TRAFFORD COUNCIL

Report to:Executive

Date:26October 2009

Report for: Information

Report of: The Executive Member for Finance and the Director of Finance

Report Title:

Revenue Budget Monitoring 2009/10 – Period 5 (April 2009 to August2009).

Summary:

Based on the budget monitoring for the first 5 months of the year, there is a forecast net overspend for all services of £0.5m,0.35%.
This is primarily due to the economic climatesuppressing income levels £1.5m, offset by procurement savings exceeding target by £(0.4)m.
Effect of economic climate:
Investment interest £0.445m;
Debt cost savings £(0.313)m
ManchesterAirport dividend £0.200m;
Planning and Building Control income £0.445m;
Parking income £0.400m;
Investment property portfolio rental income shortfall £0.145m;
Liability Order income £0.131m.
Of the above,£(0.5)m will be mitigated from reserves.
Other major variances:
Children’s Social Care £0.721m;
Physical Disabilities services £0.301m;
Older People services £(0.359)m;
Efficiencies in Highways, Parks and Countryside £(0.240)m;
Waste levy refund £(0.200)m;
Procurementefficiencies £(0.352)m;
Local Authority Business Growth Incentive (LABGI) schemeexpected award £(0.255)m.
Pay Award 2009/10 £(0.778)m
The forecast level of General Reserve in Table 2 is £(6.8)m, which is £(1.8)m above the minimum level approved by Council in February 2009. This is after including the net underspend on Corporate budgets of £(1.148)m.
Service balances brought forward from 2008/09 totalled £(1.1)m. After planned commitments and estimated outturn, there is expected to be a deficit balance of £1.2m at the end of 2009/10.
There is a £146k deficit in Council Tax relating to backdated property banding claims, mitigated by a surplus in collection of £(133)k.

Recommendation(s)

It is recommended that:
(a) The latest forecast and planned actions be noted and agreed.

Contact person for access to background papers and further information:

Name: Peter CarrExtension: 4534

Director of Finance.…………………………
Budget Monitoring - Financial Results

  1. Based on the budget monitoring for the first 5 months of the year, it is forecast that the Council will exceed its budget by £0.5m, 0.35%, for the 2009/10 financial year (Table 1 and graph at Annex 1). This includes a net overspend on the four Directorate budgets of £1.7m, 1.20%. Further analysis for each Directorate and the corporate budgets is shown at Annexes 2 to 6.

Table 1 : Budget Monitoring results by Directorate / Year end
Forecast (£000’s) / Percentage % / Period Movement
£(000’s) / Annex

Children & Young People

/ 690 / 2.13% / 71 / 2
Adult Social Services / 125 / 0.24% / 39 / 3

Prosperity, Planning & Development

/ 689 / 1.76% / 59 / 4

Transformation & Resources

/ 183 / 1.14% / 10 / 5

Total Service Variances

/ 1,687 / 1.20% / 179

Corporate budgets

/ (1,148) / (7.26)% / (722) / 6
Estimated outturn variance (period 5) / 539 / 0.35% / (543)

Main Variations

  1. The main variations included in the forecasts are:

Variances related to the effects of the current economic climate £1.5m:

a)£0.445m loss of income from investment interest;

b)Debt cost savings £(0.313)m;

c)£0.200m reduction in dividend income from ManchesterAirport;

d)Reduced income from Planning & Building Control £0.445m;

e)Reduced car parking income £0.400m;

f)An increased shortfall in the rental income from the investment property portfolio £0.145m;

g)Loss of Liability Order income £0.131m.

Use of reserves to mitigate variances:

h)Interest Rate Smoothing Reserves £(0.350)m;

i)Building Control Reserve £(0.105)m.

Other Major Variances:

j)Children’s Social Care relating to foster care and placement costs £0.721m;

k)Physical Disabilities services -demand for domiciliary care requiring additional spot purchases £0.301m;

l)Older People services - vacant hours in the in-house homecare service£(0.359)m;

m)Efficiencies from the integration of Highways, Parks and Countryside services £(0.240)m;

n)Waste levy refund linked to improved recycling rates £(0.200)m;

o)Procurement efficiency savings above target £(0.352)m;

p)Local Authority Business Growth Incentive (LABGI) scheme expected award £(0.255)m;

q)Pay Award 2009/10 saving of £(0.778)m against budget.

Impact of Economic Climate

  1. Of the total projected overspend for the Council approximately £1.5m can be attributed to the effects of the current economic climate, as listed above.
  2. There are other areasaffected but where additional costs can be reclaimed from central government:

a)predicted 10% increase in benefit recipients for the year, approximately £6.3m, including a 25% increase in benefit claimants needing to be assessed;

b)0.5% reduction in collection of business rates – approximately £750k. The cost of any shortfall in business rates is ultimately met by the Government, although the cash flow effect of delays in collection are met by the Council.

  1. The Council is also providing proactive support to residents and business, and in April 2009 the Executive agreed a number of initiativesfor which £491k has been earmarked in the General Reserve. These supplement measures already included in the approved 2009/10 budget.

Council Tax

  1. There is an estimated deficit in Council Tax income of £146k relating to backdated property band changes, which reduces to £13k after taking account of a £(133)k surplus in collection. Trafford currently has the best collection performance of the ten Greater Manchester councils, and there has been no evidence of the economic downturn affecting collection performance this year.

Reserves

7.The General Reserve balance at 31 March 2009was £(7.3)m. This is £(0.3)m higher than previously reported as a result of audit amendments made to the 2008/09 final accounts.The forecast balance after planned commitments is £(6.8)m (Table 2), which is £(1.8)m above the approved minimum level for operational purposes of £(5.0)m.

Table 2 : General Reserve Movements / (£000’s) / (£000’s)
Balance brought forward 31 March 2009 / (7,292)
Approved Support for 2009-10 revenue budget / 978
Planned One–off support in 2009-10:
- AGMA collaboration / 130
- Additional support for business and residents / 450
- Additional funding for voluntary sector grants / 41 / 621
Corporate budgets underspend (forecast) / (1,148)
Forecast balance 31 March 2010 / (6,841)

8.Service balances brought forward from 2008/09 were £(1.1)m. After planned commitments and the estimated outturn for the year, there is a projected deficit of £1.2m to be carried forward to 2010/11 (Table 3).

Table 3 : Service balances brought forward / B/f April 2009 (£000’s) / Forecast Movement in-year
(£000’s) / Forecast Balance (£000’s)

Children & Young People

/ (58) / 690 / 632
Adult Social Services / (273) / 125 / (148)

Prosperity, Planning & Development

/ 39 / 650 / 689

Transformation & Resources

/ (767) / 767 / 0

Total All Services (Surplus)/Deficit

/ (1,059) / 2,232 / 1,173

Recommendations

9.It is recommended that the latest forecast and planned actions be noted and agreed.

Annex 1

Annex 2

Annex 3

Annex 4

Annex 5

Annex 6

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