AGENDA ITEM 11
BOROUGH OF POOLE
CABINET
16 MARCH 2011
COUNCIL BUDGET MONITORING
(1 APRIL 2010 – 31 JANUARY 2011)
PART OF THE PUBLISHED FORWARD PLAN : YES
1 PURPOSE OF THE REPORT
1.1 This report gives the Council’s performance against budget for the period 1 April 2010 to 31 January 2011 and the forecast financial outturn for the year.
1.2 The purpose of the Council Budget Monitoring reporting process is to:
a) promote principles of sound and effective financial management within the Authority; to promote an efficient closure of the Authority’s accounts with consistency between in year and year-end financial reporting; to ensure there are no surprises in the authority’s year-end financial position.
b) ensure the Council’s budget monitoring process is produced regularly on a timely basis throughout the year with the information presented considered to be reliable, relevant and understandable.
c) ensure the Council manages performance against budget with prompt action being taken when material variances arise or deficits are forecast. The management of these variances being designed to avoid an adverse impact on service delivery or on the achievement of corporate objectives.
1.3 All Service Units have confirmed their acknowledgement of the issues raised.
2 DECISION REQUIRED
2.1 It is recommended that Cabinet:
a) Note the contents of the report.
b) Approve the budget transfers (virements) as set out in sections 5.3 and 6.5.
c) Approve the actions proposed in sections 9 and 10.
2.2 It is recommended that Council:
a) Approve the budget transfers (virements) as set out in section 6.4.
3 EXECUTIVE SUMMARY
3.1 Financial position and outlook for the year;
As set out in the Medium Term Financial Plan (MTFP) 2011/12 to 2013/14 the Council’s financial strategy has been to rebalance it 2010/11 financial position by £10.597m in order to mitigate the impact of the in-year Government revenue and capital grant cuts and address in-year emerging service pressures. Success in achieving this position has been critical in achieving financial equilibrium and in creating the firm foundation required to enable the strategic re-repositioning of the Council over the next few years.
Exhibit 1 below sets out how the latest, end of January position, relates to the forecast for the year put together in December and embedded within the recent Budget report. In summary there has been a small increase in the forecast surplus reported last month as a consequence of the continued impact of the in-year austerity measures undertaken to assist in the re-balancing of the 2010/11 budget.
Exhibit 1 – General Fund Position / December Position 2010/11 £000’s / January Position 2010/11 £000’sIn year requirements
- Savings & efficiencies
already assumed in MTFP / 4,263 / 4,263
- In-year pressures since February 2010 / 1,978 / 1,934
- In-year revenue cuts announced by Government / 1,511 / 1,511
Revised General Fund pressure / 7,752 / 7,708
Other additional changes
- Reduction in Local Strategic Partnership monies
(50% cut in performance reward grant) / 1,076 / 1,076- Reduction in capital grants so far announced
/ 1,769 / 1,769Sub-total of other pressures / 2,845 / 2,845
Total in-year pressures
/ 10,597 / 10,553Met by
- Savings & efficiencies work planned / (4,263) / (4,263)
- New in-year savings proposals by Strategic Directors / (5,781) / (5,829)
- Non-allocation of Local Strategic Partnership monies / (1,076) / (1,076)
Total reductions found to date / (11,120) / (11,168)
Net in-year pressure (surplus) / (523) / (615)
3.2 It should be noted however that the £615k forecast surplus does not make provision for any costs that may still fall to the Council during the remainder of 2010/11 as a result of;
o Claims by other Local Authorities that Poole should bear the care costs for specific individuals. As some of these cases will relate to individuals within the Learning Disability client group then the care packages could be high cost.
o Potential that NHS Bournemouth and Poole’s ongoing reassessment of individuals with Continuing Health Care (CHC) will lead to the Council being required to meet the care costs of these individuals.
o Bus Operator claims in respect of the reimbursement rate and capacity for the Concessionary Fares Travel Scheme.
3.3 Members are also reminded that any redundancy costs arising from notifications issued to staff before the 1 April 2011 will fall as liabilities to be recognised in the current 2010/11 financial year’s accounts.
Such costs will be funded by the application of the “re-organisation fund” which has been established to meet the extraordinary one-off costs of reorganising the Council due to the planned reductions in Government funding.
3.4 Appendix A9 attached highlights the current position in respect of the Government’s in-year cuts. The adopted approach is insofar as is practically possible these cuts have been taken where they fell.
3.5 Exhibit 1 above establishes that in addition to having to address £4.356m of Government grant cuts the Council has also had to manage £1.934m of in-year service pressures. Exhibit 2 below details the main contributors to this position. It should be noted, however, that this is a net position of a number of significant variances reported through the course of the year to date and later within this report.
It is also important to recognise that where services have delivered against the savings identified the Medium Term Financial Plan (MTFP) update report to Cabinet on the 13 July 2010 these have been included in the £5.829m of in-year savings proposals put forward by Strategic Directors (instead of being offset against in-year pressures).
Exhibit 2 – Detail of the £1.934m in-year gross service pressures
Gross PressureAmount
£000’s / Significant Variances from Budget
1,980 / Adult Social Care (£1.482m Strategic Director savings – net £498k))
512 / Parking Service – Fee Income
263 / Treasury Management
231 / Investment in Human Resources (Recruitment/capacity)
189 / Planning Fee Income
170 / Building regulation Fee Income
(103) / In-year revised resource allocations (NNDR rebates etc)
(141) / Investment Income – rent reviews
(178) / Dolphin centre – additional rent
(180) / Concessionary Fares
(242) / Efficiency Review Programme – Strategic Procurement / ICT
(567) / Numerous small items
Includes the use of specific reserves to identified pressures
1,934 / Total in-year service pressure
3.6 In respect of the General Fund revenue position Appendix A1 summarises the year-end financial outturn position. All variances in excess of £100,000 and other salient variances which have not been previously been detailed in earlier monitoring reports are set out as follows:
Local Economy (including Transportation Services)
Ý £33,000 Community Contributions
The Council has recently lost a planning appeal in respect of community contributions and as a result has been awarded costs against it amounting to £33,000. These costs have been apportioned between the various Service Units involved in the case.
The Head of Planning and Regeneration Services has undertaken a through analysis of the inspectors judgement and the relevant Strategic Director has received assurances that appropriate action has been taken to prevent any future reoccurrence of the judgement.
Corporate Items
[1]ß (£44,000) In-Year Revised Resource Allocations
As part of the 2010/11 monitoring process a principle has been established whereby any savings that are due to changes in a base budget assumption, be that due to one-off events or lower price or volume increases, then the resources should be redirected in support of the Council’s Medium Term Financial Plan.
Within January a further £44,000 saving has been identified in respect of prior year National Non Domestic Rates (NNDR) liabilities on Council owned property.
3.6 It may aid understanding of Appendix A1 to this Council Budget Monitoring Report to establish that £2.348mm of the variance reported at the cost of portfolio controlled services level relates to the use of specific earmarked reserves for the purposes they were intended for. Detailed analysis of how earmarked reserves are being drawn down is highlighted within Appendix A3 to Appendix A8.
Movements in earmarked reserves focus on the drawdown of resources to support major corporate step-change initiatives including those related to the use of new technologies that are designed to deliver significant efficiencies, as well as programmes designed to improve the effectiveness of Council arrangements. Significant changes in the forecast use of earmarked reserves from the December forecast include;
· (£78,000) Housing & Community Services – ICT Reserve
This project has been unavoidably delayed until the next financial year as a number of key posts in Housing and Community Services have been held vacant so as to allow for opportunities for redeployment from else where within the Council under the Council’s austerity measures. Additionally there is currently no capacity within the ICT project and technical teams as they are already engaged on other agreed priorities until the 2nd quarter of 2011/12.
· (£77,000) Customer Services
Re-profile of expenditure into 2011/12 to reflect savings achieved in the Technologies Budget of the Programme (around the issue of Authentication Software) and changes in staffing. A provisional work-plan to be funded by the forecast resources remaining at the end of the year has been drawn up. This will provide funding for specific technology infrastructure projects which will reflect the priorities of the Service Management Board and the Customers First programme Board.
· (£41,000) Business Continuity
Savings in the 2010/11 base budget have been set aside to ensure the planned improvements in service arrangements can be delivered in future years.
4 EFFICIENCY REVIEW PROGRAMME (ERP) - MONITORING
4.1 As part of the 2010/11 budget process, and in recognition of the growing financial pressures and the expectations of significant reductions in Government grant funding from 2010/11 onwards the Council established an Efficiency Review Programme to support the achievement of even greater level of efficiencies and savings than had previously been assumed. The Efficiency Review Programme is focused on cross cutting reviews and service based operational efficiencies originally forecast to accrue from 2011/12 onwards.
4.2 Work on this agenda has already commenced with the new strategic procurement and self insurance arrangements delivering savings and efficiencies which are beginning to accrue during 2010/11, well ahead of schedule. So far the Strategic Procurement Team has been able to translate potential savings and efficiencies in excess of £0.5m into realisable base budget savings of £224k. The total savings to date can be analysed as follows;
Amount£000’s / Contract
116 / Printing & Design Contract
34 / Mobile Phone Contract
33 / Self Insurance
32 / Energy Contract
9 / PPE & Work wear
224 / Sub Total Procurement
18 / ICT – Mobile Phone Call Technology
242 / Total 2010/11
5 CAPITAL
5.1 The Council’s current capital programme budget for 2010/11 is £39.8m. This can be compared to the original budget for the year of £46.9m. The net decrease of £7.1m arises from a combination of the following: slippage from previous years, reprofiling to and from future years, reduction in grant funding as part of the Government’s public spending cuts, and various additions to the programme funded by capital grants and other sources.
5.2 The actual capital programme spend of £29.4m to the end of January 2011 represents an overall spend of 73.8% against the programme and is lower than might be expected at this point in the financial year if a straight line profile of spend is assumed. It is worth noting however that the spend to date figure compares favourably to the 71.4% for the same period in the previous year.
5.3 Primary Capital Programme (PCP)
The Council is required to spend £6.378m of the Government Capital Grant allocated to the Primary Capital Programme by the 31 August 2011. Due to timing issues which are currently frustrating the Council’s plans to deliver schemes and fully spend the grant in line with specific grant conditions it is recommended that Cabinet approve the transfer of the following Children’s Services capital schemes, currently being held outside the Primary Capital Programme to ensure that these time-limited resources are maximised to reduce the risk of claw-back. At the same time the resources currently being used to fund these programmes will also be transferred and amalgamated with those of the Primary Capital Programme.
It should noted that we are not changing the overall PCP investment plan and are merely seeking to ensure that the Council’s overall financial interests are protected. The proposal in essence uses PCP funds to pump prime the projects below and the equivalent funds including the School’s own Devolved Formula Capital are used to replenish the overall programme.
· £168k Branksome Heath Middle School Heath & Safety Works
· £50k Turlin Moor Combined Boundary Fencing
· £25k Canford Heath Middle Boundary Fencing
5.4 A full set of individual scheme details is attached as Appendix B.
6 BUDGET TRANSFERS (VIREMENTS) - CAPITAL
6.1 A capital virement is a transfer of resources between schemes or the re-phasing of approved scheme expenditure between years.
6.2 In accordance with the Council’s Financial Regulations the following rules associated with capital virements apply; -
§ Senior Responsible Officers can approve virements up to £100,000.
§ Virements over £100,000 and up to £500,000 require prior Cabinet approval.
§ Virements over £500,000 require prior Council approval.
6.3 Appendix B12 highlights the virements to the Capital programme that have been carried out since the previous Council Budget Monitoring. The transfer of resource from Parkstone Grammar, Poole Grammar and the Learning Support Centre to St Edwards School forms part of the Council’s Medium Term Financial Plan report already approved by Cabinet going to Council on 1 March 2011 and therefore does not require the approval of Cabinet here. It should be noted that the changes listed are only part of the overall virements requested as they relate to the 2010/11 budget only.
6.4 In accordance with these regulations the following transfers (virements) require the approval of Council
Local Economy
(£1,730,000) Poole Bridge – The contingency of £1.2m has been
reprofiled into 2011/12. The start date for the Link Road contract is slightly later than originally anticipated and an additional sum in this respect is reprofiled into 2011/12.