AGENDA ITEM 13
BOROUGH OF POOLE
CABINET
2nd December 2008
COUNCIL BUDGET MONITORING
(1 APRIL 2008 – 31 OCTOBER 2008)
PART OF THE PUBLISHED FORWARD PLAN : YES
1.Purpose & Policy Context of Report
1.1This report gives the Council’s current performance against budget for the period 1st April 2008 to 31st October 2008 and also the year-end forecast for the year. The purpose of the report 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 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.
1.2All Service Units have confirmed their acknowledgement of the issues raised. They have also confirmed that there are no further issues of which they are aware, at this time.
2.Recommendations
Cabinet is asked to:
a)note the contents of the Report.
b)approve the changes to the Capital Programme outlined in Appendix B12, which are all fully funded.
c)approve the actions proposed in Section 7.
3. Executive Summary
3.1Financial position and outlook for the year;
The overall position for the year is a forecast net £1.78m surplus. This represents 1.9% of the original net budget and an increased surplus from the last monitoring report of an additional £312,000. The headline key variances for the year can be summarised as follows;-
(£810,000)Additional Treasury Management & Investment Income
(£650,000)Adult Social Services (Residential and Homecare costs)
(£470,000)National Concessionary Fares Scheme
(£200,000)Transportation Services (Energy costs, savings, efficiencies)
(£140,000)Children’s Services (Children Looked After etc)
£230,000Parking Services Income (including decriminalized parking income)
£260,000Land Charges Income
(£1,780,000)Current predicted surplus
This surplus is net of having incurred £960,000 in additional costs, which have been funded from earmarked reserves specially set-a-side for the relevant purposes. This includes the use of the Planning Delivery Grant (PDG) reserve to fund the £250,000 pressure due to the decline in Planning Fee Income.
The Draft Medium Term Financial Plan (MTFP) report, which appears as a separate report on this agenda, indentifies that the £1.78m will be applied in support of the MTFP.
3.2 Appendix A1 summarises the issues, which have been incorporated within the year-end forecast. Significant issues since the end of September report are set out as follows:
Children’s Services
[1]£100,000Free School Meals in Primary Schools.
Primary phase schools have been re-introducing hot meals over the last two years. Information, including that from the autumn school census, has shown increased claims from parents for eligibility to Free School Meals (FSM). This budget is funded from the Dedicated Schools Grant (DSG) and the pressure will be addressed in consultation with the Schools Forum.
(£118,000)Longspee Special School.
Pupil numbers at Longspee Special School have not increased, as assumed within the original DSG budget provision for 2008/09.
Local Economy (Including Transportation)
(£160,000)Concessionary Fares.
The September Council Budget monitoring report requested a report on the assumptions being made within 2008/09 as a consequence of variances within the new national scheme. This report will be included within the December Council Budget Monitoring Report. However further variations in journey numbers and reimbursement rates have resulted in an additional predicted saving compared to the budget provision made.
Other Financial Responsibilities
(£143,000)Dolphin Centre additional rent.
The final accounts for the Dolphin Shopping Centre for 2007/08 have recently been agreed. This has resulted in an additional £143,000 rent being receivable based on to the actual performance of the centre during the previous financial year. This amount is in addition to the base rent of £790,000 due in accordance with the terms of the lease.
£194,000Treasury Management Income.
In the September Council Budget Monitoring report it was predicted that the Council would generate £820,000 in additional Treasury Management Income compared to the original budget for the year. This surplus having been generated due to the combination of higher cash balances (due to slippage within the capital programme and reprofiled grant income) along with investment returns above that assumed within the budget due to extraordinary market conditions.
On the 6th November, in an attempt to jumpstart the economy, the Monetary Policy Committee (MPC) cut rates by the single largest amount since its independence in 1997, and reduced the bank rate to its lowest level since 1954. There is also a suggestion that the volatility in the market is not over with expectations of further rate cuts to come. The impact of these current and potentially future rate cuts will affect the Council’s ability to achieve the previously predicted level of additional income.
At this stage the income forecast has been reduced to reflect, in the main, the impact of the change on the London Inter Bank Bid Rate (LIBID) which is the significant element used in the rate at which the Housing Revenue Account (HRA) is required to pay the general fund for the debt taken out on its behalf.
The LIBID rate is the rate at which a bank is willing to borrow money, as opposed to the LIBOR, which is the rate at which banks are willing to lend money from one another.
4. Capital
4.1The Council’s current capital programme budget for 2008/09 is £31.6m net of a £1.0m contingency. This can be compared against the original budget for the year of £27.6m.
4.2The actual capital programme spend of £10.3m to the end of October 2008 represents an overall average of 33% spend 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. However spend patterns on complex projects will vary overtime. As previously reported a review of the capital programme is now in hand in order to further support the development of the Medium Term Financial Plan.
4.3A full set of individual scheme details is attached as Appendix B.
4.4Appendix B12 highlights the changes to the Capital programme that have occurred duringOctober.Included within these are the following significant changes;-
Children's Services
£1,152,000 Poole High (School Reorganisation)
Scheme reprofiled from 2009/10 as works are being carried out sooner than originally anticipated
£470,000 Learning Support Services (GAFF)
Temporary relocation as highlighted in Cabinet report 7th October 2008, funded from reserves
Environmental
£865,000 Poole Frontage Beach Management Works
Increased grant funding and reprofiling from 2009/10
(£283,000) Open Space & Play Strategy
Parkstone Park, Upton Park Walled Garden and Sandbanks Recreation Ground, reprofiled into 2009/10
Community Support
(1,800,000)Hamworthy Community Facility
Reprofile of a significant element of the scheme into 2009/10
Resources
(600,000)Growth Areas Grant
Reprofile of grant resources into 2009/10
5.Housing Revenue Account (HRA)
5.1Appendix C presents the Housing Revenue Account for the period to the end of October as prepared by Poole Housing Partnership (PHP).
5.2The key issues arising since the September report, as highlighted on the Appendix C3 commentary are;-
5.2.1The initial estimate for the Stock Option Appraisal process has tentatively been established as £210,000, split between 2008/09 and 2009/10 as £95,000 and £115,000 respectively. The resources required for 2009/10 will be incorporated within the Housing Revenue Account budget proposals to be presented in February 2009. Members should be made aware that this cost should only cover the initial appraisal process and will not cover the implementation of any preferred option (s).
5.2.2As referenced within section 3.2 of this report the recent fall in interest rates has resulted in a reduction in the likely debt charges on the £32m of actual Housing Revenue Account debt. However as assumed interest costs are a feature of the HRA Subsidy system, the reduction leads to an increase in the amount of negative subsidy payable to the Department for Communities and Local Government (CLG). The two amounts (less interest payable and higher government subsidy payments) do not match due to timing difference between the actual HRA debt and when the debt is recognised within the HRA subsidy system.
5.2.3Cabinet are requested to note the following HRA Capital programmes will be deferred (slipped) into 2009/10.
- £300,000Lagland Court Balconies
- £200,000Sustainability budgets
6. Budget Monitoring Reporting Assumptions
6.1Financial reports as set out are produced by Financial Services.
6.2Actual expenditure and income included is that posted to the Council’s financial ledger as at 31st October 2008 and covers the period from 1st April 2008.
6.3The profile of expenditure and income is based on service plan estimates as known.
6.4All variations to profile have been investigated. Only those that have led to an issue are now reported.
7.Proposed Action - Capital
7.1As noted in paragraph 4.2 the Capital programme is being reviewed. In the meantime it is requested that the Lead Officers provide detailed information to the Head of Financial Services in respect of the following scheme.
Lead Officer / Service Unit / Capital SchemeKelly Ansell / Housing & Community Services / Mannings Heath Gypsy and Traveller Site
8. Financial and Legal Implications
8.1 Financial Implications are as outlined within the report.
8.2 There are no Legal implications.
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9. Update on Previous Council Budget Monitoring Report Actions
9.1This section of the Council’s monthly budget monitoring report updates Members on the status of agreed actions from previous monitoring reports. The actions required by Cabinet and an update on the position against each are set out as follows:
Exhibit 1 Update on Previous Council Budget Monitoring Report Actions- Revenue
Agreed Action / Update commentary / Suggested Further Action1 / The Head of Transportation Services reports to Cabinet on the decline in the forecast income from Car Parking Services / Report to be included as part of the December Council budget monitoring report / Ongoing
2 / The Head of Transportation Services provides Cabinet with an update report on Concessionary Fares. The report should explain, the assumptions, which underpin the forecast saving for 2008/09, and those that are being made for future years. It should also include an explanation of how the recent changes to the M1 and M2 Wilts and Dorset services will cost the Council circa £168,000 in a full year and the extent to which the Council can control such changes and their financial impact. / Report to be included as part of the December Council budget monitoring report / Ongoing
Exhibit 2 -Update on Previous Council Budget Monitoring Report Actions – Capital
Agreed Action / Update commentary / Suggested Further Action3 / The below listed Lead Officers provide information to the Head of Financial Services in respect of the following listed capital schemes giving the timing of the capital works and the associated spending.
Lead Officer / Service Unit / Capital Scheme
Anthony Pinnock / CYPS Strategy Quality & / Harnessing Technology Grant
Anthony Rogers / Leisure Services / Open Space and Play Strategy
/ Updates have been incorporated within the updated capital programme with any changes referenced on Appendix B12. / No further action.
E WILKINSON
HEAD OF FINANCIAL SERVICES
Contact Officer Adam Richens Senior Finance Manager
Telephone: (01202) 63.3399
email:
Background Papers: Nil
Date: 14 November 2008
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[1] Pressure Saving / efficiency / underspend / additional income compared to the previously reported position.