ITEM CA5
CABINET – 18 MARCH 2008
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 ten months of actuals to the end of January 2008. 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 December with action plans to recover the position where appropriate.
2. The in-year underspend for Directorates is forecast to be -£1.098m, as set out in the table below, compared to an overspend of £0.545m last month, a change of -£1.643m. 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 estimate of £0.106m for flood related expenditure (see paragraph 39) the forecast in-year underspend becomes -£1.204m, which is -0.4% of the total Directorates’ budgets.
4. The year-end forecast of general balances is set out in Annex 5 and shows a forecast of £21.581m. After taking into account the forecast Directorate outturn, the consolidated revenue balances forecast is £23.105m. [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 (Annexes 1 - 5 - download as .xls file) Annex 2 (a-c) Virements and Supplementary Estimates Annex 3 Specific grants monitoring Annex 4 Forecast earmarked reserves Annex 5 Forecast general balances Annex 6 (a-g) Capital monitoring (download as .xls file) Annex 7 Council Tax Bands 2008/09 (download as .doc file)
Part 1 - Revenue
7. Annex 1 shows the forecast revenue outturn by Directorate based on the position to the end of January 2008. Significant issues or movement in the variances are commented on below and the management action being taken.
Floods
8. A summary of supplementary estimates for flood related expenditure as at 31 January 2008 is set out in the table below. There are likely to be further requests in future reports.
Children Young People & Families: £0.952m in-year Council overspend (£1.345m total overspend)
9. The overall Directorate position is a forecast overspend of £1.345m, as shown in 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 (-£1.244m), which will be required to be carried forward as an underspend on DSG. This leaves a Directorate in-year overspend of £0.952m, which is a decrease of £0.509m since the last report.
10. The main reason for the change is that the virement of £0.400m to Agency Placements from Unallocated DSG (approved by Council on 8 January 2008) has now been actioned.
11. Services to Disabled Children are currently forecasting an underspend of -£0.054m, due to the unexpected termination of an expensive placement. There may be a further reduction in the anticipated spend as negotiations with the Primary Care Trust (PCT) are taking place at present for a contribution towards the cost of a number of placements.
Dedicated Schools Grant
12. The underspend on the DSG has increased by -£0.100m this month to -£1.244m. The additional underspend is also within the Out of County service where savings have been identified as anticipated out of county placements have been accommodated within the county.
13. Proposals for the use of the underspend are currently being examined by the Directorate Leadership Team. It is likely that most of the underspend will be utilised in 2008/09 and will be carried forward as an underspend on DSG.
Social & Community Services: -£0.220m underspend
14. The position for the Social and Community Services Directorate is a forecast revenue underspend of -£0.220m, a decrease of £0.669m since the last report.
15. The overspend in Cultural Services has decreased by £0.077m to £0.041m due to slippage on a number of projects. £0.070m of this amount, in addition to the £0.038m previously identified, will need to be carried forward into the new financial year. After allowing for this, the service is left with the underlying overspend of £0.149m which relates to the balance of the stock write down costs which will be carried forward if it is not addressed in the current year.
16. Last month it was reported that additional external home support activity was planned in order to reduce the number of people waiting for care packages in hospitals. On average three additional care packages are being purchased each week and the reduced variance this month is due to the recognition that most of the costs associated with these additional care packages will fall in the new financial year. As a result, a ringfenced carry forward of £0.180m will be requested to meet these increased commitments in the new financial year. This will be considered as part of the Service & Resource Planning process for 2009/10.
17. The improvement in the Internal Home Support forecast this month (£0.056m) is due to further savings now forecast as a result of the successful implementation of the visit scheduling system.
18. Internal Day Services are forecasting an underspend of -£0.199m, a change of -£0.213m since last month. The variance relates to a revised forecasting assumption on the modernisation of Day Centres. Whereas last month the implicit assumption was that the budget for modernisation of day services would be spent in 2007/08, this is now expected to happen in 2008/09. A £0.199m ring-fenced carry forward will be requested at the year end to meet the cost of the modernised Witney Resource Centre. The revenue funding for the centre was included in the Medium Term Financial Plan (MTFP) for 2007/08, but was omitted in future years in error. This carry forward will ensure sufficient funding for the next two years. The funding for 2010/11 and beyond will be addressed as part of the 2009/10 Service & Resource Planning process.
19. Business Support & Performance Management are projecting an overspend of £0.453m, an increase of £0.078m since the last report. This change includes £0.130m which is payable to the capital programme for a revenue contribution to Foxcombe Court which should have been made in 2006/07. This has been offset by income of £0.124m from the PCT, which was reported in January as not being expected.
Pooled Budget Memorandum Accounts
20. The Older People, Physical Disabilities and Equipment Pooled Budget is projecting an overall underspend of -£0.971m compared to -£0.766m last month. The Oxfordshire County Council element of this pool is projecting an underspend of -£1.488m. The main reason for the increased underspend this month (-£0.265m) is because of reduced expenditure on contracts. In recognition of additional costs for Continuing Health Care relating to both the Old and New National Frameworks, the PCT contribution to the pool is likely to increase significantly before the year end. However, this contribution will not change the projected underspend as a provision for outstanding payments will be created at the year end. A further contribution of £0.800m is also being discussed. This is in recognition of the on-going costs of additional placements purchased during 2007/08 in order to reduce the Delayed Transfer of Care (DTOC) numbers. This contribution would need to be carried forward into 2008/09 as an underspend.
21. Within the Learning Disabilities Pool the forecast variance is now an overspend of £0.923m. Since the last report the Primary Care Trust have confirmed that they will be increasing their contribution to bring this pool back into balance this financial year.
Environment & Economy: -£0.912m underspend
22. The Directorate is forecasting an underspend of -£0.912m, an increase of -£0.152m since December.
23. The main movement is within Waste Management where the forecasted tonnage growth for the year has reduced from the 4% previously reported to 2.39%. This reduces the forecast spend by £0.085m.
24. Work on the County’s bridges following the July floods is being slipped into 2008/09. £0.050m will be requested to be carried forward for this.
Community Safety: -£0.079m underspend (-£0.135m total underspend including retained firefighters)
25. The overall Community Safety Directorate position is a forecast underspend of -£0.135m, a decrease of £0.078m since December. This movement relates to the approval of supplementary estimate for flood expenditure, offset by further expenditure (£0.106m) incurred in January relating to the July and January floods. A supplementary estimate for this is requested in this report.
26. Further requests for supplementary estimates will be included in subsequent reports as alternative accommodation is still being provided for Abingdon firefighters while their County Council flood damaged properties are being made habitable. A payment of £0.040m is also due to the Ministry of Defence for the provision of sleeping bags and for the services of 30 troops for two days to assist with sandbagging.
27. The retained firefighters budget is forecasting an underspend of -£0.056m. In accordance with Council policy, any underspend against this budget is an automatic return to balances. In order to reflect a more accurate position on balances and directorate spend the forecast figures have been revised this month to reflect this.
Corporate Core: -£0.869m underspend (-£0.783m total underspend including Coroner’s overspend)
28. The overall position for the Corporate Core is a forecast underspend of -£0.783m, compared with a forecast underspend of -£0.393m in December.
29. Legal Services are now forecasting an underspend of -£0.100m. This is due to higher than expected income from external legal fees together with reduced use of contract solicitors. The level of income awarded by the courts or received from Section 106 (developer contribution) work is always difficult to predict and has been unusually high this year. It is not expected that the service will request to carry this sum forward as in general any ‘windfall’ income such as this is returned to balances at year end.
30. An agreement has now been reached with Serco for a reduction in the contract payments for SAP support and maintenance for this year and the next four years totalling £2.0m, including a cash payment for £0.500m to be received by 31 March 2008. As ICT are currently forecasting an overspend of £0.120m as a result of much higher activity levels than anticipated, the income will be used to offset this, with the remaining £0.380m being carried forward. This plus the further instalments will be used to meet efficiency savings targets in future years.
31. The Coroner’s Service is now forecasting an overspend of £0.086m, a change of £0.026m since the last report. Any overspend against this budget is an automatic call on balances. In order to reflect a more accurate position of balances and directorate spend the forecast balances figures have been revised to reflect this.
32. Work has now been completed on the various options for addressing the Print & Design Unit operating loss in the current and future years. The unit has not been receiving sufficient orders to cover its overheads which is resulting in a forecast deficit for 2007/08. The deficit is now expected to be £0.160m, an increase of £0.030m since the last report. The County Council Management Team considered the options for the future of the unit and agreed that the only pragmatic option was closure. The statutory consultation period with employees has already started. There will be both one-off end costs incurred and a small continuing cost for a reprographics function.
Forthcoming Issues
33. Following a successful bid to claim back output VAT from HM Revenue & Customs on the hiring of audio visual items by the Library Service between 1981 and 1996, income of £0.236m is to be received by 31 March 2008. Interest due on this sum is expected at a later date and will be in the region of £0.156m. A decision will need to be made on the use of this sum which could include offsetting the overspend of £0.149m relating to the balance of the audio visual stock write down costs.
34. Compensation due from a creditor, who was obliged to repay the County Council £0.522m to reflect monies fraudulently obtained from the County Council, has been received in February. The creditor was found guilty in September 2005 of defrauding the public purse and was obliged to compensate the County Council for benefits paid and interest on those sums.
35. In the report for Cabinet on 18 December 2007, the allocation of the Local Authority Business Growth Initiative (LABGI) Grant was agreed. The allocation included £0.100m to put funding into the Business Resource Efficiency and Waste (BREW) programme. It has now transpired that this funding is no longer required so this sum will be returned to balances until a decision is made on a new allocation. Issues beyond 2007/08
36. At Council on 12 February 2008 the budget and Council Tax for 2008/09 were agreed. It has since transpired that the amounts shown for Council Tax at Bands B, F and H (Annex 5 of the report to Council) are inaccurate to one penny as they do not follow normal rounding conventions. Having considered the matter the Council’s Monitoring Officer has concluded that this does not need further Council approval. The Council is legally required to set a Band D, which is correct, and other bands are a calculation based on this amount. The correct amounts for Council Tax by Property Band for Oxfordshire County Council are as shown in Annex 7. This matter has been included here so that it is referred back to Council for information.
37. The district councils were informed of this change on 21 February 2008 to ensure that the correct charges were included on the Council Tax bills for these bands.
Virements and Supplementary Estimates
38. The virements requested this month are detailed in Annex 2a, virements previously approved in Annex 2b and Supplementary Estimates in Annex 2c. The supplementary estimates requested this month total £0.106m.
Specific Grants Monitoring
39. Annex 3 details the movement on specific grants.
Strategic Measures
40. It has been reported previously that there will be additional interest earned on the Council’s money market investments of £3.500m. The current forecast is that this will rise by a further £0.500m to £4.000m by the end of the financial year. This is a result of the continuing high level of balances and the inter-bank rates being higher than budgeted for.
41. Uncertainty remains around the Baxter Index (inflation applied to infrastructure), which is currently 3.3% to the end of January compared to the budget provision of 6.2%. The rate at the end of February is that which is applied as interest on relevant developer contributions. Continuing high oil prices may push the current rate higher in February. Each one percent movement in the Baxter Index equates to around £0.280m. This means that if the current rate were to continue there would be an additional saving of around £0.800m. This cannot be counted on at this stage because of the uncertainty alluded to above.
42. The following banks have been deleted from the authority’s lending list since the last report as their credit ratings no longer satisfy the Council’s lending criteria: - NRW.Bank - Irish Nationwide Building Society
43. The following banks have been reinstated on the lending list as the Treasury Management Strategy Team have decided to end their temporary suspension since the Fitch ratings have remained within the approved range: - Societe Generale - Lehmen Brothers Inc
Part – 2 Balance Sheet
Reserves
44. Annex 4 details the forecast movement on earmarked reserves.
45. The main movement on the earmarked reserves relates to the On Street Parking Account. The variance is due to a reduced income surplus from camera enforcement and a reduced drawdown being required for the work at the Thornhill Park & Ride.
Balances
46. Annex 5 sets out the year-end forecast of general balances taking into account known changes. Forecast balances are £21.581m as at the end of January, an increase of £0.524m since the last report. The changes are set out in the table below.
Creditors
47. 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 January for the Council overall was 89.1%. The overall performance for January was 86.8%. The slight drop in performance this month reflects staff absences over the holiday period in December resulting in over a thousand invoices being paid late. There has also been a continued effort to clear the backlog of old blocked invoices with the number of these remaining invoices still on a downward trend.
48. The Council will fail to meet the 95% target overall during the current financial year, however this is a key target and efforts continue to get monthly performance up to 95% by the end of the financial year to give us an opportunity to meet it in 2008/09.
Part – 3 Capital
49. Capital monitoring is attached at Annex 6. The Annex shows actual expenditure incurred in the current year to the end of January 2008 of £52.286m, with expenditure since December of £7.775m. After adjusting for accruals expenditure is £61.915m. This figure does not take account of any Devolved Formula Capital (DFC) spend which is recorded in schools’ accounts in the year. Projected spend on DFC for the year is £10.187m.
50. The annex shows that the total projected spend for 2007/08 is currently £101.099m. There has been an increase since the last report in forecast payments of £0.163m in 2007/08 and an increase in total scheme payments of £2.624m. The changes are analysed by Directorate below:
Directorate: Children, Young People & Families
Main Programme
51. There is an in-year decrease in forecasted payments of -£1.863m in 2007/08 and an increase in total scheme forecasted payments of £0.272m. The main changes in 2007/08 relate to minor works slippage of -£0.771m, a three month delay in the start of the St Birinus project -£0.350m and slippage of the foundation stage investment fund -£0.209m.
52. The main change to the total scheme forecast is due to estimated cost increases in the Childrens Centres valued at £0.200m, which will be fully funded through the Early Years revenue budget.
Forward Plan
53. There is a reduction in total scheme forecast of £0.052m which relates to a transfer to the main programme to support cost pressures in the Children Centres.
Directorate: Social & Community Services
54. There is an in-year increase in forecasted payments of £1.450m in 2007/08, mainly due to the land purchase for Moorview which was slipped to 2008/09, but has now been realised at £1.650m. There have been some minor changes to the forecasted payments in-year and for the total scheme payments within the programme. These include some overrun on the Time to Change programme and a small amount of slippage into 2008/9 on the library improvement programme
Directorate: Environment & Economy
55. There is an increase in both in-year forecasted payments of £0.576m in 2007/08 and total scheme forecasted payments of £2.404. The inclusion of the revised BOP programme has increased the in-year forecast by £1.194m and the total scheme forecast by £3.151m within Property Services. Transport has seen better financial settlements on scheme retentions which have decreased the in-year and total scheme forecast by -£0.592m. An element of the Thornhill P&R scheme has been brought forward into 2007/08 and cost increases for Oxford P&Rs has increased the payment forecast by £0.300m. This is offset by the slippage into 2008/09 of the Abingdon Town programme (-£0.132m).
RECOMMENDATIONS
56. The Cabinet is RECOMMENDED to:
(a) note the report;
(b) approve the virements as set out in Annex 2a; and
(c) approve the supplementary estimates totalling £0.106m as set out in Annex 2c.
SUE SCANEAssistant Chief Executive & Chief Finance Officer Corporate Core
Background papers: Directorate reports
Contact Officers: Lorna Baxter, Strategic Financial Planning Manager Tel: (01865) 816087 March 2008
[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 plus the forecast Directorate in-year underspend plus the Transport Days variation. |
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