Meeting documents

Corporate Governance Scrutiny Committee
Thursday, 26 July 2007

 

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ITEM CG9

 

CABINET – 20 JUNE 2007

 

PROVISIONAL REVENUE & CAPITAL OUTTURN 2006/07

 

Report by Head of Finance & Procurement

 

Introduction

 

1.                  This report presents the provisional revenue (Part 1) and capital (Part 2) outturn and identifies variations of actual result against budgets in 2006/07.  Figures shown in the report reflect those included in the Council’s Statement of Accounts 2006/07, which is to be submitted to the Audit Committee on 27 June 2007 , prior to audit.

 

2.                  The provisional outturn for the Council shows general balances of £22.933m; an increase of some £7.0m compared to the last report to Members, which was based upon the period to the end of February.   The £22.9m incorporates the receipt of £0.965m of Local Authority Business Growth Incentive grant (LABGI), the allocation of which in 2007/08 has been recommended by Cabinet to Council for approval and the receipt of £2.744m of Performance Reward Grant which will be applied in 2007/08.  When these two elements are taken into consideration, the “free” balances taken forward into 2007/08 reduce to £19.224m – an increase of some £4.2m on the February projection.  The reasons for this improvement are highlighted in paragraphs 47 and 50.

 

3.                  The detail for each Directorate is summarised within the report and individual reports for each Directorate are available in the Members Resource centre.  The following Annexes are attached:

 

Annex 1          Directorate Provisional Revenue Outturn – Summary and by Directorate

Annex 2(a)     Directorate carry forward proposals

Annex 2(b)     Virement of 2006/07 carry forwards to other budget heads

Annex 2(c)      Three year analysis of significant underspends (does not include overspends)

Annex 3          Virements and Supplementary estimates in 2006/07

Annex 4          Specific Grants Monitoring

Annex 5          Earmarked Reserves

Annex 6          General Revenue Balances Provisional Outturn

Annex 7          On-Street Parking Account – Statement of Income and

Expenditure for 2006/07

Annex 8          Unit cost and activity monitoring

Annex 9          Provisional Capital Outturn

(Annexes 1-7 - download as .xls file)
(Annex 8 - download as .xls file)
(Annex 9 - download as .xls file)

 


PART 1 – PROVISIONAL REVENUE OUTTURN

 

Directorate Outturn

 

4.                  The provisional revenue outturn by Directorates is detailed in Annex 1 and shows an under spend of £0.918m against the latest Directorate budgets.  In order to provide a more accurate measurement of Directorate budgetary performance, this figure needs to be adjusted to reflect that:

 

(i)                 within the overall £0.918m underspend are a number of year-end variances on budget heads which, by convention, are funded from balances because they are deemed to be outside the direct control of Directorates – this year a net overspend of £0.216m.  Taking these into account produces a Directorate underspend of £1.134m;

 

(ii)               the net cost of schools reorganisation - £2.533m – needs to be ‘rolled forward’ into 2007/08, reflecting the payback arrangements around this issue. Taking this cost out of the year-end perspective produces an underlying Directorate underspend of £3.667m – or 1.2% of the final budget.

 

5.                  This analysis is further rehearsed below and set out in Annex 1.  With effect from 1 January 2007 a number of changes in the management structure of the Council gave rise to a realignment of those services affected between Directorates.  For financial reporting purposes the Provisional Outturn has been prepared on the same basis as the budget to allow consistency of comparison. The overall year end revenue position for 2006/07 can be summarised as follows:

 

 

£m

Original 2006/07 Budget

 

Gross Expenditure

797.494

Income

-496.599

Virements

0.776

Supplementary Estimates

2.643

Overspend brought forward from 2005/06 and deducted from 2006/07 budget

-0.037

Net Final Approved Directorate Budgets

304.277

Provisional Outturn (net)

303.359

Net underspend 2006/07 (Annex 1, Column 9)

0.918

 

Returned to Council (Annex 1 Column 10)

 

6.                  These variations are excluded from Directorate carry forwards because they represent variations to budgets which are recognised under the Council’s budget management arrangements, to be outside the control of the Directorate and are therefore funded from balances.

 

7.                  The following variations are drawn from balances in 2006/07 (a minus sign indicates an underspend to be returned to balances and a positive figure represents an overspend to be drawn from balances):

 

Directorate

Total

 £m

Community Safety:

 

- Fire-fighter Ill Health Retirement

0.023

- Firefighter Pension

-0.013

- Whole time fire-fighter pay award

-0.022

- Retained Firefighters

0.219

Resources:

 

- Audit Fee

-0.082

- Coroner’s Service

0.082

- Business Rates

0.009

 Total overspend to be drawn from balances

0.216

 

8.                  These transfers are reflected in the additions to and calls on balances as set out in Annex 6.  Changes since the last monitoring report are also highlighted in the Annex.

 

Directorate Variations

 

9.                  After deducting variations outside Directorates’ control, the net underspend (excluding the City Schools planned reorganisation) is £3.667m.  This compares to a forecast under spend of £1.072m as reported in the most recent monthly monitoring based on the period to the end of February 2007, a change of £2.595m.  The movement in the forecast position is summarised below by Directorate, with explanations of major variances for each Directorate given in the subsequent paragraphs (a minus sign represents a balance to be carried forward and a positive figure represents an overspend).

 

 

Directorate

February MMR Variance

Provisional Outturn

Change from Feb. MMR

 

£m

£m

£m

Children, Young People & Families

3.344

2.893

-0.451

Less City Schools’ Reorganisation

-2.533

-2.533

0

 

0.811

0.360

-0.451

Social & Community Services

-0.132

-0.748

-0.616

Environment & Economy

-1.542

-1.405

0.137

Community Safety

-0.278

-0.480

-0.202

Resources & Chief Executive’s

0.069

-1.394

-1.463

Total

-1.072

-3.667

-2.595

 


Directorate: Children, Young People & Families

 

10.             The net overspend for the Children, Young People & Families Directorate is £2.893m compared to £3.344m as reported in the February 2007 monitoring report and detailed below.  There are amounts recoverable in future years totalling £2.768m; -  £2.533m of this relates to the planned repayment of the City Schools' reorganisation and £0.235m to the variation in transport days within the Home to School Transport Service.  Excluding these amounts gives an in-year overspend of £0.125m, of which £0.516m relates to the Dedicated Schools Grant (paragraph 16).  The movement in the forecast position is summarised below (a minus sign represents a balance to be carried forward and a positive figure represents an overspend also to be carried forward):

 

 

February

MMR variance

Provisional Outturn

Change from Feb MMR

 

£m

£m

£m

Children & Young People

-0.548

-0.956

-0.408

Early Years & Family Support

1.308

1.255

-0.053

Educational Effectiveness

-0.320

-0.778

-0.458

Strategy & Performance

0.136

-0.168

-0.304

Strategy & Performance: Dedicated Schools Grant

0

0.516

0.516

Schools

0

0.256

0.256

Total in year variation

0.576

0.125

-0.451

Plus Recoverable in future years:

 

 

 

Variation in Transport Days

0.235

0.235

0

City Schools Reorganisation

2.533

2.533

0

Total Variation Non Delegated Budgets

3.344

2.893

-0.451

 

11.             The increase in the underspend from £0.548m to £0.956m within the Children and Young People service relates principally to an increase (£0.086m) in the underspend for the Transport budget.  The remainder of the changes relate to a number of additional underspends reported at outturn, which, although individually small, are spread across a number of budgets. These have arisen through a combination of project slippage and confirmation of the final position on volatile budgets (which by their very nature are difficult to forecast during the course of the year).

 

12.             Within the Early Years and Family Support service the overspend at outturn is £1.255m compared to a forecast of £1.308m at the end of February, the reduction arising from a number of small underspends.  The five main areas of overspend are Agency Placements £0.425m, Asylum Seekers £0.652m (including the overspend of £0.361m on the Leaving Care budget), Legal Fees £0.162m, Children’s Homes £0.145m and Support to Schools and Settings £0.178m.

 

13.             Of the increase in the Educational Effectiveness underspend, £0.176m relates to Standards Fund Grant matched funding.  The total underspend on Standards Fund is £0.496m (£0.213m Primary Strategy and £0.283m Secondary Strategy), which can be spent up to 31 August 2007 and will need to be carried forward.

 

14.             The remainder of the increase in the Educational Effectiveness underspend (£0.282m) relates to the generation of additional income through Oxfordshire Quality Schools Association (OQSA) and efficiency savings £0.080m.   A £0.200m underspend relates to slippage on individual projects within Curriculum Learning & Inclusion. 

 

15.             The overall year-end variance within the Strategy and Performance service is an overspend of £0.348m.  This is a combination of an overspend of £0.516m on the Dedicated Schools Grant (DSG) (as the central element of the grant is held within this service) and an underspend of £0.168m on non-DSG budgets.  The overspend on the DSG is detailed in paragraph 16.  In the February monthly monitoring report an overspend of £0.136m was forecast for the Strategy & Performance service; the year-end position is an underspend of £0.168m.  Of the movement, £0.291m relates to an underspend in respect of the Children’s Integrated Information Programme that has arisen due to slippage in the work supporting a nationally driven project. 

 

16.             The final allocation of DSG for 2006/07 was lower than originally notified (and incorporated as part of the 2006/07 budget setting process for schools) by £0.516m due to the incorporation of the Early Years census and issues with pupil data matching.  This situation was replicated in many authorities.  As part of the post formula review, changes have been made to the verification process surrounding pupil number submissions.  This overspend has been carried forward against the central budget and will be the first call on this budget in 2007/08.   The overspend has been taken into account in calculating the schools formula allocation in 2007/08, providing sufficient funding for the central budget to meet the overspend.

 

17.             After deducting the planned overspend of £2.533m relating to City Schools the overspend on non-delegated schools budget is £0.256m.   This is primarily made up of an underspend of £0.296m on the Schools Contingency budget for repairs and maintenance and an overspend of £0.524m relating to additional structural repairs and maintenance costs incurred in 2006/07 on the Repair and Maintenance budget within this service.  The Schools contingency budget was established to provide a central fund to meet repairs and maintenance.  As no virement was requested during the year to match budget to spend the carry forward proposals incorporate a virement request of £0.296m from Schools Contingency to offset part of the overspend on Repair and Maintenance leaving an overspend of £0.228m to be carried forward on the capitalised repairs and maintenance budget which will be reflected in the development of the programme of works for 2007/08.

 


Directorate: Social & Community Services

 

18.             The net underspend for this Directorate (excluding Supporting People) is £0.748m, compared to a forecast underspend of £0.132m reported in the most recent monthly monitoring report, an increase in underspend of £0.616m.  There is no variation on the Supporting People budget.  The movement in the forecast position is summarised below (a minus sign represents a balance to be carried forward and a positive figure represents an overspend also to be carried forward):

 

 

February MMR Variance

Provisional Outturn

Change

 

£m

£m

£m

Cultural Services  & Adult Learning

-0.038

-0.164

-0.126

Social Care for Adults

-0.198

-0.362

-0.164

Partnerships & Planning (excl. Supporting People)

-0.021

-0.452

-0.431

Business Support & Performance Management

-0.042

0.062

0.104

Directorate Management Team (incl. contingency)

0.167

0.168

0.001

Social & Community Services Subtotal

-0.132

-0.748

-0.616

Supporting People

0

0

0

Total per Annex 1

-0.132

-0.748

-0.616

 

 

 

 

Memorandum Accounts

 

 

 

Older People, Physical Disabilities & Equipment Pooled Budget

0.181

0.101

-0.080

Learning Disabilities Pooled Budget

0.021

-0.025

-0.046

 

19.             The increase in the Cultural Services and Adult Learning underspend is primarily due to an improvement of £0.105m within the Music Service relating to additional income. 

 

20.             The Social Care for Adults underspend has increased from £0.198m to £0.362m, a net movement of £0.164m.  This represents a combination of a £0.439m increase in residential and nursing income relating to Older People, from clients in the Orders of St John (OSJ) homes as final income figures are returned.  This is offset by an additional £0.372m charge to expenditure as the S117 provision in the balance sheet is increased so that it is sufficient to meet the claims forecast for 2007/08 for Mental Health care once cases have been fully assessed and the liability for care costs determined.

 

21.             Other less significant changes reported within the Social Care for Adults service are improved positions within Learning Disabilities internal day services (£0.107m), and Adult Placement Services (£0.071m) as offset by an increase in the underachievement of Fairer Charging Income (£0.138m).

 

22.             Within the Partnership and Planning service £0.278m of the increase in underspend is due to slippage on spend for vehicles (adapted for clients) and £0.090m of Modernisation Funding received in 2006/07 where spending will be incurred in 2007/08 for Internal Day Services for year 2 of the programme.

 

23.             Within the pooled budget for Older People, Physical Disabilities and Equipment a repayment of £0.687m to the Social & Community Services reserve was made at the year-end.  This reserve was created as part of the 2006/07 budget to meet internal pressures and external cost pressures from the Health Sector.  This transfer was possible as the budget provision, earmarked for the increased revenue costs of the OSJ contract has not been needed due to slippage on the Homes for Older People Strategy (HOPS) Capital programme.  Within the Learning Disabilities pooled budget a repayment of £0.150m was also made to this reserve as final expenditure was lower than that predicted in the February monitoring report.

 

Directorate: Environment & Economy

 

24.             The net underspend for the Directorate is £1.405m.   This compares to a forecast underspend of £1.542m as reported in the February financial monitoring report, a decrease of £0.137m.    The movement in the forecast position is summarised below (a minus sign represents a balance to be carried forward and a positive figure represents an overspend):

 

 

February MMR Variance

Provisional Outturn

Change

 

£m

£m

£m

Transport

-0.448

-0.534

-0.086

Sustainable Development

-0.932

-0.772

0.160

Trading Standards & Registration

-0.048

-0.048

0

Business Support

-0.114

-0.051

0.063

Total Variation

-1.542

-1.405

0.137

 

25.             Within the Transport service the key changes in the forecast relate to a change in the funding assumptions for a bridges project (to be funded from capital rather than revenue).  Within Sustainable Development, £0.158m of the £0.160m movement relates to Waste Management, and relates to a number of areas.  The movement in forecast outturn for Business Support relates to Property and Legal services recharges received in excess of the amounts previously forecast.

 

Directorate: Community Safety

 

26.             After deducting variations outside the Directorate’s control the net underspend for this Directorate is £0.480m.  This compares to a forecast underspend of £0.278m as reported in the most recent financial monitoring report based on the period to the end of February 2007, a change of £0.202m.  The movement in the forecast position is summarised below (a minus sign represents a balance to be carried forward and a positive figure represents an overspend to be carried forward):

 

 

February MMR Variance

Provisional Outturn

Change

 

£m

£m

£m

Fire & Rescue Service

-0.278

-0.361

-0.083

Emergency Planning Service

0

-0.001

-0.001

Community Safety Team

0

-0.120

-0.120

Travellers’ sites

0

0.002

0.002

Total Variation

-0.278

-0.480

-0.202

 

27.             There are a number of small changes amounting to £0.083m in the variation to £0.361m for the Fire & Rescue Service.  The underspend of £0.090m for the Youth Offending Service and £0.030m for the Safer Communities Unit relate to slippage on committed project expenditure.

 

Directorate: Resources & Chief Executive’s Office

 

28.             After deducting variations outside this Directorate’s control, the net underspend is £1.394m.  This compares to a forecast overspend of £0.069m as reported in the last financial monitoring report, a decrease of £1.463m.  The movement in the forecast position is summarised below (a minus sign represents a balance to be carried forward and a positive figure represents an overspend also to be carried forward):

 

 

February MMR Variance

Provisional Outturn

Change

 

£m

£m

£m

Financial Services & Procurement

-0.030

-0.069

-0.039

Human Resources

-0.060

-0.062

-0.002

Legal Services

0.056

0.004

-0.052

Information Communications & Technology

0.043

-0.528

-0.571

Business Support

0.036

0.009

-0.027

Property Services

0.117

-0.481

-0.598

Coroner’s Service

0

0

0

Shared Services Centre

0

0

0

Shared Services: SAP Revitalisation project

0.250

0.160

-0.090

Chief Executive’s Office

-0.343

-0.427

-0.084

Total Variation

0.069

-1.394

-1.463

 

29.             Within ICT the forecast in February assumed that servers for the Data Centre totalling £0.426m would be delivered in March.  Delivery and installation for approximately half this equipment slipped into 2007/08 and there was also slippage on other projects.  This is partially offset by the forecast underspend of £0.383m on Project Link falling to £0.292m.  It is proposed that this carry forward will transfer along with the budget to Social & Community Services in 2007/08.

 

30.             The Property Services overspend in February included £0.083m in respect of the Oxford Castle project pending Council approval of a revenue/capital switch for this sum.  The remaining change relates to an underspend of £0.492m on repair and maintenance of corporate properties.

 

31.             The Property budget has historically been difficult to forecast accurately and this has been made more complicated this year with the split between school and other properties.  School repair and maintenance is now part of the Dedicated Schools Grant funding and is held within Children, Young People & Families but managed by Property Services.  The change in forecast has also arisen from:

 

·              £0.467m of structural repair and maintenance has been capitalised at the year-end.  By capitalising structural repair and maintenance, a revenue/capital switch for the equivalent amount will enable efficiency savings on the property consultancy contract to be transferred to the revenue budget.  The final figure of £0.467m in 2006/07 was higher than expected and the budgeted saving of £0.335m.

·              Slippage has arisen as the Prudential programme of backlog maintenance is putting pressure on the delivery of the non-Prudential planned maintenance programme.

 

32.             A planned overspend on the SAP Revitalisation Project has been forecast throughout the year, but the final overspend of £0.160m is lower than forecast due to slippage on project streams in particular SAP integration.

 

33.             The increase in the underspend recorded by the Chief Executive’s office is a combination of relatively small changes in underspends across a number of areas.  The Initiatives Fund has a balance of £0.082m which will be available for projects and general pressures and of the Scrutiny budget underspend £0.018m will be used to fund the commitment for a research assistant, the remainder for future review work.

 

Carry Forward Arrangements

 

34.             Under the Council’s Financial Regulations, the Cabinet is responsible for approving all carry forwards and will, as for last year, look carefully at the allocation of carry forwards to consider whether previous patterns of spending indicate that carry forwards will be used in 2007/08 or whether they should be withheld in order to strengthen Council balances and enable resources to be allocated to areas where there is a need for spending in the next financial year. Annex 2(c) provides a comparison of outturn positions over the last three years for areas where there has been significant under spending.

 

35.             Directorates are required to carry forward all overspends to be recovered in the following year with the exception of certain budgets deemed to be outside the control of Directors which are a call on balances. Underspends may be carried forward subject to Directors providing the Cabinet with an explanation of the reasons for the underspends and stating the case for the application of the resources in the following year. Explanations have been requested for all proposed carry forward of underspends of £0.050m or over, in order to focus on material items.  Directorates can propose application of carry forwards to the service in which they were generated or request a virement of the carry forward in 2007/08 to meet pressures in other areas.

 

36.             Details of Directorate variations and proposed carry-forwards are set out in Annex 2(a). Proposed virements of 2006/07 carry-forwards to different budget heads are set out in columns 6 and 7 of Annex 2(a) and at Annex 2(b).

 

Virements and Supplementary Estimates in 2006/07

 

37.             Annex 3 details changes from the original estimate approved by Council in February 2006, highlighting new virements and supplementary estimates since the February monitoring report.

 

Bad Debt Write Off

 

38.             In accordance with procedures, the Cabinet receives notification of the total value of SAP debts written off each quarter.  For the quarter ended 31 March 2007 , £0.012m has been written off relating to 27 individual debts.  The largest individual debt write off was for £0.002m, as recommended by Legal Services. Most of the debts have been written off because it is uneconomical to recover through the courts.

 

Specific Grants Monitoring

 

39.             Details of Government grants received in 2006/07 and associated expenditure are set out at Annex 4.

 

 

£m

Specific grants received in 2006/07 (as per published Medium Term Service & Financial Plan)

399.113

New grants/changes previously reported

6.401

New grant changes notified in March

0.074

Total grants for 2006/07

405.588

 

Earmarked Reserves

 

40.             Details of earmarked reserves held by Directorates are detailed in Annex 5 and the movement on balances in 2006/07 are summarised below: 


 

 

2006/07

 

Balance at

1 April 2006

Forecast Movement

Forecast

Balance at

31 March 2007

 

Contributions

From Reserve

Contributions

To Reserve

 

£m

£m

£m

£m

Children, Young People & Families

17.063

-15.011

17.178

19.230

Social & Community Services

1.550

-0.746

0.665

1.469

Environment & Economy

4.397

-1.834

2.611

5.174

Community Safety

0.923

-1.181

0.766

0.508

Resources & Chief Executive’s Office

5.672

-1.693

0.122

4.101

Corporate

10.306

-3.879

5.875

12.302

Directorate Total

39.911

-24.344

27.217

42.784

 

Directorate: Children, Young People & Families

 

41.             Within the Schools delegated budgets there has been an overall increase of £1.757m between the opening and closing balances for total schools’ reserves (both revenue and capital reserves).  Schools’ revenue reserves (net of School Loans) have changed from £8.111m to £7.754m, a reduction of £0.357m.  The Capital Reserves have increased from £7.471m to £9.585m There have, however, been significant changes in balances for each sector with Primary and Special school reserves both increasing and Secondary reserves falling.  The increase arises mainly due to the ability to spend Standards Fund allocations up to the end of the academic year on 31 August.  There has been a net overall increase in the other reserves within this Directorate (set out in Annex 4).

 

Directorate: Social & Community Services

 

42.             Within Social & Community Services, the original recovery plan for Adult Learning anticipated that all of the £0.699m reserve would be required to offset revenue overspends in 2006/07, however savings within expenditure and additional income has led to a lower than forecast draw down.  Uncertainties surrounding the Learning & Skills Council grant for 2007/08 means that the reserves may be required to support the service.

 

Directorate: Environment & Economy

 

43.             Within Environment & Economy the On-Street Parking revenue surplus for 2006/07 was £0.360m.  The accumulated surplus at 1 April 2006 was £2.794m.  £0.148m of this balance has been used to offset the reduction in income following the removal of charges at the Council’s Park & Ride sites and £0.472m has been used as funding for capital works during the year.  The accumulated surplus on the account at the end of 2006/07 is £2.534m.  Of this, some £1.6m is committed to funding the Thornhill Park and Ride capital scheme and £0.4m has been committed as part of the 2007/08 budget exercise, to support the revenue cost of Park and Ride.  The account also supports an annual deficit on off-street car parking of some £0.2m.  A statement of actual income and expenditure for the account is included at Annex 7 to this report.  The Cabinet is requested to approve the carry forward of the net surplus on this account.

 

Directorate: Resources & Chief Executive’s Office

 

44.             The balance on the Modernisation Fund has been moved into a reserve to be applied in future years in accordance with the agreed terms for use of the Fund.

 

45.             A reserve was set up at the start of the year to provide temporary funding for the Shared Services project using a temporary cash surplus in the capital programme.  Actual spend in 2006/07 was significantly less than the original business case due to delays in acquiring suitable premises.  An amount of £1.453m was drawn down against the reserve in the year leaving £2.771m to be carried forward to 2007/08.

 

Corporate Reserves

 

46.             A transfer of £0.687 from the Older People, Physical Disabilities and Equipment pooled budget and £0.150m from the learning Disabilities pooled budget has been made to the Social & Community Services Emergency Reserve at the year end (Paragraph 23).  The remainder of the changes reflect an increase of £1.57m on the Capital Reserve to £6.649m and a decrease of £2.355m to £2.914m on the Insurance reserve which is further commented upon below.

 

Insurance Reserve Surplus

 

47.             On the 24 May 2007 , the Council received the formal report from Watson Wyatt, the Insurance Fund actuaries, on the triennial valuation of the Fund.  This valuation incorporated a review of the claims record of the Council, which recognised the relatively benign experience of the last twelve months and estimated a prudent figure to hold as a reserve and projected claims forward for the next three years.  Given the conclusions of the report, it is deemed that £2.821m can be released from the reserve and be taken into balances.  This addition to balances will be incorporated into the Councils medium term planning framework to determine how this one-off sum can be most effectively utilised.

 

48.             Whilst the valuation report was not received until late May, the scale of the resulting adjustment requires that this be recognised in the 2006/07 final accounts - as a ‘post-balance sheet event’.  To provide consistency between this report and the final accounts, this late adjustment is accordingly incorporated in the provisional outturn perspective.

 

Strategic Measures

 

49.             The provisional outturn for Strategic Measures shows a surplus of £3.221m compared to the £3.0m surplus reported to Cabinet in April.

 

50.             Cabinet was asked to agree to the formation of a £1.0m provision from the surplus to smooth the anticipated impact of the Statement of Recommended Practice (SORP) on debt restructuring activity in future years.  This issue is still under discussion with the external auditor and it is therefore recommended that at this point, this proposal is not actioned - although the Council may wish to re-examine this issue in the future.  Instead, this sum, plus the £0.221m not previously declared, will be added to balances at 31 March 2007 .

 

51.             The Council undertook a significant amount of debt restructuring during 2006/07, generating net discounts of £0.618m.  There would have been a net premium on the balance sheet at 31 March 2007 of £0.788m from previous debt restructuring.  The opportunity has been taken to write off all premiums and discounts generated on debt restructuring activity, which will have minimal impact on the Council’s financial position going forward and will save a significant amount of work that would have needed to be undertaken to meet new accounting requirements commencing from 2007/08.

 

Efficiency Savings

 

52.             The Annual Efficiency Statement (AES) system requires all Local Authorities to meet efficiency targets that are broadly 2.5% of their 2004/05 adjusted budgets each year up to 2007/08.  Oxfordshire's first target was to find £8.140m of savings in 2005/06, with a further £8.062m in 2006/07 and £8.102m in 2007/08 - giving a total of £24.304m of AES savings by the end of the three-year period.  At least half of the target (£4.070m in 2005/06, £4.031m in 2006/07 and £4.051m in 2007/08) must be cash releasing AES savings - where cash can be released from service budgets without affecting service outputs and quality.

 

53.             A 'backward looking' AES return for 2006/07 must be made to the Government by 5 July 2007 .  This return will consider whether the £8.101m AES cash releasing target and the overall AES £16.202m target has been met for 2006/07.  Figures for this return will be assembled in due course so an overall position is not yet available.

 

54.             Two Directorates have reported difficulties in achieving savings during 2006/07.  Within Children, Young People & Families savings attributable to Asylum Seekers and the Residential service were unachievable due to funding arrangements relating to Asylum Seekers and the demands of the Residential service.   Within Social & Community Services 80% of the efficiency savings target has been achieved.  Of the unachieved savings £0.750m relates to Fairer Charging Income where gains from working with partnership organisations have been much lower than originally envisaged.  The other significant shortfall relates to Home Support where savings of £0.250m associated with the installation of assistive technology in clients’ homes has not been achieved in 2006/07 partly due to delays in letting the contract and partly due to difficulties in tracking the extent to which the technology has resulted in savings in care costs.  In some cases alternative savings have been found where the original saving was unachievable.

 

BVPI8

 

55.             BVPI8 measures the percentage of undisputed invoices paid within 30 days of receipt.  Performance against the target contributes to the Council’s Comprehensive Performance Assessment and is monitored throughout the year from information generated within SAP, the Council’s financial management system.  The Council’s target for 2006/07 was for 95% of invoices to be paid within 30 days of receipt and the table below shows the performance for March 2007 and the cumulative for the year.

 

 

March 2007

2006/07

 

%

%

Children, Young People & Families

93.1

94.4

Social & Community Services

85.8

87.7

Environment & Economy

93.6

97.5

Community Safety

89.2

95.7

Resources

91.9

94.8

Chief Executive’s Office

96.1

95.5

Mouchel Parkman – CIS invoices

99.4

91.1

 

91.1

92.2

 

General Revenue Balances

 

56.             There have been a number of changes affecting the Council’s general balances during the year.  These have been reported as part of the monthly financial monitoring and are shown in full at Annex 6.  The provisional outturn position for general reserves is £22.933m (net of the City Schools overspend) as at 31 March 2007, although when the planned application of LABGI and Performance Reward Grant (PRG) in 2007/08 is taken into account, the Council’s free balances going forward into 2007/08 is £19.224m.  The main factors contributing to the improved position from that reported in February’s monitoring report are the release of £1m from Strategic Measure as highlighted in paragraph 50 and the confirmation of a surplus on the Insurance reserve of £2.821m paragraph 47.

 

57.             The changes in the forecast general balances since the February financial monitoring report to arrive at the provisional outturn position are shown below:

 

 

£m

Forecast position per last report (net of City Schools)

15.964

Further changes now confirmed:

 

  Repayment of 50% of Adult Learning temporary supplementary

  estimate

0.087

  Adjustment following preparation of final accounts for 2006/07

0.095

  Reduction in fire-fighters overspend and ill-health retirements

0.002

  Community Safety fire-fighter Pensions - transfer value received

0.013

  Reduction in Audit Fee

0.032

  Performance Reward Grant

2.744

  Surplus on Insurance reserve

2.821

  Surplus on Strategic Measures

1.221

  Coroners Service – additional costs of inquests

-0.037

  Business Rates

-0.009

Net forecast position (net of City Schools) as at 31 March 2007

22.933

Less:

 

  Recommended application of LABGI and PRG in 2007/08

-3.709

Free Balances going forward into 2007/08

19.224

 

58.             This analysis includes those items defined in paragraph 6 as being funded from balances because they are deemed to be outside of Directorates’ control – although a number of them have already been reported in the February monitoring figures.

 

59.             The Cabinet is asked to approve additional calls on balances of £0.037m in relation to the Coroners Service and overspends of £0.009m on non-domestic rates (both of which are included in the table above).

 

60.             The carried forward overspend on the City Schools Reorganisation now stands at £2.533m.  This is being repaid on an annual reducing balance basis until 2012 from the savings resulting from the reorganisation.

 

Conclusion

 

61.             The Council’s general balances position reflects a substantial improvement compared to the year-end forecast at the point the 2007/08 budget was set, although the major element in this improvement has been the impact of the May 2007 Insurance Fund revaluation reflected herein.

 

62.             The Directorate carry forward position stands at £3.667m (net of City Schools), an increase of £2.595m from the projections in the February financial monitoring report.  This compares to a carry forward position of £3.020m (net of City School ’s) at the end of 2005/06 and reflects slippage in a number of projects.


PART – 2 CAPITAL

 

63.             The Provisional Capital Outturn summary at Annex 9 shows an underspend of £7.1m compared to a capital programme of £93m as identified in the February Monthly Financial Monitoring report to Cabinet on 17 April 2007.

 

64.             The main areas of underspending are in the Children, Young People & Families programme (£4.9m), Social & Community Services (£1.9m) and Environment & Economy (£1.2m).  These underspends are offset by an overspend (£1.2m) on Resources.  These areas are considered further below:

 

Directorate: Children, Young People & Families

 

65.             The main reason for the underspend of £4.9m relates to slippage on a number of schemes across the programme, the most significant of which is £0.8m on minor works.

 

Directorate: Social & Community Services

 

66.             The main reason for the underspend of £1.9m is slippage on the HOPS externalisation project (£0.7m) and Bicester HOPS project (£0.8m).

 

Directorate: Environment & Economy

 

67.             The main reasons for the underspend of £1.2m are improved settlements on projects at Banbury Hennef Way (£0.5m), Didcot Milton Heights Phase 2 (£0.5m) and Bicester Skimmingdish Lane (£0.2m) i.e. – these projects have been delivered at a lower cost.

 

Directorate: Resources

 

68.             The main reasons for the overspend of £1.2m are due to the capitalisation of ICT hardware and software costs (£1.8m) resulting from the virement between Property and ICT, offset by slippage on various projects.  A revenue contribution of £0.8m has been made from the ICT budget towards the capitalised hardware and software costs to show a net £1m position.

 

69.             A contribution from the revenue budget of £1.508m was agreed as part of the 2006/07 budget to provide additional funding for capital project.  This contribution was not required to fund the capital programme in 2006/07 and so has been transferred to the Council Reserve for use in future years.

 

70.             In the course of the capital closedown the opportunity was identified to make a series of adjustments between capital and revenue totalling £3.645m capitalising some structural maintenance expenditure.

 


These adjustments were as follows:

 

(a)               Cabinet approved a permanent virement of £1.0m between Property and ICT at its meeting on 17 April 2007 .  The actual costs relating to Property Services totalled £1.165m and the excess of £0.165m requires a further revenue/capital switch.

 

(b)               Cabinet agreed in principle a revenue/capital switch on 20 March 2007 relating to an overspend on the Oxford Castle Project.  The actual figure for 2006/07 totalled £0.083m, and is reflected in the property service revenue figures.

 

(c)               In order to effect savings in the Mouchel Parkman contract a capital/revenue switch totalling £0.467m has been made between Capital & Property Services.

 

(d)               The 2006/07 capital surpluses of £2.930m arising from the Homes for Older People Programme has been used to make a contribution to the revenue budget to meet the increased cost of the HOPS contract.

 

71.             In addition a further £3.590m of structural maintenance was capitalised as specified in the SORP.  This is funded by a revenue contribution to capital.

 

72.             In accordance with the SORP some £0.246m of receipts from the sale of assets/ restructure covenants were credited to revenue rather than the capital receipts account.  This reflected receipts below £0.010m and restrictive covenants that were not capital related.

 

73.       These receipts would normally be used to fund the capital programme so a revenue contribution of £0.246m has been made to the capital programme to reflect this position.

 

RECOMMENDATIONS

 

73.             The Cabinet is RECOMMENDED to:

 

(a)               note the provisional revenue and capital outturn set out in the report;

 

(b)              approve the Directorate carry-forwards as set out in annex 2(a), including the virement of carried forward underspends to other budget heads in 2006/07 as set out in annex 2(b);

 

(c)               approve the use of balances to meet  the overspend of £0.009m on non-domestic rates (paragraph 59);

 

(d)              approve the use of balances to meet £0.037m overspend on the Coroners Service (paragraph 59);

 

(e)               agree that the surplus in the On-Street Parking Account at the end of the 2006/07 financial year, so far as not applied to particular eligible purposes in accordance with Section 55(4) of the Road Traffic Regulation Act 1984, be carried forward in the account to the 207/08 financial year (paragraph 43); and,

 

(f)                 rescind the approval given to the formation of a £1.0m provision from the Strategic Measures surplus in respect of debt restructuring (paragraph 50). 

 

 

SUE SCANE

Head of Finance & Procurement

Corporate Core

 

Background papers:             Directorate reports

Contact Officers:                   Ken Bell, Assistant Head of Finance (Services) (part 1), Tel: 01865 815411

Mike Petty, Strategic Financial Manager - Capital and Strategy (Financial Planning) (part 2), Tel: 01865 815622

 

June 2007

 

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