL OUTTURN

  43. 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.
  44. 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.
  45. 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.
  46. 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.
  47. 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.
  48. RECOMMENDATIONS

  49. The Cabinet is recommended to:
          1. note the provisional revenue and capital outturn set out in the report;
          2. 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;
          3. approve the use of balances to meet the overspend on non-domestic rates of £0.514m;
          4. approve a supplementary estimate of £0.446m to return the balance relating to a late 2003/04 audit adjustment to the Pooled Budget;
          5. 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;
          6. 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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