Meeting documents
Cabinet
Wednesday, 1st September, 2004
1111
|
Bath & North East Somerset Council |
|||
|
MEETING: |
Council Executive |
PAPER |
|
|
DATE: |
1st September 2004 |
||
|
TITLE: |
|||
|
WARD: |
All |
||
|
AN OPEN PUBLIC ITEM |
|||
|
List of attachments to this report: Appendix
1: Financial Monitoring Statement: All Council Spending |
|||
1 THE ISSUE
B7 This report presents the first monitoring information for the Authority as a whole for the financial year 2004/05 to the end of June 2004. The report also includes a number of budget transfer requests that require Council Executive agreement or are reported for information purposes as prescribed by the Budget Management Scheme.
2 RECOMMENDATION
The Council Executive is asked to:
B7 Note the expenditure and income position for the Council in the financial year to the end of June and the year end projections detailed in Appendix 1 of this report.
B7 Approve the virements listed in Appendix 2.
B7 Recommend to Council the allocation of £100,000 from revenue balances to provide funding for the remainder of 2004/05 for a Council project team in respect of the Council's input to the Southgate evelopment.
3
FINANCIAL IMPLICATIONS
B7 The financial implications are contained within the body of the report.
4 THE REPORT
B7 The Budget Management Scheme requires that the Council Executive consider the revenue monitoring position on a quarterly basis.
B7 Where overspent, services are expected to seek compensating savings to try and bring budgets back to balance. The Budget Management Scheme states that if overspending occurs it must be recovered.
REVENUE BUDGET MONITORING APRIL TO JUNE 2004
B7 Appendix 1 outlines the Council's current financial position for the 2004/05 financial year to the end of June 2004 by portfolio. The Appendix shows that there will be a projected year-end overspend of £1,002,000.
B7 Significant areas of over and under spend are highlighted in this report, but further explanations of the reasons for over and under spends in the current year are provided within the notes to Appendix 1.
B7 Social Services portfolio - forecast £970,000 over spend
Current estimates for budgets within the Social Services portfolio are that they will be overspent by £970,000 (2.8%). This is mainly in Adult Services in the Residential, Nursing and Domiciliary Care budgets. Pressure on fee levels and the loss of grants have been compounded by the statutory requirements to meet need, pressure to clear hospital beds and requirement to meet `Access' targets.
The Social Services management team meet regularly to review the situation. They have frozen a proportion of the furniture and equipment budgets and Management panels are currently in place to ensure assessed needs meet the eligibility criteria. Consultation is underway to tighten the published eligibility criteria. Benchmarking of B&NES costs against comparator LAs has identified which cost areas are higher than average and work is underway to see if these can be reduced, by learning from others.
A full report will be brought back to the October Executive with options to address the overspend. This report will address the actions required to eliminate overspends in future years. In the current year planned actions will make some inroads in to the overspend however it is very unlikely that it will be eliminated.
B7 Lifelong Learning Portfolio - forecast £66,000 overspend
The projected overspend arises due to new school openings, increased school rents, Home to School Transport and higher than expected school redundancies. Savings identified have limited the overspend to £66,000 mainly due to lower than anticipated Nursery Grant payments.
The department is actively reviewing several central budgets to provide efficiency savings to meet the shortfall. The ability to accurately predict full year spending projections is enhanced when September pupil numbers and their needs are identified. More accurate predictions will enable the department to prioritise some spending plans and limit expenditure in order to recover the current overspend predictions.
B7 Leader's Portfolio - forecast £120,000 over spend
Corporate Projects are projecting an overspend of £140,000 mainly due to Infoplus savings targets which are unlikely to be achieved this year (£90,000) and in the Contact Centre, where there are pressures relating to the Staff Transfer and Call Centre projects.
The Council's retained ICT budgets are projecting an overspend of £34,000 due to delays in the rollout of the XP operating system which has meant that rechargeable days are less than expected. This is expected to be recovered in this year or in 2005/06 from recharges made.
Youth & Community Services are anticipating a year end underspend of £54,000 due to vacancy management savings.
B7 Sustainability & The Environment Portfolio - forecast A394,000 overspend
The Waste Management service has recorded a 5% increase in waste arising in the first quarter of the financial year. If waste growth continues at 5% throughout the remainder of the year then a £130,000 overspend is projected. We are also experiencing a rise in green and timber waste disposal prices - we have mitigated this forecast overspend by accelerating recycling initiatives, leading to a projected overspend by the service of £70,000.
The Public Convenience budgets are forecast to overspend by £62,000 due to slower implementation of the closure programme than anticipated.
These overspends are partially offset by a projected underspend of £38,000 in Planning due to increased income through recharges and staff savings and further actions in other service areas are being taken to reduce these forecast overspends still further.
B7 Resources Portfolio - forecast £330,000 underspend
The Council has experienced a better than anticipated cash flow in the first quarter of the financial year. This has enabled the Council to extend the period before it needs to enter into long term borrowing. As a result the Loan Charges budget is predicted to underspend by £340,000.
The balance of the Portfolio is made up from a number of over and under spends as detailed in the notes to Appendix 1.
B7 Tourism, Leisure & Culture Portfolio - forecast £53,000 overspend
Customer Service, Libraries & Information are projecting break even at year end overall with £80,000 income from the sale of library materials, a £27,000 VAT refund due to changes in custom rules, staff vacancy savings and increased generation of income at Bath and Keynsham Libraries respectively being reinvested in changes to the service to deliver developments in the Service Plan and associated Customer access improvements.
There are overspends in Tourism (£35,000) and Leisure (£18,000). The Tourism overspend relates to an accommodation charge for which no provision is available and the Leisure overspend is due to start up costs relating to the Council managing the public provision of Chew Valley School leisure facilities, having failed to reach agreement with the previous partner. Full recovery of this overspend will be achieved in future years.
B7 The Chief Executive, Resources Director and the Executive Member for Resources will require proposals for achieving a robust outturn that is more in line with the budgets set for 2004/05. Cost reduction plans should be produced within and across Services to reduce these projected overspends. These will be detailed in the next monitoring report to the Executive in December.
B7 Directors Group are actively monitoring and managing the Council's financial position, Executive members will be regularly briefed on progress by Directors and given an update in monthly monitoring reports.
VIREMENT REQUESTS 2004/05
B7 Budget transfers requiring Council Executive approval are listed in Appendix 2 together with an explanation of why the transfer is necessary.
B7 Appendix 3 indicates the effect upon service and portfolio cash limits if these proposals are approved.
B7 This is the first virement list to be presented to you since the budget was set in February. It therefore includes all carry forwards from the 2003/04 outturn, creation of budgets arising from new grants, and the staff transfers undertaken as part of customer access. Also it includes the claw back of inflation allocated for the pay award, which was finally agreed at 2.75%, when the original allocation was 3%.
5 SOUTHGATE PROJECT
B7 Council, at its meeting on 15th July, noted that that the accumulation of major projects, including those undertaken directly by the private sector but which are likely to affect the Council's area significantly over the next few years, all point to a shortfall in key skills and resources and further noted that a recommendation will be made to seek additional revenue funding to relieve resource pressures in highways control and to establish a project team in respect of the Council's input to the Southgate development.
B7 Appendix 4 provides additional information in respect of the implications of the Southgate development for the Council, and requests £100,000 in order to fund a cross-service project team for the remainder of this financial year. The only funding available is revenue balances, and the Council Executive is therefore requested to recommend to Council that £100,000 is released from balances. Future years' effects will need to be assessed and incorporated into the financial plan review. Information relating to the pressures in highways control are still being assessed and a further report will be made in due course.
B7 After consideration of the 2004/05 outturn in June the level of general fund revenue balances was anticipated to be £5.33m. The prudent level required has been set at £7m. Since that time Council at 15th July meeting, approved use of £250,000 for planning costs as part of the capital review mentioned in paragraph 5.1.
6 RISK MANAGEMENT
B7 A risk assessment related to the issue and recommendations has been undertaken, in compliance with the Council's decision making risk management guidance.
7 RATIONALE
B7 This report is presented as part of the reporting of financial management and budgetary control required by the Council.
8 OTHER OPTIONS CONSIDERED
B7 There are no other options to be considered at this stage of the financial year.
9 CONSULTATION
B7 This report has been circulated to the Executive Member for Resources, the Chief Executive, the Chief Financial Officer, the Section 151 officer, the Monitoring Officer and all Financial Managers.
|
Contact person |
Anne Feakes 01225 477320, Tony Bartlett 01225 477302 |
|
Background papers |
Budget Management Scheme |
SOUTHGATE REDEVELOPMENT.
RESOURCING REQUIREMENTS.
Scheme Background
On 25th September 2003, full planning permission was granted for a high quality mixed use redevelopment of the Southgate area of Bath. The planning consent was issued to CGNU Life Assurance Limited (in conjunction with its Fund Manager, Morley Fund Management) who are the Councils' tenants under a ground lease for 99 years granted in June 1974.
On 22nd March 2004 terms were provisionally agreed on the property deal, whereby the Council would accept a surrender of the existing lease to CGNU and grant a new one on the completed development at a minimum rental of £1,200,000 per annum, or 5% of the rents received, whichever is the higher. In addition, CGNU agreed to guarantee the Council the sum of £1,150,000 per annum during the 5 year redevelopment period.
It is anticipated that the redevelopment will commence in early 2005, prior to which the following three issues require to be determined:-
B7 Agreement to the timing and terms of the new head lease. This will cover such areas as rental, new lettings, assignments, sales and in general the process for the estate management of the redeveloped Southgate. It is the Council's view that the new lease should be implemented only on practical completion of the re-development scheme.
B7 The agreement to and the signing of the development/building agreement which will cover the redevelopment programme. This agreement will ensure that the redevelopment is completed in accordance with agreed design and specification and will contain and specify details of all areas of methods of working during the build period to include highways, environmental health and city centre management. The projected timescale for the signing of the Development Agreement is September, 2004, by which time the project team must be fully resourced and operational.
B7 At present the project is being managed through the "Partnership" Steering Group which meets on a regular basis and comprises Chris Patterson (CGNU/Morley Fund Management),Tom McBain and Andy Nash (B&NES), David Pelter and Greg Beach (Buro 4, the CGNU project consultants), Richard Herbert (Strutt & Parker, Property Consultants to CGNU), Brian Raggett (CB Richard Ellis, Property Consultants to B&NES) and Colin Darracott (Executive Member (B&NES). The group is jointly chaired by Morley and B&NES and also requires the attendance as appropriate of the solicitors acting for both parties in the formulation of the agreements. At this stage, the project teams work concentrates on the property deal, although once the project becomes `live' then the major concern of the Council will be to manage the impact of the building development on the City centre and surrounding area.
City Centre management
Once re-development work starts (assumed Jan 2005) there will be considerable work for the Council in managing the impact on the area. Dedicated resources will be needed to manage traffic flows, press and publicity, tourism impact, environmental health, and economic development which cannot be accommodated within the Council's current resources. Planning for this will also need to be started by about September if the project is to cause as little disruption as possible.
The Council is in the process of setting up a dedicated Project Team which will be led by Andy Nash (Property & Legal Services) and will comprise a full time project administrator (to be appointed), Brian Raggett (CBRE, property consultant), professional staff from Property & Legal Services on both property and legal issues, and officers representing highways, planning, environmental health, finance, PR and economic development. All of these functions will expand as the project progresses.
This project team will be responsible to a project board, responsible for both the overall project strategy, and for ensuring that the Council's interests are protected. It will comprise Tom McBain (Head of Property & Legal Services, Lead Officer) Jean Hinks (Resources Director and project sponsor), Vernon Hitchman (Solicitor to the Council) and senior officers from Highways, Environmental Health and Economic Development, together with appropriate members of the Council.
There is currently no funding in place in respect of the Project Team, although an indemnity has been secured from CGNU to fund the Council's property consultants (CB Richard Ellis) and solicitors (Ashursts).
The salary costs within Property and Legal Services amounts to £135,000 p.a.
The estimate of salary costs for the other service officers' time is£80,000.
If the team is to be funded from September this year, until the end of the financial year, then I would estimate a total sum of all officers' input at£100,000 to take account of the upfront work required for traffic orders, road closures etc.
It is therefore recommended that Council approve a budget of£100,000 for this year from balances for this purpose, and that consideration for future years should be included within the financial plan.