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ITEM CA5

CABINET – 21 MARCH 2006

FINANCIAL MONITORING

Report by Head of Finance & Procurement

1. This report covers the period up to the end of January 2006 for revenue and capital. The consolidated forecast to date shows a balance of £12.845m. This is an increase of £0.658m since the previous report and is made up of a net reduction of £0.680m in the forecast Directorate overspend offset by a net call on balances of £0.022m. The overall Directorate position is now forecast to be an underspend of £0.055m.
2. For the remainder of the financial year the budgets of the two realigned Directorates will continue to be treated for financial reporting purposes as if the realignment had not taken place, although from 1 January management responsibility for some areas of those budgets has changed. In this report, therefore, the ‘Learning & Culture’ and ‘Social & Health Care’ groupings are retained. However, a summary of the position for the realigned directorates is included at Annex 5 for information.

Learning & Culture

3. The forecast position for Learning & Culture is an in-year underspend of £1.047m, an increase of £0.801m since the previous report. Excluding the City Schools Reorganisation, there are amounts recoverable in future years of £0.994m to set against this, giving a net underspend of £0.053m. The main change is in relation to Statementing and Fees to Independent Schools. The projected in-year underspend for these services has increased by £0.248m as a result of releasing unspent provision for new cases, reductions in case costs and lower than expected take-up of SEN places in playgroups. In addition, it is proposed to rephase the repayment of the 2003/04 overspend on Statementing and Fees to Independent Schools, reducing the amount to be paid back in 2005/06 by £0.289m. The Schools Budget for 2006/07 includes provision for the full repayment of the carried forward overspend. As the Schools Budget from April 2006 is funded by the Dedicated Schools’ Grant it will no longer be possible to vire unspent budgets to services outside the Schools Block. It is proposed to vire the funding released by the rephasing, together with part of the in-year underspend on Fees to Independent Schools, to offset the £0.381m overspend forecast on Home to School Transport. This will bring that budget back into balance for the year.
4. The Spring Term count of pupil numbers was held on 19 January 2006. Draft figures for the numbers of children taking up half-time nursery places suggest that the net overprovision on the budget for Early Education Funding for 3 & 4 Year Olds is £0.508m, an increase of £0.202m since the last report. It is proposed to vire £0.100m of this underspend to support capital improvement projects for Foundation Stage children in primary schools and to use the balance to offset overspends for Adult Learning and Children & Families.
5. Budget monitoring returns for the period from 1 April to 31 December have been received from 88% of schools and indicate that balances at the end of the year will show little change from the March 2005 LMS Reserves position.

Social & Health Care

6. The forecast overspend for Children & Families has increased by £0.335m since the previous report. This is primarily due to eight additional agency placements from January onwards. The forecast assumes that three children will leave care before the end of March and that there will be no further new placements. If either of these assumptions proves incorrect the overspend is likely to increase further. There has been an overall increase in the number of children looked after which is placing pressures on the placement budget both for 2005/06 and for 2006/07 and on the achievement of the targets set out in the Children’s Placement Strategy. The 2006/07 budget includes additional funding of £1.303m to meet demographic pressures and new statutory requirements, as well as one-off funding of £0.565m to repay part of the overspend that will be carried forward from 2005/06. Current projections indicate that the overspend will be £1.195m, which suggests that the residual pressure to be addressed from the 2006/07 budget will be £0.630m. The Social & Health Care action plan included with the financial monitoring report considered by the Cabinet on 18 October assumed that an overspend of £0.500m would remain in relation to Children & Families, in line with the recovery plan for the service agreed as part of the Children’s Placement Strategy. As a result of the increase in the forecast overspend for Children & Families reported this month, it is now considered likely that the actual year end overspend will be higher than the assumed £0.500m.
7. The forecast underspend for the Older People service has increased by £0.222m. This underspend is being managed to offset anticipated pressures in the next financial year, as set out in the budget approved by Council on 14 February. At its meeting on 17 January the Cabinet approved a supplementary estimate of £0.100m to support efforts to reduce delayed discharges of patients from hospital, which is repayable in the 2006/07 budget.

Environment & Economy

8. The forecast underspend for Environment & Economy has reduced by £0.121m since the previous report, primarily as a result of revised projections for the cost of general waste disposal and hazardous waste. Some of the underspend relates to slippage on projects and the directorate has indicated that it wishes to carry these forward to fund the projects in 2006/07. This position will be set out in the outturn report to the 21 June Cabinet.

Community Safety

9. There has been an increase of £0.115m in the forecast underspend for the Fire & Rescue service as a result of additional ODPM grant funding which will be used to fund incident response training in 2006/07 and timing differences on the upgrading of the Brigade’s breathing apparatus, which is not now expected to take place until April. The forecast overspend for the Youth Offending Team remains unchanged. The 2006/07 budget includes £0.252m to repay the overspend brought forward from 2004/05 but this still leaves a pressure of £0.228m.

Resources & Chief Executive’s Office

10. The forecast directorate underspend has increased by £0.226m. This is primarily due to slippage on project work by the Corporate Property Group, which is expected to be around £0.175m. This will be carried forward to fund the projects in 2006/07.
11. A supplementary estimate of £0.028m is requested to fund the costs of an additional Unison Assistant Branch Secretary. Funding for this post has been included in the budget for 2006/07 and future years. This post will assist Unison in supporting the delivery of the Council’s change agenda.

External Cash Fund Management

12. Scottish Widows Investment Partnership and Investec Asset Management have been appointed as the Council’s External Fund Managers. Benchmarks have been agreed with the individual managers and the Cabinet is recommended to request the Council to approve a number of changes to the Treasury Management Strategy in order to ensure optimum fund performance.

Council Balances

13. The forecast position for general balances has reduced by £0.022m since the last report and now stands at £12.790m. This is due to an increase of £0.090m in the forecast overspend on the Firefighters’ Pension budget, offset by a reduction of £0.020m in the Retained Firefighters’ overspend and the return to balances of a £0.048m underspend on the budget for the May 2005 council elections. This remains in line with the projections set out in the 2006/07 budget proposals which were agreed by Council on 14 February.

Capital

14. There has been a net reduction of £0.053m in the expected level of capital payments in 2005/06. This is the result of slippage on schemes in Learning & Culture and Environment & Economy, offset by increased expenditure on the HOPs Stage 2 land purchase in Social & Health Care and the purchase of ambulance stations by Resources. There is an overall increase in payments of £1.454m over the period of the programme.

Introduction

15. This report covers the period up to the end of January 2006 for revenue and capital. The detail for each Directorate is summarised within the report and individual reports for each Directorate are in the Members’ Resource Centre.

Annexes

16. The following annexes are attached:

Revenue

Annex 1 Estimated Year End Position Directorate Summary (Annex 1 - download as .xls file)

Annex 1a-1e " " " by Directorate (Annex 1 - download as .xls file)

Annex 2a Summary of Virements (Annex 2 - download as .xls file)

Annex 2b Summary of Supplementary Estimates (Annex 2 - download as .xls file)

Annex 3 Latest Grants Position (download as .xls file)

Annex 4 Forecast Revenue Balances at Year End (download as .xls file)

Annex 5 Realigned Directorates Year End Forecast (download as .xls file)

Annex 6 Learning & Culture Action Plan (download as .doc file)

Annex 7 Proposed Lending List Limits (download as .doc file)

Capital

Annex 8 Capital Monitoring Summary (Annex 8 - download as .xls file)

Annex 8a-8g Capital Monitoring by Directorate (Annex 8 - download as .xls file)

Part 1 – Revenue

17. Annex 1 shows the forecast revenue outturn position at the end of January. The movement in the position is summarised below (a minus sign represents a balance to carry forward and a positive figure represents an overspend):

	Dec 05 £m	Jan 06 £m	Change £m
Learning & Culture	3.583	3.072	-0.511
Less City Schools’ Reorganisation	3.125	3.125	-
	0.458	-0.053	-0.511
Social & Health Care	0.625	0.676	0.051
Supporting People	0.399	0.399	-
Environment & Economy	-1.024	-0.903	0.121
Community Safety	0.400	0.285	-0.115
Resources & Chief Executive’s Office	-0.233	-0.459	-0.226
	0.625	-0.055	-0.680

18. The main issues on the revenue budget for each directorate are set out below:

Learning & Culture (-£1.047m)

19. An in-year underspend of £1.047m is predicted for Learning & Culture, an increase of £0.801m since the previous report. There are amounts recoverable in future years totalling £4.119m. £3.125m of this is the planned overspend on the City Schools’ Reorganisation, and the remainder relates to the 2003/04 overspends on Statementing and Fees to Independent Schools, which are repayable over three years until 2006/07, and the variation in transport days on the Home to School Transport service. The movement on the non-delegated budgets since the last report is as follows:

	Dec 05 £m	Jan 06 £m	Change £m
School Development	-0.291	-0.326	-0.035
Children’s Services	-0.016	-0.451	-0.435
Community Learning	0.029	-0.196	-0.225
Cultural Services	-0.016	-0.069	-0.053
Resources	0.179	0.147	-0.032
Systems & Performance Management	-0.131	-0.152	-0.021
	-0.246	-1.047	-0.801
Plus: Recoverable in Future Years
Children’s Services – Statementing & Fees to Independent Schools	0.390	0.680	0.290
Children’s Services – Transport Days	0.314	0.314	-
City Schools’ Reorganisation	3.125	3.125	-
	3.583	3.821	-0.511

20. The forecast position includes underspends of £0.724m which have been earmarked for use to meet pressures in the 2006/07 financial year and £0.451m for which alternative uses in 2005/06 are proposed. These will be set out for consideration and approval by members in the outturn report to the 20 June Cabinet. Excluding these amounts, the net pressure to be addressed in 2005/06 has reduced to £0.128m. An updated version of the Action Plan to recover the position is attached at Annex 6.

School Development (-£0.326m)

21. The underspend on the School Development Service includes £0.328m in relation to the Standards Fund grant. This grant is allocated on an academic year basis and may be spent up to 31 August 2006, and the underspend will need to be carried forward to 2006/07 when it is expected to be spent in full.
22. Excluding the Standards Fund carry forward the position for the service is an overspend of £0.002m. This is a reduction of £0.035m since the last report and represents the achievement of a breakeven position for the service overall. A number of over and under spends remain and it is proposed to vire budgets within the service to address this. The net effect of these virements will be as follows:

	Jan Variance £m	Proposed Virement £m	Net Variance £m
Strategic Management	0.034	-0.034	-
Standards Fund	-0.328	-	-0.328
SEN Curriculum Enhancement	-0.234	0.216	-0.018
OQSA	0.210	-0.170	0.040
OSIT	0.279	-0.240	0.039
Administration	0.035	-0.035	-
Residential Centres	0.041	-0.012	0.029
Governor Services	0.082	-	0.082
Adviser Staffing Budgets	-0.445	0.275	-0.170
	-0.326	-	-0.326

23. Although there is an underspend remaining on the adviser staffing budgets, not all overspends are being offset by virements at this stage as it is hoped that there will be further improvement in the positions as a result of action by cost centre managers. Cabinet is recommended to approve the proposed virements.

Children’s Services (-£0.451m)

24. The forecast in-year underspend for Children’s Services has increased by £0.435m since the previous report. The forecast underspend for Out of County Fees has increased by £0.168m as a result of releasing unspent provision for new cases, reductions in commitments and adjustments to existing case costs, while the underspend for Statementing has increased by £0.080m due to a lower than expected take-up of SEN places in playgroups and a reduction in the estimate for new cases in mainstream schools for the remainder of the financial year. The total in-year underspend for SEN services is now £0.474m. It is proposed to use £0.250m of this to fund expenditure previously charged to the Standards Fund, releasing grant income that can be used up until 31 August 2006, and £0.101m to fund additional SEN provision in mainstream schools to prevent children having to go out-county.
25. The Medium Term Financial Plan agreed by Council in February 2004 included provision for the 2003/04 overspend on Statementing and Fees to Independent Schools to be carried forward and repaid over three years, with the final repayment in 2006/07. Provision for this repayment was included in the directorate’s budgets for 2004/05 and 2005/06, and in the Schools Budget for 2006/07. It is proposed to rephase the repayment of this overspend, reducing the amount paid back in 2005/06 by £0.289m. The Schools Budget for 2006/07 includes provision to pay back the carried forward overspend in full. As the Schools Budget will be funded by Dedicated Schools Grant from April 2006, it will not be possible to vire budget to services outside the Schools Budget. This rephasing will release funding which can be used to offset the 2005/06 overspend on Home to School Transport, which is now forecast to be £0.381m. The Cabinet is requested to approve this rephasing and the virement of the released funding, together with £0.092m of the in-year overspend on Out of County Fees, to the Home to School Transport budget. This will bring the Home to School Transport service back into balance for the year. Additional funding of £0.833m has been allocated to the service in the budgets for 2006/07 and future years and it is hoped that this will prevent a recurrence of similar problems. Given the level of overspend on the service in 2005/06 careful monitoring will be required to ensure that future pressures can be managed from within the budget.

Community Learning (-£0.196m)

26. The Spring Term count of pupil numbers took place on 19 January 2006. Draft figures indicate that the net overprovision on the budget for Early Education Funding for 3 & 4 Year Olds is £0.508m, after allowing for a transfer of £0.189m to the Individual Schools’ Budget in relation to take-up of places in schools by children prior to their fifth birthday. In line with the Council’s priorities for 2005/06, it is planned to vire £0.100m of the underspend to support capital improvement projects for Foundation Stage children in primary schools. The remaining £0.408m remains unallocated at present, although it is anticipated that it will be used to offset the overspend of £0.289m on the Adult Learning service, with the balance being used to contribute to the residual overspend on Children & Families.
27. The projected overspend for Adult Learning remains at £0.289m. The majority of this relates to salary costs of staff who are due to take voluntary or compulsory redundancy as part of the current service restructuring and is a one-off cost for this financial year. Additional costs relating to courses for learners with learning disabilities (£0.042m) and engaging interim management for the service (£0.034m) are expected to continue into the early part of the 2006/07 financial year and may put pressures on that year’s budget. It is anticipated that this overspend will be met from the shortfall in spending on the budget for Early Education Funding for 3 & 4 Year Olds.

Cultural Services (-£0.069m)

28. The forecast underspend for Cultural Services has increased by £0.053m since the previous report. This is due to a decrease in the projected overspend for the Music Service as a result of £0.038m additional income and a reduction of £0.015m in forecast costs. There are expenditure commitments in 2006/07 of £0.056m as a result of slippage on the Library Management System Replacement Project and £0.033m for other known pressures, which will be funded from the carry forward of savings from negotiated VAT exemption on audiovisual loans. Any unclaimed sum remaining on the budget for Village Hall Grants (currently £0.047m) will be carried forward to meet claims in future years.

Resources (£0.147m)

29. The projected overspend for Premature Retirement Compensation (PRC) has increased by £0.016m and now stands at £0.490m. The restructuring of the Adult Learning Service is not yet complete and further costs are expected. However, subject to any other commitments, it is proposed to meet the costs of the Adult Learning redundancies from the Community Education Centres’ accumulated surplus, which is held as a reserve on the balance sheet. To date this accounts for £0.118m of the overspend, leaving a balance of £0.372m to be carried forward to 2006/07. This figure is after the virement of £0.439m of unallocated 2004/05 carry forward to the budget, meaning that, net of the effects of the Adult Learning restructuring, the total in-year overspend is £0.811m. An additional £0.750 has been included in the 2006/07 budget on an ongoing basis, while negotiations are continuing to tighten the criteria under which teachers can retire early, but this remains an area of pressure and will need to be monitored closely.
30. The forecast position for County Facilities Management (CFM) remains break-even, with the assumption that secondary schools will pay the amounts they owe for 2005/06 in this year or will accrue for them in their accounts. A report on the outcome of the consultation on proposals for the future of the service was considered by the Cabinet on 7 March 2006.

Systems & Performance Management (-£0.152m)

31. The underspend for this service has increased by £0.021m since the previous report as a result of the removal of the Head of Service post from the structure of the new Children, Young People and Families Directorate from 1 January. £0.052m of the underspend will be carried forward into 2006/07 to meet additional staffing costs arising from the Directorate restructuring during the year. The £0.100m estimated unspent balance of the £0.300m made available from the Modernisation Fund to cover the costs of the realignment now includes the proposed spending of £0.073m on accommodation works at Cricket Road. This will be carried forward to fund ongoing work related to the realignment in 2006/07.

Delegated Schools’ Budgets

32. Three-year budget plans for 2005/06 to 2007/08 for 289 of the Council’s 293 schools (99%) have been formally approved and show an estimated year-end balance of £3.232m. The remaining 4 budgets have been agreed for 2005/06 and show a net deficit of £0.064m, giving an overall projected balance for all schools of £3.168m. Budget monitoring for the period

1 April to 31 December have been received from 88% of schools and show a projected increase in year end balances of £1.5m from this initial estimate. In recent years schools’ balances have typically been around £5m higher than initial estimates due to slippage on R&M programmes and the ability to spend Standards Fund allocations up to the end of the academic year on 31 August. It therefore remains likely that the actual year end position will show little movement from the March 2005 LMS Reserves figure of £8.274m.

Social & Health Care (£0.676m)

33. The forecast outturn for Social & Health Care is an overspend of £0.676m, an increase of £0.051m since the previous report. The movement on the individual service areas is shown below:

	Dec 05 £m	Jan 06 £m	Change £m
Children & Families	0.860	1.195	0.335
Older People	-0.690	-0.912	-0.222
Mental Health	-0.081	-0.100	-0.019
Learning Disabilities	0.529	0.507	-0.022
Physical Disabilities	0.147	0.118	-0.029
Directorate Management Team	0.049	0.006	-0.043
Business Support & Performance Management	-0.064	-0.078	-0.013
Commissioning, Planning & Partnership	-0.124	-0.060	0.064
	0.625	0.676	0.051

34. The financial monitoring report considered by the Cabinet on 18 October 2005 included the Social & Health Care action plan for the recovery of the position. This assumed that an overspend of £0.500m would remain in relation to Children & Families, in line with the recovery plan for the service agreed as part of the Children’s Placement Strategy. The reported position also assumes that actions identified by the Action Plan and currently being implemented in a number of services will have the desired effect, particularly in Children & Families and Older People. As a result of the increase in the forecast overspend for Children & Families reported this month, it is now considered likely that the actual year end overspend will be higher than the assumed £0.500m.

Children & Families (£1.195m)

35. The forecast overspend for Children & Families has increased by a further £0.335m since the previous report and now stands at £1.195m. The Children’s Placement Strategy envisaged a shift in placement types with a move away from high-dependency, high-cost residential care, in particular agency care, towards increased use of foster care. However, an overall increase in the number of children looked after is placing pressures on the budget for Children & Families for both 2005/06 and 2006/07 and on the achievement of the targets set out in the Placement Strategy, with increased spending on Foster Care not accompanied by the expected reduction in the residential agency overspend.
36. An additional eight placements have been made during January, four in to agency residential care and four into Independent Fostering Agency placements. This has resulted in an increase of £0.201m in the forecast overspend for Agency Residential Care, which now stands at £0.926m. This forecast assumes that there will be no further placements made during the remainder of the financial year, and that three current placements will cease before the end of March. If these three placements continue to the year end there will be additional costs of £0.056. Additionally, there are three known children who may require placement before the end of March, with a potential extra cost of £0.050m. The projections are also based on there being 66 children in placements for the remainder of the financial year. The average over the year is 70 children and if this trend continues placement costs will further exceed projections.
37. There has been a reduction of £0.081m in the forecast underspend for Leaving Care as a result of reduced income expectations and increased projections for care, rent and support costs, together with smaller movements on other areas of the service.
38. Additional funding of £1.303m has been allocated to the service in the 2006/07 budget to meet demographic pressures and new statutory requirements. In addition, one-off funding of £0.565m was agreed to offset the 2005/06 overspend. Current projections indicate that this will leave a balance of £0.630m to be carried forward to 2006/07, of which £0.119m is expected to be met from the underspend on Early Education Funding for 3 & 4 Year Olds. Management action is needed to resolve how the outstanding balance will be repaid. The newly appointed Head of Early Years and Family Support is requested to review and update the Placement Strategy in the light of the underlying pressure for 2006/07 and to set out what actions need to be taken to balance the budget.

Older People (-£0.912m)

39. The forecast underspend for the Older People service has increased by £0.222m since the previous report. The projected underspend for external Home Support services has increased by £0.167m as a result of a reduction in the allowance for reconciliation differences between the different systems used by the service. An increased income forecast for internal Home Support has increased the underspend there by £0.076m, although this is offset by overspends forecast on Intermediate Care Services and Relief to Care. Additionally, there is an increase of £0.086m in the underspend forecast for Care Management Teams.
40. The Older People underspend is being managed to offset anticipated pressures in the next financial year, as set out in the budget approved by Council on 14 February. Actions taken to control expenditure have, in some cases, had an adverse impact on delayed transfers of care, affecting the ability of hospitals in Oxfordshire to meet their Accident and Emergency targets. Additionally, there has been an effect on access to Home Support for clients in some areas of the county, and on other performance targets. In recognition of this the Cabinet agreed at its meeting on 17 January to make a supplementary estimate of £0.100m to support efforts to assist in the reduction of delayed discharges of patients from hospital. This will be repayable during 2006/07 and the repayment has been incorporated in the 2006/07 budget.

Other Service Areas

41. There has been little change in the forecast overspend for Learning Disabilities. The 2006/07 budget approved by Council on 14 February included provision for the repayment of the overspend from savings elsewhere within the Social & Community Services Directorate.

Supporting People (£0.399m)

42. As previously reported, the Government has revised the formula for distributing the Supporting People Grant with the result that the grant allocated to the Oxfordshire Supporting People Partnership has been reduced by £1.5m, or 7%, in 2005/06. Allocations of Supporting People Grant for 2006/07 were announced on 5 December. Oxfordshire’s allocation has reduced by 2.43% with a further reduction of 5% expected in 2007/08. The Supporting People programme is administered by the Council on behalf of the Joint Commissioning Body. Due to the contract structure in place for Supporting People it is highly unlikely that it will be possible to implement the required scale of cuts in 2005/06. A three-year financial strategy was agreed by the Joint Commissioning Body on 16 December with the aim of phasing in service reductions over that period and achieving a balanced budget by the end of 2007/08. This will also allow for the repayment to the County Council of the £0.399m which has been made available to the Commissioning Body to cushion the impact of the grant reduction in 2005/06.

Environment & Economy (-£0.903m)

43. The forecast underspend for the Environment & Economy Directorate has reduced by £0.121m since the last report. This relates predominantly to slippage on projects and the Directorate has indicated that it wishes to carry the underspend forward to fund the projects in 2006/07. The movement on the individual service areas is summarised below:

	Dec 05 £m	Jan 06 £m	Change £m
Transport	-0.072	-0.028	0.044
Sustainable Development	-0.859	-0.766	0.093
Trading Standards & Registration	0.022	-0.003	-0.025
Business Support	-0.115	-0.106	0.009
	-1.024	-0.903	0.121

Transport (-£0.028m)

44. The underspend for Transport has reduced by £0.044m since the previous report. This is primarily the result of management action to ensure that where it has not been possible to progress the projects originally planned the funding is used for alternative projects. £0.300m was carried forward from 2004/05 for a Business Process Review of the service and it is anticipated that £0.100m of this will be carried forward to 2006/07 to maintain progress. The current projection falls short of this amount and the Directorate is keeping the position under review.

Sustainable Development (-£0.766m)

45. The forecast underspend on the Waste Management service has reduced by £0.204m since the previous report. This is predominantly due to a reduction of £0.100m in the forecast underspend for general waste disposal following further analysis of actual tonnages, together with a reduction of £0.051m in estimated trade waste charges. Additional costs for the disposal of hazardous waste due to increased contract costs and the effect of complying with new regulations are now predicted to be £0.311m over budget.
46. The directorate has identified that £0.763m of the £0.766m underspend forecast for the Sustainable Development service relates to slippage on projects for which the funding will be required in 2006/07. These include £0.190m for the Land Development Progress System, £0.108m for the West End Project, £0.273m for the purchase of the Oakley Wood waste disposal site and £0.112m for the procurement process for new waste treatment capacity.
47. Estimated spending in 2005/06 on the Minerals & Waste Development Framework and the Structure Plan remains at £0.052m. These projects have slipped from previous years and the underspent budgets were returned to Council balances at the end of 2004/05 to be held centrally against identified future commitments. Once the spending requirement is more definitely known it is intended to make a request to Cabinet for the return of part of the underspend. No final decision will be made on this until a more accurate picture of the spend in year is available.

Community Safety (£0.285m)

48. The forecast overspend for Community Safety has reduced by £0.115m since the previous report. This is due to an increased underspend forecast for the Fire & Rescue service. £0.035m of this relates to New Dimension grant funding awarded to Oxfordshire by the Office of the Deputy Prime Minister for incident response training in relation to potential terrorist threats. Notification of the grant was not received until 31 January 2006 and it is intended to carry out the training in 2006/07. Tenders for the upgrade of the Brigade’s breathing apparatus are being evaluated. Replacement sets are not expected to be received until April 2006. It will therefore be necessary to carry forward the budget provision of £0.080m to 2006/07.
49. The Firefighters’ Pension budget is now expected to be overspent by £0.180m at the year end due to the net effect of transfer values received from other Brigades offset by the unbudgeted retirements of three firefighters. This is a movement of £0.090 from the net underspend forecast last month and will be a call on Council balances, offset by a reduction of £0.020m in the estimated overspend on the retained firefighters’ budget.
50. The forecast overspend for the Youth Offending Team remains at £0.480m. It has been agreed that additional funding will be made available in the 2006/07 budget to fund the £0.252m overspend brought forward from 2004/05, but this still leaves a pressure of £0.228m to be addressed. It had been hoped to use PSA Reward Grant funding to assist with this but there are unresolved issues relating to the nature and timing of these payments.

Resources & Chief Executive’s Office (-£0.459m)

51. The forecast underspend for the Resources Directorate and the Chief Executive’s office has increased by £0.226m since the previous report. Financial Services and Procurement is now expected to underspend by £0.058m as a result of slippage on the rollout of financial management training for service managers and e-procurement training. An underspend of £0.039m has arisen for the Corporate Information Management Unit due to delays in replacing staff. This will be carried forward to cover pressures within the pay budget in 2006/07. An action plan is being developed to manage these pressures in the longer term.
52. Slippage on project work within the Corporate Property Group is now estimated to be around £0.175m. This relates principally to the asbestos survey programme, and is committed for completion of projects in 2006/07. It is also estimated that £0.009m of the £0.010m supplementary estimate in relation to the costs of planning and organising the official opening of the Oxford Castle development, due to take place in May 2006, will be carried forward to 2006/07. The Castle project itself is forecast to overspend by £0.075m in 2005/06. This will be offset in 2006/07 using allocated budget and a contribution from the Oxfordshire Preservation Trust. The final revenue position for the project is likely to be a small overspend. However, there is a budget of £0.150m in the capital programme which is unlikely to be required and it is proposed to manage any residual overspend using a revenue/capital switch.
53. The final payments against the budget for the May 2005 Council elections have now been made. There is an underspend on this budget of £0.048m, which will be returned to council balances.
54. The Medium Term Financial Plan approved by Council on 14 February included £0.029m to fund the costs of a second Unison Assistant Branch Secretary. The Council is seeking Unison support for the change agenda and their ability to deliver this support will be severely compromised without the additional post. The Assistant Branch Secretary has been in post throughout this year and the Unison team is working closely with Corporate HR on the delivery of the change agenda. The Cabinet is recommended to approve a supplementary estimate of £0.028m to provide funding for the post in 2005/06.

External Cash Fund Management

55. As reported at the Cabinet meeting on 7 February 2006, the Council has appointed Scottish Widows Investment Partnership (SWIP) and Investec Asset Management as External Fund Managers.

Benchmarks

56. Benchmarks have now been agreed with each individual manager. SWIP have been given a target of UK Base Rate plus 1% (net of fees). This benchmark requires the maximum average duration of the fund to be 5 years instead of 3 years as stated in the Treasury Management Strategy for 2006/07. Investec Asset Management has been given a composite benchmark of 70% 3 month LIBID (cash) and 30% ML 0-5 year gilts. The average duration of this fund will be 3 years. Cabinet is recommended to request Council to approve that the maximum average duration of the fund invested with SWIP should be 5 years instead of 3 years.

Specified Investment Instruments

57. The Fund Managers have requested permission to invest in Bond Funds and Short Term Funds. These are specified investment instruments and operate in a very similar way to Money Market Funds. They work by pooling together the investments from a range of participating organisations. Bringing together a large number of smaller investments enables the bulk buying of assets, which typically achieves higher returns. These funds can invest in instruments that are not permitted on a segregated basis. Permitted assets include Certificates of Deposit (CDs), Commercial Paper (CP) and Floating Rate Notes (FRNs). Cabinet is recommended to request Council approval for Bond Funds and Short Term Funds to be added to the list of approved investment instruments.

Lending List Limits

58. The Fund Managers will use the Council’s approved lending list for investments. The Cabinet is recommended to request Council to approve that the Fund Managers be given separate lending list limits from the limits used in-house. These limits will be in addition to the in-house limits. The current lending list limits used in-house and the proposed limits for the External Fund Managers are shown at Annex 7.

Other Institutions Included on the Council’s Lending List

59. In addition to highly credit rated banks and building societies the authority also invests in AAA rated Money Market funds. Cabinet is recommended to request Council to approve that 100% of the externally invested fund can be placed in Money Market funds, AAA rated Bond Funds and AAA rated Short Term Funds.

Efficiency Savings

60. It was previously reported that a risk remained that the Learning Disability Service and the corporate HR function will fail to meet their budgeted efficiency savings. The forecast this month suggests that Learning Disabilities will meet its target, although some of the savings for HR are not expected to be achieved. The position continues to be monitored closely.

BVPI8

61. BVPI8 measures the percentage of undisputed invoices paid within 30 days of receipt. Performance against this target contributes to the Council’s Comprehensive Performance Assessment. The target for 2005/06 is 95% and performance for the year to date is as follows:

	%
Learning & Culture	92.9
Social & Health Care	91.3
Environment & Economy	98.1
Community Safety	95.2
Resources	87.2
Chief Executive’s Office	97.2
	91.0

62. Adult Learning and County Facilities Management continue to be key areas of concern for Learning & Culture, with the percentage of invoices paid within 30 days remaining below 90%. The Youth Service and the Music Service have both improved since the last report, with performance at just over 90%, although this is still short of the Council’s target of 95%.
63. Social & Health Care are reviewing procedures around the payment of invoices to ensure that performance improves. It is intended to implement a system for central receipt of invoices over the next 6-9 months which should result in a significant improvement.
64. The performance of the Resources Directorate has deteriorated further since the previous report. The performance of Mouchel Parkman, the Council’s property consultants, continues to be poor as a result of staffing problems. Concerns have been raised with Mouchel Parkman and the company is taking action to improve performance. Performance in some other areas of the Directorate remains unacceptable and action is being taken to improve these areas.

Consolidated Revenue Balances

65. The forecast position for general balances has decreased by £0.022m. This is the result of an increase of £0.090m in the forecast overspend on the Firefighters’ Pension budget, offset by a reduction of £0.020m in the Retained Firefighters’ overspend and the £0.048m underspend on the budget for the May 2005 Council elections. The forecast position for consolidated revenue balances is shown below:

	£m
Revenue balances per last report	12.812
Increase in Firefighters’ Pension overspend	-0.090
Decrease in Retained Firefighters overspend	0.020
Council Elections underspend	0.048
	12.790
Directorate Carry Forward as per Annex 1	0.055
	12.845

66. The Cabinet is requested to approve a supplementary estimate of £0.028m to fund the costs of a second Unison Assistant Branch Secretary. If this is approved it will reduce the forecast position for general balances to £12.762m and the consolidated position to £12.817m.
67. The £2m surplus interest on cash balances which is expected in 2005/06 will not need to be returned to the capital programme, this amount will remain in balances as set out in the budget approved by Council on 14 February. It is currently estimated that £0.052m of the £0.724m of 2004/05 carry forward that was returned to balances by Environment & Economy to be held against a risk assessed schedule of future commitments may be required in 2005/06. This position remains around £3m higher than the budgeted position at the year end. The target for balances for 2006/07 to 2010/11 has been reviewed as part of the budget process and the revised target was set out in the supplementary report considered by Council on 14 February.

Part 2 – Capital

68. The capital monitoring for January is attached in annexes 8 to 8g. There is an overall increase of payments in 2005/06 of £0.940m which is a reduction of £0.053 compared to £0.993m as reported to Cabinet on 21 February 2006. Over the period of the programme the increase in payments is £6.488m compared to £5.034m reported in February 2006. The position is analysed below:

		Dec 05		Jan 06		Change
		2005/06	After	2005/06	After	2005/06	After
			2005/06		2005/06		2005/06
		£m	£m	£m	£m	£m	£m
Learning & Culture
	Main Programme	1.339	4.575	0.669	5.711	-0.670	1.136
	City Schools	-	-	-	-	-	-
	Culture	-	-	-	-0.050	-	-0.050
Social & Health Care		-0.036	-0.125	0.670	-0.122	0.706	0.003
Environment & Economy		-0.110	0.584	-0.475	0.949	-0.365	0.365
Community Safety		-	-	-	-	-	-
Resources		-0.200	-	0.076	-	0.276	-
		0.993	5.034	0.940	6.488	-0.053	1.454

69. The variations are explained below:

Learning & Culture (Main Programme) – Annex 8a

70. The reduction of payments in 2005/06 reflects slippage of £0.530m in the Foundation Stage Investment Fund schemes, slippage due to delays in the Warriner scheme of £0.400m and increased costs for the Nettlebed scheme of £0.260m due to additional works required for compliance with regulations. The net result is a reduction of £0.670m since the last report.
71. The overall increase in payments after 2005/06 is mainly due to the Burford Community College – Phase 2 scheme, the net effect of the above three schemes and additional fees for these schemes.

Learning & Culture (Culture) – Annex 8c

72. The reduction of payments after 2005/06 is due to £0.050m reduction in the Libraries and Museums minor works.

Social & Health Care – Annex 8d

73. The increase of payments in 2005/06 reflects the HOPs stage 2 scheme land purchase for a new build of £0.725m, reduction of £0.050m costs for the Wallingford Day Centre scheme and additional minor works costs of £0.028m. Projected expenditure for the Redlands scheme is £0.003m more than the last report. The net result is an increase of £0.706m since the last report.
74. The overall increase in payments after 2005/06 is due to the increased costs for the Redlands scheme of £0.003m.

Environment & Economy – Annex 8e

75. There is an overall decrease of £0.365m in payments for 2005/06 since the last report. This is due to changes in various schemes detailed in Annex 8e. The overall increase in payments after 2005/06 is £0.365m.

Resources – Annex 8g

76. The increase of payments in 2005/06 is due to the purchase of ambulance stations for £0.276m.

RECOMMENDATIONS

77. The Cabinet is RECOMMENDED to:

1. note the report;
2. approve the proposed rephasing of the repayment of the 2003/04 overspend on Statementing and Fees to Independent Schools;
3. approve the virement of £0.184m from the budget for Out of County Fees and £0.197m from the Statementing budget to offset the overspend on Home to School Transport;
4. approve the virement of £0.289m from the budget for Early Education Funding for 3 & 4 Year Olds to Adult Learning;
5. request the Head of Early Years & Family Support to bring forward an updated action plan on how the pressures on the Placement Strategy will be managed in 2006/07;
6. approve a supplementary estimate of £0.028m to fund the costs of a second Unison Assistant Branch Secretary;
7. request Council to approve the following modifications to the approved Treasury Management Strategy:

1. that the maximum average duration of the fund invested with SWIP should be 5 years instead of 3 years;
2. that Bond Funds and Short Term Funds be added to the list of approved investment instruments;
3. that the external fund managers be given separate lending limits in addition to the in-house limits, as shown at Annex 7;
4. that 100% of the externally invested fund can be placed in Money Market funds, AAA rated Bond Funds and AAA rated Short Term Funds;

8. approve the adjustments to the capital programme as shown at paragraph 68.

SUE SCANE
Head of Finance & Procurement

Background Papers: Detailed Directorate reports and annexes deposited in the Members’ Resource Centre.

Contact Officers:
Part 1 Sadie Slater, Financial Manager (Budget Monitoring) Tel 01865 815989
Part 2 Mike Petty, Strategic Financial Manager (Capital & Treasury)

Tel 01865 815622

March 2006

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