CLACKMANNANSHIRE COUNCIL
REPORT TO: SCRUTINY COMMITTEE MEETING ON 21ST JUNE 2007
SUBJECT: HOUSING CAPITAL PROGRAMME: DRAFT FINAL POSITION 2006/07 AND SUMMARY TO 2008/09.
PREPARED BY: KISH PARMAR, PRINCIPAL ACCOUNTANT & SHEELAGH NORRIS, POLICY PLANNING MANAGER, HOUSING SERVICES
1.0Summary
1.1This report details the draft-final position of the Housing Capital Programme for 2006/07, together with a summary of the budgets for 2007/08 and 2008/09. The figures are subject to final internal review being carried out as part of the year end work and external audit. The appendix highlights any significant variations to the position previously reported.
1.2The table below summarises the capital borrowing requirement for the three years to 2008/09 and shows changes to approved budgets:
£’000 / 2006/07Approved Budget (Council Report 9th Feb 2006 / 2006/07
As per Mid Year Report / 2006/07 Draft Final Position for the year / 2007/08 Approved Budget (Report to Council on 8th Feb 2007) / 2008/09 Approved Budget (Report to Council on 8th Feb 2007 / Total for 3 years
Gross Expenditure before transfers / 9,370 / 9,370 / 9,742 / 9,510 / 8,665 / 27,917
Approved budgets transferred from 05/06 as per Mid Year Report / 225
Budgets transferred from 07/08 to 06/07 per year end position / 124 / (124)
Budgets transferred from 06/07 to 07/08 per year end position / (1,047) / 1,047
Gross Expenditure after Transfers / 9,370 / 9,595 / 8,819 / 10,433 / 8,665 / 27,917
Capital Receipts / (3,825) / (4,064) / (3,873) / (3,939) / (4,025) / (11,837)
Net expenditure (Council borrowing/Reserves) / 5,545 / 5,531 / 4,946 / 6,494 / 4,640 / 16,080
Gross Expenditure Variance from Approved 06/07 budget / 225
2.4% / (551)
(5.9%)
Gross Expenditure Variance from Mid Year figures / (776)
(8.1%)
1.3The gross expenditure after transfers of £8.819m represents the largest ever Capital Programme delivered by the Housing Service in conjunction with Property Services. Despite the major difficulties in one of the Kitchen contracts, which were previously reported, the Service has succeeded in delivering a very substantial programme.
2.0Recommendation
2.1The Scrutiny Committee is asked to note the financial position and the borrowing requirement for Housing capital programme for the three years to 2008/09.
3.0BACKGROUND
3.1A report reviewing the mid year position of the Housing Capital Programme for 2006/07 was presented to the Council meeting of 19th October 2006. The Council approved the mid year adjustments proposed in that report which showed projected gross expenditure of £9,595k, including £225k of approved budget carried over from 2005/06 (an increase of 2.4% from the budgeted position). The projected capital receipts of £3,825k from Right to Buy sales were expected to remain as budgeted. However, this would be augmented by receipts of £239k from sale of land/property held on the HRA, thereby reducing the net borrowing requirement for 2006/07 to £5,531k. The net borrowing requirement for the three years to 2008/09 reported to the Council was £15,742k
3.2Comparing the Mid-Year approved budgets to the draft-final position for 2006/07, the gross expenditure shows a net decrease of £776k (8.1%). This variance comprises the following elements:
3.2.1A net transfer of budgets between 2006/07 and 2007/08.Housing Service is proposing to transfer £1,047k to 2007/08, of which the most significant is £365k in respect of Doors, £274k for Kitchen Renewals, £86k for Area Improvements and £78k for the Bathroom project. Conversely, it has been necessary to transfer £124k from 2007/08 to 2006/07 in order to bring forward expenditure on certain projects ahead of completion date. Two material projects in this respect are Thermal Insulation (£74k) and Communal Areas (£33k). These transfers are necessary to accommodate the rescheduling of the capital programme as part of the 3 year capital plans and do not represent an increase in spend on these budgets.
3.2.2A net over spend of £147k in various projects.Budgets for Feasibility Studies and Other Costs (£88k) were under-spent. These are netted off against overspends of £169k in Water Supply Pipe Replacements (transfer of budgets from 05/06 to fund this was reported to the Performance & Audit Committee in February), £54k in Structural Works and other minor overspends. The reasons for these variances are detailed in the Appendix.
3.3The capital receipts have decreased by £191k to £3,873k from the position projected in the mid year report. Although the Council sold the predicted number of properties, receipts were not as high as originally anticipated. However, the shortfall has been compensated to a degree by receipts from Housing land and shops.In 2007/08, capital receipts will be carefully monitored. Early sales figures indicate that the receipts may be higher than estimated. However, it is difficult to predict the capital receipts out-turn with any certainty as they are dependent on a number of factors out with the control of the Council,e.g. type and number of properties sold and the level of discount for which tenants qualify.
3.4Taking the factors described in 3.2 and 3.3 above, the net expenditure (borrowing requirement) for 2006/07 is £4,946k which is a decrease of £585k compared to the Mid-Year position. Of this £923k are attributed to transfers as detailed in 3.2.1 above (which will not have an impact on the overall borrowing requirement).
3.5It should be emphasised that the above draft position is subject to internal year end review and external audit. However, the final position is not expected to change significantly from the draft figures presented here.
3.6A report proposing the 3-year Housing Capital programme from 2007/08 to 2009/10 was presented to the Council at the Special Council meeting on 8th February 2007. The report recommended that the Council approve the budget for 2007/08, with officers to bring forward more detailed proposals when available. The 3-year capital programme proposals take into account the Council’s progress towards meeting the SHQS and work towards completion of kitchen and bathroom replacement programme for all tenants. The Council approved a gross expenditure budget of £9,510k. Taking into account the transfers detailed in 3.2.1 above, the revised projected gross expenditure for 2007/08 is £10,433k
3.7There being no change for the 2008/09 approved budgets, the net borrowing requirement for the three years to 2008/09 is £16,080 which is anincrease of £338k to the position reported in the Mid-Year report.Of this £191 is as a result of the shortfall in capital receipts as explained in 3.4 above and the balance of £147k being overspends in various projects as explained in 3.2.2 above.
3.8Where appropriate, Housing Services will seek approval to carry forward unused budgets from 2006/07 to 2007/08, to be added to the budgets already approved by the Council for 2007/08 in order to complete the projects. The draft-final position shows that a carry over of approved budgetsfrom 2006/07 of £1,047k will be required for 2007/08. Details of these carry forwards will be provided in the next report.
4.0CONCLUSION
4.1The draft-final position for 2006/07 shows a net borrowing requirement of £4,946k. It is subject to internal review and external audit, but the final position is not expected to be significantly different
4.2The net borrowing requirement for the three years to 2008/09 is expected to be £16,080k, taking into account all transfers between the three years proposed in this report to accommodate the rescheduling of the capital programme.
4.3The draft-final position indicates that the Service will require to carry forward unspent budgets of £1,047k in 2006/07 to 2007/08. Details of these carry forwards will be provided in the next report
4.4The 3 year budgets for 2007/08 to 2009/10 presented to Council takes account of the business plan to deliver the SHQS and ‘Clackmannanshire Standard’in consultation with the Council’s tenants and their advisors.
5.0SUSTAINABILITY IMPLICATIONS
Not applicable to monitoring reports
6.0IMPLICATIONS FOR COUNCIL
6.1Financial implications:As noted in the report.
6.2Staff implications:None
6.3Declarations:
1The recommendations contained within this report support or implement Corporate Priorities, Council policies and/or the Community Plan:Corporate Priorities /
Council Policies /
Community Plan /
2In adopting the recommendations contained in this report the Council is acting within its legal powers /
3The full financial implications of the recommendations contained in this report are set out in the report. This includes a reference to full life cycle costs where appropriate /
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Head of Finance
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Director of Corporate Development
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