ITEM CA5
CABINET – 18 DECEMBER 2007
FINANCIAL MONITORING
Report by the Assistant Chief Executive & Chief Finance Officer
Introduction
1. This report sets out the Council’s forecast financial position for the 2007/08 financial year based on actuals to the end of October 2007. It includes projections for revenue, balances, reserves and capital. The report sets out explanations where the forecast outturn is significantly different from the budget and also when compared to the position at the end of September with action plans to recover the position where appropriate.
2. The in-year overspend for Directorates is forecast to be £1.651m, as set out in the table below, which is a marginal change from the position reported last month of £1.655m. The in-year forecast excludes the variances on the City Schools Reorganisation, Dedicated School Grant (DSG) funded services and the Transport Days variation.
3. Taking into account the supplementary estimates of £1.033m in relation to the July floods (see paragraph 8) and the virement of £0.400m to Agency Placements from Unallocated DSG (see paragraph 13), the forecast in-year overspend becomes £0.218m, which is 0.07% of the total Directorates’ budget.
4. The year-end forecast of general balances is set out in Annex 5. After taking into account known changes, the forecast is £20.151m. Taking into account the forecast Directorate outturn, the consolidated revenue balances forecast is £18.820m. [2]
5. Figures for each Directorate are summarised within the Annexes and individual Directorate reports setting out the detail have been placed in the Members’ Resource Centre.
6. The following Annexes are attached:
Annex 1 (a-e) Forecast Outturn by Directorate Annex 2 (a-c) Virements and Supplementary Estimates Annex 3 Specific grants monitoring Annex 4 Forecast earmarked reserves Annex 5 Forecast general balances (Annexes 1 - 5 - download as .xls file) Annex 6 Activity and Unit Cost monitoring (download as .xls file) Annex 7 (a-g) Capital monitoring (download as .xls file) Annex 8 Allocation of Local Authority Business Growth Initiative grant (download as .xls file)
Part 1 - Revenue
7. Annex 1 shows the forecast revenue outturn by Directorate based on the position to the end of October 2007. Significant issues or movement in the variances are commented on below and the management action being taken.
Floods
8. Supplementary estimates totalling £0.981m relating to expenditure incurred as a result of the July floods were approved by Cabinet on 20 November 2007. Further supplementary estimates totalling £0.052m are being requested in this report and are explained in the following sections for each of the Directorates.
9. A summary of supplementary estimates for flood related expenditure as at 31 October 2007 is set out in the table below. There are likely to be further requests in future reports.
Children Young People & Families: £1.340m in-year overspend (£1.833m total overspend)
10. The overall Directorate position is a forecast overspend of £1.833m, as per Annex 1a. This includes the cost of the City Schools Reorganisation (£1.957m) where the repayment is planned over a number of years, the Transport Days variation (-£0.320m) and an underspend on DSG funded services (-£1.144m), which will be required to be carried forward as an underspend on DSG. This leaves a Directorate in-year overspend of £1.340m. The Directorate is currently investigating other areas of applicable DSG expenditure that offset this sum.
11. The projected overspend has increased by £0.115m since the last report. This relates to an increase of £0.100m in the pressure on the Agency Placements budget and a pressure of £0.015m relating to the Commissioning and Partnerships budget for a purchase order specialist post.
12. The projected overspend on Agency Placements has increased by £0.100m to £0.600m. This is represented by an increase in known commitments and an increase in the projected expenditure for the remainder of the year. As previously reported, there has been a significant and unusual increase in the number of placements needed for infants and mothers with babies. As a consequence, there has been a rise in the number of placements made in the independent sector as Oxfordshire does not have sufficient local carers to meet the current demands. The increase in the projected expenditure for the remainder of the year relates to specific family cases and carer availability for high cost cases.
13. A permanent virement is requested in this report for £0.400m (expenditure and income) to be transferred into the Agency Placements budget from unallocated DSG (see paragraph 16). Increasing both the expenditure and income budgets allows the service to address ongoing pressures in relation to education and transport costs within this budget. This would reduce the projected overspend to £0.200m. However, due to the volatile nature of this service, the projected spend could increase.
14. As previously reported there is significant risk on the Asylum Seekers budget relating to current and previous years’ grant claims and to the results of the Home Office data matching policy. The position with regard to previous years claims is now close to being resolved. Oxfordshire’s claim was submitted at the end of July 2007 with the outcome now expected in December 2007.
Dedicated Schools Grant
15. There is no change to the underspend reported last month of £1.144m predicted on Out of County Placements. The Directorate is in the process of investigating other areas of applicable DSG expenditure that offset this sum. Any balance remaining will be required to be carried forward as an underspend on DSG.
16. Permanent virements are proposed in annex 2a for the use of the DSG Unallocated budget within Early Years and Family Support. This proposal is intended to support the ongoing resource reprioritisation, to break the cycle of deprivation through early intervention strategies and to address ongoing pressure within the placements budget. It is therefore proposed, subject to council approval, to vire £0.400m to Family Support & Assessment to increase the establishment of social workers and £0.400m to Agency Placements to address the ongoing pressures in relation to education and transport costs within this budget (see paragraph 13).
Social & Community Services: £0.058m overspend
17. The position for the Social and Community Services Directorate is a forecast revenue overspend of £0.058m, an overall decrease of £0.191m since the September report. There have been improvements in the forecasts for external home support (-£0.195m) and in the income forecast for residential and nursing placements for Older People (-£0.173m). These improvements are partially offset by a reduction in the forecast income for Older People Fairer Charging (£0.117m) and an increase in the variance within Business Support (£0.113m), together with other more minor changes.
18. External Home Support is now forecast to overspend by £0.275m. The projection has improved by £0.195m since last month due to a more accurate forward forecast and continued efforts to reduce the average hourly cost of purchased care. Some volatility of the forecast is inevitable due to the size of this budget and the many variables that influence expenditure. It should be noted that £0.179m of this overspend relates to expenditure on care and support costs (including housing) for failed asylum seekers. Provision of this service is a statutory duty.
19. The previously approved virement to increase the income target for residential and nursing placements and decrease the income target for Fairer Charging by £0.500m has now been actioned. There has been a further increase in the forecast income for residential and nursing placements for Older People of £0.173m, mainly due to an increase in the number of full fee payers. The forecast overachievement of residential and nursing placement income now stands at £0.490m after taking account of the £0.500m virement. There has also been a further reduction in the forecast income for Older People Fairer Charging of £0.117m.
20. The forecast overspend in Business Support has increased by £0.113m to £0.251m. This increase is mainly associated with retaining the Specialist order-processing team for longer than anticipated and pressures within the budget for legal fees. When the previously agreed supplementary estimate of £0.101m in relation to the July floods is taken into account the overspend becomes £0.150m.
21. Adult Learning continues to report a balanced year-end position, although a pressure of £0.380m has been identified. Management actions and as a last resort, use of the Adult Learning reserve, should address this pressure by the year-end and any implications for next year’s budget. Pooled Budget Memorandum Accounts
22. The Older People and Physical Disabilities Pooled budget is projecting an overall underspend of £0.508m compared to £0.383m last month. This figure is made up of some significant variations between partners. The County Council elements of the pooled budget are projected to underspend by £1.390m (compared to £1.276m in September) and the Primary Care Trust (PCT) elements are expecting an overspend of £0.883m (compared to £0.892m in September). The current level of underspend in the County Council elements of the pool are mainly as a result of better than expected negotiations with block providers, shorter average length of stay and savings as a result of the new single Registered Nursing Care Contribution rate. Residential placements continue to be made at a similar rate to last year.
23. The £0.114m reduction in the County Council forecast expenditure this month is mainly due to savings within the contracts for block purchased beds. As previously reported, any overall underspend on this pooled budget will be re-invested in improved services. It is not expected that the Council will need to call on the Emergency Fund Reserve to contribute towards the PCT overspend.
24. The Learning Disabilities Pool is predicting an overspend of £0.875m, compared to £0.678m in September. The increase in projected spend relates to additional placements agreed by Panel. If the forecast does not improve corrective action will be taken, where possible, during the year to reduce the net spend. If this fails the overspend will be carried forward, to be addressed by the pool in the coming year(s). If the Joint Management Group decides that the overspend cannot be reasonably be dealt with by the pool either in the current or future years, a request for further funding from both partners would be made.
Environment & Economy: £0.179m underspend
25. The Directorate is forecasting an underspend of £0.179m, a decrease of £0.059m since September. The main movements are within Waste Management.
26. There has been a net decrease in the forecast underspend for Waste Management of £0.066m. There is a reduction in the forecast overspend for waste disposal of approximately £0.209m due to a reduction in the estimated tonnages for the year of approximately 6,000 tonnes. Although the forecast has reduced, this still represents an increase in tonnages compared to the budget and an estimated overspend of £0.231m remains. Overall, the increase in tonnages compared to the budget is averaging at 4%, with landfill and recycling growth at 3% and 5% respectively. It is anticipated that the tonnages and cost may reduce further as more activity data is received.
27. The reduction in the waste disposal overspend is offset by a revised forecast in potential penalties currently being negotiated, relating to minimum tonnage targets not being met at one of the landfill sites.
28. The forecast position for the Directorate includes £0.480m of flood related expenditure for which a supplementary estimate has now been approved. As a result, actions are now in place to increase expenditure of road maintenance.
29. Within Property Services, flood damage costs for staff housing are now estimated at £0.007m and a supplementary estimate is requested in this report.
Community Safety: £0.287m overspend
30. The Community Safety Directorate is forecasting an over spend of £0.287m, which is an increase of £0.045m since September. This is due to further expenditure incurred by the Fire & Rescue Service during October relating to the July floods. A supplementary estimate for this amount is requested in this report.
31. After taking into account the previously agreed supplementary estimate of £0.400m in relation to the July floods the overall Directorate forecast becomes a £0.113m underspend.
Corporate Core: £0.145m overspend
32. The overall position for the Corporate Core is a forecast overspend of £0.145m, a reduction of £0.032m since September.
33. Corporate Performance is now forecasting an underspend of £0.075m, mainly within the Scrutiny budget. It is proposed that this is carried forward to meet pressures in this budget next year.
34. The operating loss forecast for the Print & Design Unit has increased by £0.030m to £0.100m. As previously reported, the unit is operating in a very competitive and volatile market and it is difficult to forecast a final position for the year with any degree of certainty. It is possible that the forecast deficit may increase further. There are various options currently under review for addressing this budget pressure, all of which have cost implications.
35. There are some pressures on staffing budgets in ICT. However, negotiations are nearing completion with the contractor that provides SAP support and this should result in a significant repayment to the Council this year and a reduction in contract payments over the next four years. This should enable ICT to balance its budget this year and meet its savings target for at least two more years.
Virements and Supplementary Estimates
36. The virements requested this month are detailed in Annex 2a, virements previously approved in Annex 2b and Supplementary Estimates in Annex 2c. The total supplementary estimates requested this month total £0.052m.
Specific Grants Monitoring
37. Annex 3 details the movement on specific grants.
Activity and Unit Cost Monitoring
38. Annex 6 sets out a comparison of activity levels and unit costs between those budgeted for the year and a forecast of the outturn for the year. The figures shown are based on the information currently available for the actual activity levels for the first six months of the year.
Strategic Measures
39. Additional interest earned this year on the Council’s money market investments of £2.500m has been added into general balances in previous months, as shown in Annex 5. This figure could rise further by the end of year due to recent volatility in bank lending rates and uncertainty around the Baxter Index (inflation applied to Infrastructure), which is currently lower than budgeted. This index is influenced by oil prices, which have risen considerably this year and may therefore push the Baxter Index up later in the financial year. It is not possible to forecast this accurately but it is important to flag up this uncertainty.
Part – 2 Balance Sheet
Reserves
40. Annex 4 details the forecast movement on earmarked reserves.
Balances
41. Annex 5 sets out the year-end forecast of general balances taking into account known changes. Forecast balances are £20.151m as at the end of October, a movement of £0.052m since the last report. This is due to further supplementary estimates requested for flood related expenditure.
42. As referred to in the previous report, an additional Local Authority Business Growth Incentive (LABGI) grant allocation relating to 2005/06 and 2006/07 totalling £0.340m was received in September 2007. Council have approved that a fund of £0.100m be established to assist in welcoming and supporting returning military personnel to Oxfordshire. Proposals for the allocation of the remaining £0.240m funding are attached at Annex 7.
Creditors
43. BVPI8 measures the percentage of undisputed invoices paid within 30 days of receipt for which the Council’s target for 2007/08 is 95%. The performance for the year to the end of October for the Council overall was 88.8%, 6.2% below the target. Although performance continues to be disappointing, October has seen the figures rise across most of the Council, with the overall performance for the month at 88.5% just below the average for the year. Performance is expected to improve further as the new processes around the new e-procurement module and single Shared Service Accounts Payable team are refined.
Part – 3 Capital
44. As at the end of October 2007 the variation to the last capital programme update is an anticipated -£4.613m variation in 2007/08, a change of -£3.116m since the last report. The detailed position is shown in Annexes 7a – 7g.
45. The increase in the total cost of schemes included in the capital programme is £0.906m of which £0.065m is the change since the last report.
46. The changes compared to the last monthly monitoring are shown in the table below:
Directorate: Children, Young People & Families
Main Programme
47. There is a reduction in payments in 2007/08 of £0.424m. This is mainly due to the changes in spending profile of some of the schemes. This includes Stanbridge Hall -£0.894m, where there is a delay due to an environmental assessment report. There are revised building programmes at Didcot, St Birinus Science Block -£0.417m and Lenthall House, Burford School -£0.275m. These are partly offset by schemes coming into the main capital programme from the forward plan.
48. There is an increase in payments for the overall schemes of £2.779m. This is mainly due to the above-mentioned schemes transferring to the main capital programme from the forward plan.
Forward Plan
49. There is a reduction in payments in 2007/08 of £2.022m.
50. The main changes are the transfer of schemes to the main programme: · provision of halls at Baldon £0.300m · provision of halls at Marsh Baldon £0.377m · modernisation of Hardwick Primary School £0.370m · science facilities at Gosford Hill £0.300m
51. In addition to this there is a change in the spend profile of £0.475m in the Opportunity Funding schemes, where costs were budgeted in 2007/08 but are now estimated in future years.
52. There is a reduction in payments for the overall schemes of £2.716m, mainly due to the costs of schemes transferring to the main capital programme: · provision of halls at Baldon £0.591m · provision of halls at Marsh Baldon £0.377m · modernisation of Hardwick Primary School £0.870m · science facilities at Gosford Hill £0.520m
Directorate: Social & Community Services
53. There is a delay in the Library Improvement Programme where a budget of £0.205m was estimated in 2007/08 but has now been slipped to 2008/09.
Directorate: Environment & Economy
54. There is a variation of £0.466m in 2007/08 and £0.001m in the overall payments of the Environment & Economy programme. The variation is mainly due to slippage on schemes, the largest of which is £0.399m on the Local Authority Trading Scheme Waste Initiative scheme.
RECOMMENDATIONS
55. The Cabinet is RECOMMENDED to:
(a) note the report;
(b) approve the virements as set out in Annex 2a;
(c) recommend Council to approve the permanent virement of £0.800m from the DSG unallocated budget as set out in paragraph 16;
(d) approve the supplementary estimates totalling £0.052m as set out in Annex 2c;
(e) approve the changes to the capital programme as set out in paragraphs 44 to 54; and,
(f) recommend Council to approve the allocation of the LABGI grant as set out in Annex 8.
SUE SCANEAssistant Chief Executive & Chief Finance Officer
Background papers: Directorate reports
Contact Officers: Lorna Baxter (Parts 1&2) 01865 816087 Mike Petty (Part 3) 01865 815622
December 2007
[1] 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. [2] The consolidated revenue balances forecast is the forecast general balances less the forecast Directorate in-year overspend plus the Transport Days variation. |
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