Meeting documents

1 THE ISSUE

1.1 This report presents the financial monitoring information for the Authority as a whole for the financial year 2009/10 to the end of July 2009.

2 RECOMMENDATION

The Cabinet agrees that:

2.1 Strategic Directors should continue to work towards managing within budget in the current year for their respective service areas, and to manage below budget where possible by not committing unnecessary expenditure, through tight budgetary control.

2.2 This year's revenue budget position as shown in Appendix 2 is noted.

2.3 The capital expenditure position for the Council in the financial year to the end of July and the year end projections detail in Appendix 3 of this report are noted.

2.4 The revenue virements listed for approval in Appendix 4(i) are agreed.

2.5 The changes in the capital programme listed in Appendix 5(i) are noted.

2.6 The movements in the Recession Reserve listed in Appendix 6 are noted.

2.7 The drawdown from the revenue contingency reserve of £20,000 in respect of Friendship Links with China, as described in 5.11 below, is agreed.

2.8 There is likely to be a drawdown from the revenue contingency reserve of an amount which is considered to be in the range of £20,000 to £50,000, with the final sum being authorised by the s151 officer in consultation with Cabinet Member for Resources, in respect of Norton Radstock Town Council review, as described in 5.12 below.

2.9 The additions to the 2009/10 capital programme as detailed in Appendix 7 are approved.

2.10 Council be asked to confirm the revenue budget allocation of £35k in 2009/10 rising to £230k per annum by 2011/12 in respect of potential debt charges arising from the 'places for change' project (to enhance facilities for the homeless in Bath), which would enable a total Council capital contribution of up to £3m (including land/property), even though there is now no certainty of match funding, subject to satisfactory project proposals being developed and agreed by the Cabinet members for Housing and Resources.

3 FINANCIAL IMPLICATIONS

3.1 The financial implications are contained within the body of the report.

4 CORPORATE PRIORITIES

4.1 The annual service and resource planning process allocates scarce resources across services with alignment of these resources towards our corporate improvement priorities as set out in the Corporate Plan. This report monitors how the Council is performing against the financial targets set in February 2009 through the Budget setting process.

5 THE REPORT

5.1 The Budget Management Scheme requires that the Cabinet consider the revenue and capital monitoring position four times per year.

5.2 For revenue, 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.

5.3 Appendix 1 highlights significant areas of forecast over and under spends. Appendix 2 outlines the Council's current revenue financial position for the 2009/10 financial year to the end of July 2009 by Cabinet Portfolio. The current forecast outturn position is an overspend of 1.78% or £2.218m.

5.4 Recovery actions are being put in place and it is anticipated that the majority of the overspend will be recovered by the end of the financial year. These actions will be proactively managed by Strategic and Divisional Directors. These include:

• Drawdown of £158,000 from the recession reserve in respect of the parking variance
• Finalisation of the VAT refund in respect of leisure services for the period 1990-1994 of £1.068m (including interest), of which £700,000 has been included in the 2008/09 accounts, leaving £368,000 in 2009/10.
• The potential of up to £1m of further planned Customer Services actions, the implications of which are still being assessed.

5.5 Appendix 3 outlines the current position for the 2009/10 Capital programme, currently forecasting spend of £93.2m which is £7.6m less that the revised budget of £100.8m, of which £793k is underspend, and £6.8m is forecast to be rephased into future years. The total programme forecast to 2013/14 is expenditure of £328.9m which is £5.7m or 1.7% less than the budget. The total programme is likely to increase over time as more certainty is established over funding and approval of projects.

5.6 The Council's financial position, along with its financial management arrangements and controls are fundamental to continuing to plan and provide services in a managed way, particularly in light of the medium term financial challenge. Close monitoring of the financial situation provides information on new risks and pressures in service areas, and appropriate management actions are then identified and agreed to manage and mitigate those risks.

5.7 Revenue budget virements which require cabinet approval are listed in Appendix 4(i). Technical budget adjustments are shown in Appendix 4(i) for information purposes.

5.8 As part of the 2009/10 budget setting process, pay inflation of 1.75% (2% less 0.25% increased award agreed through arbitration in 2008/09) has been included as an estimate of the then unknown pay award. An offer has now been made by the National Employers for Local Government Services at 1.00%, with an extra 0.25% on the lower 7 points. A decision by the Unions on the pay offer is expected by 11^th September 2009. If this is accepted, it is likely to result in an estimated saving of around £500,000. It was agreed by Council in February's Budget Report to give delegated authority to the Divisional Director - Finance to adjust cash limits to reflect the actual pay award when confirmed. This would mean that any savings would be available for re-allocation in the current financial year and / or a contribution to reserves, recognising the medium term financial challenge. The ongoing effect of any saving would represent a marginal improvement in what is otherwise a very challenging financial future.

5.9 Changes to the capital programme are listed in Appendix 5(i), while Appendix 5(ii) provide the updated capital programme allocated by Portfolio.

5.10 The Council set up a recession reserve in February 2009 of £685,000. In addition, and in line with the Council resolution, subsequent allocations of Local Authority Business Growth Incentive grant (LABGI) have been added, giving a total of £1.061m. The movements to date on this reserve are detailed in Appendix 6. The allocations thus far are already in excess of the LABGI funding, and Cabinet need to be cautious in agreeing any further allocations in light of the overspends highlighted in this report, some of which are recession related, and the potential for further adverse financial impacts to emerge.

5.11 A full report is being presented to Council on 10^th September 2009 on Friendship Links with China. In the mean time, Cabinet are requested to consider the allocation initial funding of £20,000 from the revenue contingency reserve, in order to cover the initial exchanges as part of this agreement.

5.12 The costs of the current review & possible constitutional changes of Norton Radstock Town Council is estimated to be in the range of £20k - £50k. It is proposed that this is funded from the revenue contingency reserve.

6 RISK MANAGEMENT

6.1 The substance of this report is part of the Council's risk management process. The key risks in the Council's budget are assessed annually by each Strategic Director, with these risks re-assessed on a monthly basis as part of the budget monitoring process.

7 EQUALITIES

7.1 This report provides information about the financial performance of the Council and therefore no specific equalities impact assessment has been carried out on the report.

8 RATIONALE

8.1 The report is presented as part of the reporting of financial management and budgetary control required by the Council.

9 OTHER OPTIONS CONSIDERED

9.1 None

10 CONSULTATION

10.1 Consultation has been carried out with the Deputy Leader of The Council & Cabinet Member for Resources, Strategic Directors, Section 151 Finance Officer, Chief Executive and Monitoring Officer.

11 ISSUES TO CONSIDER IN REACHING THE DECISION

11.1 This report deals with issues of a corporate nature.

12 ADVICE SOUGHT

12.1 The Council's Monitoring Officer (Council Solicitor) and Section 151 Officer will have had the opportunity to input to this report and have cleared it for publication.