ITEM CA5
CABINET – 18 SEPTEMBER 2007
FINANCIAL MONITORING
Report by Head of Finance & Procurement
Introduction
1. The report covers the period up to the end of July 2007 for both revenue and capital. Changes to the forecast outturn are reported against the position at the end of May, as previously reported to the Cabinet and significant variations highlighted.
2. The Directorate in-year overspend for 2007/08 is predicted to be £1.672 which, when the City Schools reorganisation overspend of £1.957m (repayment planned over a number of years) and the Schools Transport days variation of £0.494m (paragraph 7) is included, produces the overall overspend of £4.123 as detailed below.
* The variance has been calculated as the difference between the latest budget and forecast outturn. The percentage is a measure of variance to latest budget.
3. The year-end forecast position of General balances at the end of July as updated in Annex 5 is £22.499m. Allowing for a further allocation of £1.323m of Performance Reward Grant (approved by Council on 13 February 2007 and not yet incorporated onto SAP) together with the supplementary estimate of £0.159m requested in this report (paragraph 23) implies a revised year-end forecast for General Balances of £21.017m. This, when taken with the forecast Directorate in-year overspend of £1.672 m and the Transport days 2007/08 variation of £0.494m, gives a consolidated balances forecast for the year-end of £18.850m.
4. Members will note that the impact of the recent flooding has yet to be reflected in Directorate expenditure forecasts and an assessment of the budgetary implications for the Council is set out in a separate report elsewhere on this agenda. Once the figures have been finalised, they will be incorporated into future monitoring reports.
5. The detail for each Directorate is summarised within the Annexes and a detailed commentary is contained in the individual reports for each Directorate that are placed in the Members’ Resource Centre.
6. The following Annexes are attached:
Annex 1 Estimated year-end position Directorate summary Annex1a-1e “ “ “ by Directorate Annex 2a Virements requested this month Annex 2b Summary of virements Annex 2c Summary of Supplementary Estimates Annex 3 Specific grants monitoring Annex 4 Earmarked reserves Annex 5 Forecast general balances Annex 6 Efficiency Savings Annex 7 Capital monitoring
(CA5 - Annexes 1-6 - download as .xls file)
(CA5 - Annex 7 - download as .xls file)
Part 1 - Revenue
7. Annex 1 shows the forecast revenue outturn position for the year-end based on the position to the end of July 2007. Any significant movement in the variances identified are commented on by Directorate.
Directorate: Children Young People & Families (total overspend £3.728m – of which £1.277m in-year overspend)
8. The Directorate is forecasting an overspend of £3.728m. Of this, £1.957m relates to the City Schools reorganisation and £0.494m to a variation in Transport days; both to be recovered in future years. The balance of £1.277m relates to the current financial year. This overspend relates to the Early Years and Family Support service, the main budgets where significant overspends are projected being Agency Placements £0.150m, Asylum Seekers £0.652m, Legal Services £0.250m and Children’s Homes £0.145m.
9. The volatility of the Agency Placements budget makes this a high-risk area. Since the last report (May 2007) the projected overspend has been adjusted from £302k to £150k to reflect the supplementary estimate of £152k agreed by Cabinet in June to clear the balance of the overspend brought forward. Management action relating to the introduction of the new placement duty and support service is expected to impact positively on the pressures in the budget. The detailed review is continuing and an update will be given in future reports.
10. Within the Asylum Seekers service – where the projection reflects the overspend brought forward from 2006/07 - rigorous monitoring is in place and work is underway to reconfigure the service based on a structure that can more closely be sustained by the likely grant levels. Significant risk remains in relation to current and previous years’ grant claims in relation to the Main Home Office grant linked to the data matching policy. Considerable progress has been made in resolving this and a final position is expected in the next report.
11. With the exception of the variation in transport days of £0.494m, within the remainder of the Transport budget early indications are that the budget will not be overspent. However, this is an area of financial risk resulting from uncertainties about the variability in transport inflation, the outcome of the rolling programme of retendering and new legislation. The forecast variation in transport days overspend has reduced from £0.588m at the end of May, as actual route information costs rather than budgeted projections are now incorporated. This figure will be updated further when patterns of provision change at the start of the school year.
Directorate: Social & Community Services (£0.331m overspend)
12. The Directorate is forecasting an overspend of £0.331m, an improvement of £0.132m on the last reported position (as at the end of May). This reflects a £0.393m improvement in the forecast for External Home Support, which has been partially offset by a £0.131m increase in the forecast shortfall of Fairer Charging income and a £0.126m decrease in the forecast overachievement of client income for residential care service. There is no change to the overspend of £0.244m forecast for Cultural Services which incorporates the £0.255m audio-visual stock write off overspend brought forward from 2006/07.
13. Overall Social Care Services for Adults are showing a position which at this stage in the year is very close to break-even (£0.141m overspend). However, in order to maintain this position, work is continuing on implementing a challenging programme of efficiency savings.
14. The action plans referred to in last month’s report are now in place within both External Home Support and the internal Learning Disabilities service. Within External Home Support, while savings in the price of care have been achieved, a breakeven position could not be delivered without a service reduction; consequently an overspend of £0.326m is forecast which reflects services continuing at their current level. This compares to the £0.719m overspend forecast at the end of May and is nearly matched by net underspends elsewhere within Social Care for Adults.
15. The forecast underachievement on the Older People’s Fairer Charging income budget has increased by £0.131m to £0.500m. This change in forecast may reflect the underlying natural volatility in client numbers and associated income; there could also be an indication of an emerging trend towards a lower number of clients in home support but with higher cost packages. There is also a reduction of £0.126m - to £0.563m - in the underspend relating to additional residential and nursing income forecast on the budget funding the contribution to the Older People’s pooled budget. Overall client income budgets are on target and some realignment between Fairer Charging and residential care income budgets will be proposed in the September monitoring report.
16. Planning and Partnerships position has improved because income of £136k, which was uncertain at the time of the last report, has now been received from the PCT in respect of External Day Care services.
17. Pressures of over £300k have been identified within Business Support, however it has been assumed that action plans will deliver the necessary offsetting savings to achieve a break-even position. The action plans will be finalised and reported next month. Pooled Budget Memorandum Accounts
18. The combined Council and PCT variance forecast for the Older People’s, Physical Disabilities and Equipment pooled budget is an underspend of £0.424m. The underspend on the Council’s element of the Older People’s pooled budget has increased to £1.203m, due to a revised forecasting of the rates at which vacancies are arising. The change from the position detailed in the May report also takes into account an additional £0.420m forecast of expenditure arising from the decision by the pooled budget’s Joint Management group for one extra residential/nursing placement for older people to be purchased each week for the remainder of the financial year. There has been a decrease in the forecast overspend (now £0.228m) for the Council’s element of the Physical Disabilities pooled budget, which is mainly due to the continuing pressure of existing care packages.
19. There has been an improvement in the forecast overspend of £0.093m to £0.359m on the Learning Disabilities pooled budget. This represents ongoing efforts to contain expenditure where reasonably possible and to achieve a break-even position by year end. The forecast includes the anticipated achievement of £1.5m efficiency savings. Slippage on the achievement of supported accommodation savings (£0.5m) has been offset by overachievement of Independent Living Fund income where 100% of claims submitted have been successful.
20. Lead responsibility for the Mental Health (staffing) pooled budget rests with the Oxfordshire and Buckinghamshire Mental Health Trust and the Mental Health (SLA) pooled budget with the PCT. There is no significant variance to report based on the latest position available at the end of June for either pooled budget.
Directorate: Environment & Economy (£0.089m overspend)
21. The Directorate is forecasting an overspend of £0.089m, which is a £0.329m increase compared to the position set out in the May report. This relates primarily to Sustainable Development with a net increase of £0.142m in Waste Management and an increase of £0.159m for Flood Defence Levies.
22. Waste Management now have 3 months of confirmed tonnage information which support a prediction that shows a 3% increase, approximately 10,500 tonnes, in waste arising compared to the budget provision costing £0.440m. This is offset by funding of £0.148m received from the DTI for the cost of Waste Electrical Electronic Equipment (WEEE) in the first quarter of the financial year. In addition, there is an underspend of £0.200m relating to slippage of waste treatment procurement costs which will be required to support the project in 2008/09. This has arisen because the budget was initially profiled evenly over the three year expected life of the project and it is now anticipated that a higher proportion of the costs will occur towards the end of the project.
23. Formal notification of the 2007/08 Flood Defence Levy was received in mid-February, too late to be incorporated in the 2007/08 budget exercise. The final levy exceeded the budget provision by £159k and, in accordance with the traditional treatment of this item, a supplementary estimate is requested to fund this extra cost.
24. As highlighted in the May report, the 2007/08 budget within Property Services for the Salix project includes £0.200m of matched funding that will be needed to meet the costs of this project in 2008/09 and 2009/10 and which will, accordingly, be carried forward.
Directorate: Community Safety (£0.225m underspend)
25. There is an underspend of £0.050m on the Fire Control Project budget relating to a 2004/05 policy and budget plan approval for the appointment of a Radio Replacement Scheme Manager. As the appointment was deferred to 2005/06 the £0.050m will need to be carried forward to 2008/09 to fund the four-year commitment.
26. A fire-fighter who transferred from another authority in 2001 has elected to transfer pensionable service. Under the new financial arrangements for fire-fighter pensions this transfer of £0.167m will be paid into balances.
27. The financial impact on the Community Safety budget of the July floods is referred to in the report on the floods elsewhere on this agenda.
Directorate: Corporate Core (£0.200m overspend)
28. The overall Corporate Core position is a forecast overspend of £0.200m, £0.050m of which relates to the overspend reported previously for the Coroner’s Service, largely due to additional military inquest costs not funded by the Government. In previous years, any overspend against this budget has been a call on balances.
29. An overspend of £0.100m is now forecast in Print and Design pending the completion of an action plan. A review is being undertaken to address the situation, because the service is not currently competitive when compared with the private sector. Also, an overspend of £0.050m is now forecast in Communications and Marketing due to the increasing production and distribution costs of the Council’s magazine. There are budget pressures within other services but it is expected that these can be managed, to avoid any overspending.
30. Savings of £0.264m are projected for the Shared Services Centre, reflecting the move of services to the end of June. Investment in the project will total £6.05m in accordance with the business case with estimated spend this year of £4.453m.
Virements Requested
31. The virements requested this month are detailed in Annex 2a.
Bad Debt Write Off
32. In accordance with procedures, the Cabinet receives notification of the total value of SAP debts written off each quarter. For the quarter ended 30 June 2007, £0.011m has been written off relating to 40 accounts, 17 of which were for £5 each on a schools ‘tidy up’ exercise. The highest was £0.004m going back to 1994/95 and is now time barred from further proceedings.
33. It is also recommended that Cabinet approve the write off of 4 debts totalling £0.081m that have arisen in the Social & Community Services Directorate as detailed below:
Client A (Residential): £10,084.29 Client B (Residential): £12,764.19 Client C (Residential): £41,601.74 Client D (Domiciliary): £16,297.97
34. Advice from Legal Services is that, for a variety of reasons, the debts are unrecoverable and are recommended for write off.
Specific Grants Monitoring
35. Annex 3 details the movement on specific grants. Within the Children, Young People & Families Directorate, notification of a £0.113m decrease in the Dedicated Schools Grant (DSG) has been received. There has also been a net adjustment of £0.354m reported for the Standards Fund Grant because a decrease of £0.902m is offset by additional Standards Fund grant for new initiatives of £1.262m. There is also a reduction of £0.285m in the Asylum Seekers grant due to a lower number of under 18 year olds than the previous year. The increase of £0.201m in the Leaving Care Unaccompanied Asylum Seekers grant is due to higher numbers of over 18 year olds than in the previous year. There are various other minor changes reported within other Directorates. Efficiency Savings
36. Annex 6 summarises, by Directorate the 2007/08 budget efficiency savings for each service area and compares this to the forecast outturn at the end of June identifying any risks in their achievement.
Strategic Measures
37. The Council has taken £12m of 2007/08 borrowing requirement from the Public Works Loan Board in August. The loans were for £6m each, one at 4.55% and one at 4.45%. This compares with the budget provision of 4.6%. This produces savings of £12k in a full year.
38. A loan for £4m was restructured in August with full year savings of £6k. Loans totalling £8m have been restructured to date with full year savings of £13k.
39. The latest forecast position on Strategic Measures is a surplus of £2.5m for 2007/08. This compares with a forecast surplus of £1m previously reported. The additional £1.5m will be added to balances.
40. The surplus of £2.5m reflects a number of factors including increases in the Bank Rate from a budgeted 5% to 5.75% generating £0.7m, higher capital balances generating £0.8m, higher general balances generating £0.7m and lower interest payments on developer contributions due to lower than budgeted interest linked to the Baxter Index of £0.2m.
41. The level of the Baxter Index is subject to a degree of volatility and payments of interest on developer contributions could increase by £0.5m for a 2% increase in the Baxter Index. This means that the current projection of a £2.5m surplus is not certain to be maintained to the end of the financial year.
Part – 2 Balance Sheet
42. As detailed in Annex 5, the movement reported to General Balances this month relates to the supplementary estimate of £0.152m to Agency Placements, the allocation of the revenue element of the Performance Reward Grant received at the end of the 2006/07 financial year of £1.421m, the allocation of £0.965m of Local Authority Business Growth Incentive Fund and £1.500m additional interest on balances.
43. BVPI8 measures the percentage of undisputed invoices paid within 30 days of receipt. The Council’s target for 2007/08 is for 95% of invoices to be paid within 30 days of receipt and the performance for the year to the end of July for the Council overall was 89.37%. This performance reflects the fact that the Council is in the process of moving towards managing a higher proportion of invoices under the new system of e-procurement. The decrease in the measure from May partly relates to delays as invoices are redirected to Shared Services and partly to reconciliation of receipted goods and invoices on SAP as the system is bedded down.
44. Annex 4 details the movement on Earmarked Reserves. In the Children, Young People & Families Directorate, budget submissions have now been received from all 293 schools. 280 of these (96%) have been verified and indicate a 2007/08 year end balance of £5.111m. However, taking into account past experience of spending patterns, the brought forward revenue reserves (before the school loans adjustment) of some £8.859m from 2006/07 has not yet been reduced.
45. In the Medium Term Financial Plan, pressures of £0.247m relating to the ongoing Fire Control/Fire Link projects were identified and included in the 2007/08 budget. The Department for Communities and Local Government has recently announced that the projects have slipped; consequently this budget will be required in a future year to fund the related expenditure. A transfer of £0.247m to a Fire Control/Fire Project reserve from the 2007/08 budget provision will be made, to be drawn upon by agreement of the Head of Finance & Procurement and Director for Community Safety.
Part – 3 Capital
46. The Capital Monitoring position for July 2007 is shown at Annex 7. In summary there are projected increased payments of £3.035m in 2007/08 and an increase in the overall programme of £13.834m as compared to the May programme reported to Cabinet in July. The funding for these additional payments comes from a number of sources. These include capital receipts, prudential borrowing, capital grant, virements and unallocated capital resources. All the changes in payments are funded within the overall resources available to the programme.
47. These changes are considered in more detail below:
Directorate: Children, Young People & Families
48. On the Main Programme there is a reduction in payments of £1.842m in 2007/08 and an increase in overall programme payments of £0.093m. The reduction in payments in 2007/08 is mainly as a consequence of slippage in payments on Banbury Dashwood Cattlemarket £0.200m, Chinnor St. Andrews £0.540m, Loans to Foster Parents £0.403m, Peers Academy £0.100m and East Oxford Joint Children’s Centre and ACL of £0.602m.
49. The most significant change in the overall programme payments is due to increased costs on the East Oxford Joint Children’s Centre and ACL of £0.090m as a result of delays in the Surestart approval process.
50. There is an increase in payments of £0.063m on the City Schools Programme. This reflects the addition of a scheme for East Oxford School which is fully funded within the resources available to the programme. Directorate: Social & Community Services
51. There is an increase in payments of £1.369m in 2007/08 and an increase in overall programme payments of £3.902m.
52. The increase in payments in 2007/08 is due to a number of factors. These include the addition of projects for Learning Disabilities – Supported Living as approved by Cabinet in July and funded by Prudential Borrowing £0.240m; Older Persons Care Home Improvements £0.525m funded by Government Grant; the increased costs of the Moorview project as agreed by Cabinet in July £1.866m. These costs are offset by slippage on Thame Library £1.012m and the transfer of funding from Learning Disabilities Day Centres to the Moorview project £0.250m.
53. The overall increase in programme payments reflects the increased costs of the Moorview project £2.427m; Older Persons Care Home Improvements £0.525m and the Learning Disabilities Supported Living Project £1.2m, offset by the transfer of funding from Learning Disabilities Day Centres to the Moorview project £0.250m.
Directorate: Environment & Economy
54. There is an increase in payments of £2.425m in 2007/08 and an increase in overall payments of £7.776m.
55. The increase in payments in 2007/08 mainly reflects the inclusion of the Better Offices Project £2.961m offset by a reduction in payments on the Transport capital programme of £0.490m mainly in respect of schemes funded by developer contributions. The provision for the Affordable Housing Loans Scheme £0.196m has been removed as the available funding has been allocated. There is also a £0.150m provision for Oakley Wood which was omitted in error in the July Capital Programme reported to Cabinet.
56. The overall payments increase is mainly reflected by the Better Offices Project of £8.013m: the full costs of the Oakley Wood Project £0.450m offset by reduced payments on the Transport capital programme £0.490m and the deletion of the Affordable Housing Loan Scheme provision of £0.196m.
57. Project Approvals for part of the Better Offices Project were agreed by Cabinet in June. Further schemes will be brought forward as other elements of the project develop. Overall funding for the project was agreed by Cabinet and the revenue costs associated with the project were included in the Medium Term Financial Plan.
Directorate: Community Safety
58. There is an increase in payments of £0.020m in 2007/08 which reflects the bringing forward of costs for the feasibility work on the Wallingford Fire Station project from 2008/09.
Directorate: Corporate Core
59. There are increased payments of £1m in 2007/08 and a further £1m in 2008/09. This reflects the permanent virement agreed by Cabinet to charge £1m of expenditure on ICT hardware and software to the capital programme each year. These increased payments are offset by transferring capital provision for Property Client costs and costs associated with obtaining capital receipts to revenue.
RECOMMENDATION
60. The Cabinet is RECOMMENDED to:
(a) note the report;
(b) approve the virements as set out in Annex 2a (paragraph 31);
(c) approve the £0.159m supplementary estimate to Environment & Economy for the Flood Defence Levy (paragraph 23);
(d) approve the write off of £0.081m bad debt in Social & Community Services (paragraph 33);
(e) approve the changes to the capital programme as set out in paragraphs 46 to 59.
SUE SCANEHead of Finance & Procurement Corporate Core
Background papers: Directorate reports
Contact Officers: Ken Bell (Parts 1&2) 01865 815411 Mike Petty (Part 3) 01865 815622
September 2007
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