Meeting documents
Cabinet
Wednesday, 3rd September, 2003
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Bath & North East Somerset Council |
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MEETING: |
Council Executive |
AGENDA |
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MEETING DATE: |
3 September 2003 |
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TITLE: |
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WARD: |
All |
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AN OPEN PUBLIC ITEM |
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List of attachments to this report: App 1: Provisional Revenue Outturn by Director 02/03 App 2: Reasons for variances 02/03 App 3: Provisional Revenue Outturn by Old Portfolios 02/03 App 4: Budget Items to be Considered for Carry Forward to 2003/04 |
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1 THE ISSUE
1.1 This report presents the provisional revenue outturn for 2002/03, with some recommended technical adjustments. The report refers to known potential pressures for the current year, as a preface to a request to carry forward specific budget items to 2003/04.
2 RECOMENDATION
That the Executive:
2.1 Note the provisional revenue Outturn for 2002/03 in Appendix 1 at £0.299m overspent, rather than the previously reported and expected £0.952m.
2.2Agree the carry forward proposals in the tables in Appendix 4 as exceptions to the budget management scheme.
2.3 Request Council to approve use of balances to write off the shortfall of £355,000.
2.4 Request Council to agree to use £51,000 of balances to write off the requirements for savings in member and democratic services budgets in 2003/04.
3 THE REPORT
BACKGROUND AND CONTEXT
3.1 This report provides information about how the Council did in terms of its spending against its budget in 2002/03, and its position compared to the forecast made for the 2002/03 overspend when setting the budget in February.
3.2 Page 1
The report follows the format of reporting services by Director, although the performance of services by old portfolio is also given in Appendix 3. Requests for carry forward are listed according with a reference to Director (see Appendix 4).
3.3 Elsewhere on the agenda, the final accounts are reported in their statutory accounting format for approval, e.g. in terms of the balance sheet and statutory accounting requirements.
3.4 The Executive received financial reports throughout the year highlighting the known pressure areas, and identifying those actions that can be taken to reduce these to manageable proportions. Since the financial situation last year was forecasting a large overspend, actions were taken to limit these overspends and find some additional savings during the last financial year.
3.5 A Budget Management Scheme (BMS) is in force, which specifies how over and under spending should be treated in any year.
REVENUE OUTURN 2002/03
3.6 Appendix 1 outlines the Council's provisional financial position for the 2002/03 financial year. Before any carry forward rules or approvals are applied, this amounted to a £299,000 overspending against the Budget for the year. This compares to the figures last reported to the Executive in March of a £952,000 overspend. The explanations for the variations are given in Appendix 2 and highlighted below. The over spend is less than predicted mainly due to the actions taken during the year to relieve spending pressures.
3.7 The main areas of overspending are Social Services, Housing, Education and Operations. There are under spends in the Corporate Support area, Corporate Budgets and Resources. However this is a generality and there is wide variation between services within those broad headings and also the reasons for these over and underspendings. There is more detail available in the background papers to this report.
3.8 In Social Services there is a significant overspending on children's placements and pressures on Private Sector Home Care budgets and residential/nursing placement budgets. The over spend in these areas has been significantly offset by under spends in the salaries budgets. In Housing much of the over spend was due to a steady growth in demand for bed and breakfast and temporary accommodation since stock transfer. In the transfer of Spa Care Line not all staff were redeployed and so some additional redundancy costs have been incurred.
3.9 In Education the ISB overspend will be carried forward. The over spend is due to higher than expected pupil numbers and increased statementing costs.
3.10 The Operations overspend was due to an overspend on Leisure services.
3.11 In Corporate Support the under spend is due to slippage on Financial Plan items. In Corporate Budgets there was an over spend on Audit fees due to the costs of Legal challenges and the additional input to CPA process. However there was a saving on the debt charges. But not all of the provision made for insurance increases and the provision for the old Housing Revenue Account was not required after the account was closed.
CURRENT SPENDING - 2003/04 BUDGET POSITION
3.12 A number of early financial pressures have already come to light in the current year. These can be seen in more detail elsewhere on the agenda in the first monitoring report.
3.13 Page 2
In particular the attempts to make paper reduction measures as an efficiency saving in Members' budgets has not been achieved in the current year or in previous years. It is clear that the Council's demands have exceeded the available budgets and that modernised working has not achieved the anticipated reduction in paper usage. Measures are in hand to recoup more of the costs in future from those who generate the paper volume and who generate extra meetings beyond the corporate core agreed. In total the accumulated budgets are £22,800 in democratic services and £28,120 in member services, a total of £50,920 or £51k.
3.14 Action will be taken to try to mitigate all other cost pressures in the current financial year.
DECISIONS REQUIRED RELATING TO OVER AND UNDER SPENDS
3.15 Decisions are needed on some of the items in Appendix 4 relating to under and over-spending in 2002/03. Each section of Appendix 4 is clearly marked for information or for decision. In particular, decisions are required in tables 3 to 6 of Appendix 4. If all these items are approved, this would give a final overspend of £0.7m, compared to a forecast overspend in March of £0.952m. The budget approved included set aside balances of £342,000 to meet overspending pressures, and it also increased balances overall by £414,000.
3.16 If a decision is made to carry forward all the items listed in appendix 4, all of the contingency set aside for over spending will be required. In addition, Council will need to be asked to approve using a further amount of balances to finance the shortfall in 2002/03 of £355,000.
3.17 Table 6 includes a recommendation that the overspend be carried forward to the current financial year for the Arts service, effectively reducing the Community Arts budget this year by £4,000. It would be extremely difficult for the service to absorb this one off reduction in its budget, which (other than staff) consists almost entirely of fees and grants to voluntary arts organisations. Grants have already been either made or committed for the year and temporary arrangements necessary to cover the work of the senior post have already absorbed any saving from the vacancy
3.18 A statement of balances is included as Appendix5. This was also reported in February 2003 at the time of budget setting and has been updated for known changes (these are highlighted in the appendix). However, if the requests in 2.3 and 2.4 are approved by Council the overall situation would be as follows:
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Description |
£k |
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Planned Opening available Balances in 2003/04 - also the Budget Forecast and Plan for April 2003 |
4,367 |
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Draw down further approval to fund PARIS project (July 2003) |
-100 |
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Additional Use in write off over spends and carry forward under spends (recommendation 2.3) |
-355 |
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Funding of Spa concert £30k |
-30 |
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Request for use of balances (recommendation 2.4) |
-51 |
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Net extra amounts transferred to balances since February 2003 |
78 |
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Page 3 Remaining available balances would then be (2.5% net revenue budget) |
3,909 |
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Recommended Minimum based on corporate risk assessment |
5,000 |
3.19Further monitoring reports will be provided to the members of the Executive on a monthly basis for 2003/04 and the overall position will be monitored during the year and formally reported to the Executive quarterly.
3.20 A further contribution to balances has been made from rates refunds in 2003/04 from several years prior to an including 2002/03. This is reported on the monitoring report elsewhere on the agenda and has been added as a note to appendix 5 for information.
3.21 For information movements in school balances are also included in appendix 5.
4 CONSULTATION
4.1 This report was sent to Trade Unions on 18 August 2003.
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Contact person(s) |
Anne Feakes, 01225 477320, Tony Bartlett, 01225 477302 |
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Background papers |
Budget Monitoring Reports throughout 2002/2003 to Council Executive Budget Resolution - Council February 18th, 2003 Council Budget Management Scheme, updated April 2002. |
Page 4
Page 4
Budget Items to be considered for carry forward to 2003/04
TABLE 1:
For Information only
A Summary of Appendix 1
Part A) Base Position Summary |
£000's |
Overspend - appendix 1, column 3 minus column 4 |
299 |
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Less net overspent items already automatically carried forward (table 2) |
-140 |
Add automatic carry forward of over spend (subject to approval of recovery plans) |
-771 |
Net Under spend - Net of above figures (BMS position) |
-612 |
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Part B) Final proposed position, (all in £000's) This includes all items contained within this Appendix and reflects the final position if all the items listed are agreed. |
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Net Under spend - figure above |
-612 |
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Add Carry forward Financial Plan items listed for decision - Table 3 |
331.5 |
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Add Carry forward Under Spends listed for decision - Table 4 |
218.5 |
Add Write off overspends listed for decision - Table 5 |
763 |
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Subtract Carry forward over spends listed for decision - Table 6 |
-4 |
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Net Overspend if all agreed would then be |
697 |
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Contingency for 2002/03 overspends was |
342 |
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Net difference, (worse than expected) is - To write this off will require approval of Council |
355 |
Historical Note: The approved budget for 2002/03 made provision for a write off of overspends of up to £1.95m net. Last year all but £342k of this was used. The remaining £342k was set aside as a contingency for 2002/03 pressures.
Page 13
Appendix 4 (continued)
Budget Items to be considered for carry forward to 2003/04
TABLE 2: Over and under spends already approved under Budget Management scheme (BMS) and Statutory Requirements (SR)
This table is for information - no decisions is required
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Over spend Carry Forward Requests - approved under rules of BMS - 2002/03 to 2003/04 |
Requested approval £ |
Already Approved under BMS/ SR £ |
Current Portfolio Holder |
EducationSchools over spend - adjustments of pupil numbers and this cash has been already allocated to schools in 2002/03 in excess of budget. 2003/04 budgets have already been adjusted for this. Under the fair funding legislation approval of this is a legal requirement as all funding allocated to schools is ring fenced. |
175,000 |
175,000 |
JG |
Under spend Carry Forward Requests - approved under rules of BMS - 2002/03 to 2003/04 |
Requested approval £ |
Already Approved under BMS/ SR £ |
Portfolio Holder |
Corporate Services |
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2003/04 budget - under spend on Chairman's allowance |
15,000 |
15,000 |
MH |
2003/04 Budget - Under spend on payroll development budget |
20,000 |
20,000 |
MH |
Total (net) |
-140,000 |
-140,000 |
TABLE 3
For decision - Slippage of Financial Plan items from 2002/03 to 2003/04 on carry forward.
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Financial Plan under spends proposed for carry-forward:- |
Requested approval £ |
Already approved under BMS £ |
Current Portfolio Holder |
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Corporate Support Unit Modernisation of Local Government |
23,558 |
MH |
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Corporate Training to roll out specific programme of Corporate Child Protection Training. |
21,404 |
MH |
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Customer Access to complete conversion of the Hollies |
81,051 |
PC |
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Page 14 New Payroll System (excluding budget saving of use of under spend) so £90k in total - linked to PARIS agreement as work has been delayed because of negotiations |
70,000 |
see table 2 |
MH |
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CIS Web Development - as above linked to PARIS agreement |
9,004 |
PC |
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Community Strategy - slippage in completion of the strategy until 2003/04 |
9,869 |
PC |
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DEEDS Local Plan - a number of objectives were received so work has been delayed even more than anticipated. There was already slippage agreed in the 2003/04 budget, this is additional to that. |
76,000 |
RT |
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Tourism Company - scheme subject to delay - requested rephasing of this budget |
27,481 |
NOF |
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Resources PARIS - small scheme under spend, also rephasing of budget |
13,137 |
MH |
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Total Proposed for Carry Forward |
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0 |
0 |
331,504This column indicates where figures are approved within the rules of BMS. If no figure it will need a decision to approve it
This column lists the figures requested
TABLE 4:
For decision - Under spend carry
forward requests not automatically approved
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Under spend Carry Forward Requests - those not approved under rules of BMS - 2002/03 to 2003/04 |
Requested approval £ |
Already Approved under BMS £ |
Current Portfolio Holder |
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DEEDS - Public Protection Request to carry forward under spend to implement recommendations of the service improvement review (Best Value Review). This had been highlighted to the former Executive Member. It had therefore already been flagged as a planned under spend to be carried forward and subject to your final approval. |
70,000 |
VP |
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Resources Remaining net under spend in Resources areas to fund service improvements in the Revenues and Benefits service. |
51,000 |
MH |
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Planning appeal Request to carry forward under spend on balance of DEEDS services to cover recent legal costs arising from a Planning appeal. The director has requested that should this not be approved, any net under spend in the DEEDS area is utilised to reduce the use of Lambridge balances required by the parking service. |
97,500 |
RT |
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Page 15 TABLE 4 TOTAL |
218,500 |
0 |
Appendix 4 (continued)
Budget Items to be considered for carry forward to 2003/04
TABLE 5:
For Decision - Requests for overspend write off from services in 2002/03
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Requests to write off overspends |
Request £ |
Already approved under BMS £ |
Current Portfolio Holder |
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Operations Operations Services (net) - This overspend could not be recovered within a reasonable period by the new Leisure Contract. |
125,000 |
0 |
NOF |
DEEDSCorporate Transport saving - although there have been some savings in car parking due to movement in staff parking permits, these have not been specifically identified for this saving. A green travel plan pilot is being implemented this year and can be rolled out to all areas in 2004/05. But it is not realistic to expect such a large recovery in 2003/04, particularly in view of the time frames required for implementation. |
80,000 |
0 |
Sir EJ |
Economic Development - Recreation ground case legal fees in excess of sum set aside by Council. One off costs arising as a result of the Council decision. |
8,000 |
0 |
CD |
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Housing and Social Services Social Services overspend - in view of current pressures upon the service such as changes in preserved rights funding, repayment of this large amount would be very difficult for the service to meet. The service had already reduced the potential overspends significantly in 2002/03 by management action. |
462,000 |
0 |
FH |
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Housing Overspend - this arose from the demand in growth for temporary accommodation. This was recognised by additional budgets in 2003/04. However the pressure is continuing with 20% of the budget spent in the first two months of 2003/04. Therefore it will be exceedingly difficult for the service to recoup this in the current financial year. |
44,000 |
0 |
VP |
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Corporate Support Services Repayment of this sum is not considered to be feasible in 2003/04 in view of the demands made on the service. |
44,000 |
0 |
MH |
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763,000 |
0 |
TotalPage 16
TABLE 6:
For Decision - Carry forwards of overspends anticipated from 2002/03
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Carry forward of overspends to be recovered in 2002/03 and subsequent years. |
Amount to be requested £ |
Amount Approved £ |
Anticipated Period of Recovery (years)* |
Portfolio holder to recommend recovery plan to Executive |
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Education Central Education Director Budgets - automatic carry forward of overspend (net) - approval of recovery only in 2003/04 |
0 |
8,000 |
1 |
Page 17 JG |
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Community Arts - to be recovered in 2003/04 The Community Arts budget totals only £579,000 and was already fully committed by the time that the extra recruitment costs were incurred in 2002/03 that caused this overspend. |
4,000 |
1 |
NOF |
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Total |
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4,000
8,000This column indicates where figures are approved within the rules of BMS. If no figure it will need decision to approve it
This column lists the figures requested
Use and Reconciliation of General Fund Balances to Date in 2002/03
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Type |
£k |
Actual Use ( ) or contribution (-) in 02/03 |
Of which Earmarked 03/04 and future years |
Net change since budget and proposed in report* |
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Reported opening general fund balances 2001/02 as in the final accounts |
5,817 |
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2002/03 uses (earmarking) |
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Risk Mgt & Invest to Save not yet spent |
Use |
-301 |
0 |
-301 |
0 |
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Legal challenge costs not yet charged in 2002/03 (provision from £1.9m HRA transfer) |
Use |
-100 |
-87 |
-13 |
0 |
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PARIS project |
Use |
-126 |
0 |
-126 |
0 |
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Other misc. previously earmarked uses (net) - net gain on estimates of £12k net (refunds). |
Use |
-110 |
-89 |
-86 |
-65 |
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Add use of Lambridge reserve in budget for decriminalised parking (to be repaid in future years) |
Addition |
350 |
350 |
0 |
0 |
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Use in Budget 2002/03 (as in current approved cash limits) |
Use |
-1,055 |
-1,055 |
0 |
0 |
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Expenses towards the set up of the new Tourism company in 03/04. |
Use |
-100 |
0 |
-100 |
0 |
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Executive contingency. This was set aside in the 2002/03 budget as a contingency for potential additional unavoidable costs in 2002/03 |
Use |
-342 |
-291 |
-45 |
0 |
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03/04 Budget earmarking for further legal challenge cost in the budget |
Use |
-100 |
0 |
-100 |
0 |
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Legal challenges - approval Council in July 02 for recreation ground |
Use |
-150 |
-159 |
0 |
-9 |
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VAT returned on Car Park charges (but see below also) |
Addition |
100 |
100 |
0 |
0 |
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Balances to be used in funding carried forward financial plan items in 2003/04 |
Use |
-318 |
0 |
-318 |
0 |
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Approval by Executive in October (£25k) and Council in November (£50k) to Norton Radstock Regeneration Company (NRR) up to £75,000 to assist with future Company operations |
Use |
-75 |
-75 |
0 |
0 |
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Allocation of remaining Avon balances to be transferred in October 2002 |
Addition |
463 |
463 |
0 |
0 |
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Contribution in 2003/04 budget to balances |
Addition |
414 |
0 |
414 |
0 |
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Net balances after budget approved (equal to 2.75% of recommended net revenue budget). Approved figure in 2003/04 budget. |
Balance |
4,367 A |
-74 |
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Movements since budget set: |
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If use balances to write off additional overspend as set out in report |
0 |
-355 |
-355* |
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Page 18
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VAT returned on Car Park charges |
Addition |
45 |
0 |
45 |
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Requested use of balances for member budgets |
Use |
-51 |
-51 |
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Rate refunds (plus more refunds are expected in 2003/04 to meet budget savings) |
Addition |
107 |
107 |
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Draw down of a further £100,000 of general revenue balances to fund the completion of the PARIS project. (Exec Review July 2003). |
Use |
-100 |
-100 |
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Approvals by Council since February 2003 |
Use |
-30 |
-30 |
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New Non-Earmarked General Fund Balances |
3,909 B |
691 C |
-458 = B-A |
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Net minimum for proposed £158m budget at 2.5% would need to be £3,970k On CPA measure (i.e. excluding schools) is 4.2% |
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There will be an addition to the balances from the rates refund July 2003 (net of costs and provision to meet savings set in 2003/04 budget) - see monitoring report |
Addition |
Approx £775k |
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When received new non earmarked balances total £k |
4,684 |
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Reconciliation to Final accounts report (elsewhere on this agenda)
Use of balances in 2002/03 (above) equals £691k (figure C). Amount reported in accounts is also £0.691m.
Movements in School balances in 2002/03
Primary Final balances of £2,270,532 a reduction of £57,431 on the previous year
Secondary Final balances of £750,156 a reduction of £11,523 on the previous year
Special Final balances of £213,371 an increase of £10,160 on the previous year
