Meeting documents

1 THE ISSUE

1.1 This report presents the first monitoring information for the Authority as a whole for the financial year 2006/07 to the end of June 2006. The report also includes a number of budget transfer requests for both revenue and capital that require Council Executive agreement or are reported for information purposes as prescribed by the Budget Management Scheme.

2 RECOMMENDATION

2.1 the expenditure and income position for the Council in the financial year to the end of June and the year end projections detailed in Appendices 2 & 3 of this report are noted.

2.2 the virements listed in Appendix 4 are approved and the changes in the capital programme listed in Appendix 6 are noted.

2.3 The report on Transport & Highways and Home to School Transport (Appendix 8) is noted and in light of the on-going budget pressures highlighted in these areas, the 2005/06 overspends are written off against the earmarked reserves created as part of the 2005/06 outturn report. (paragraph 5.7)

3 FINANCIAL IMPLICATIONS

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

4 COMMUNITY STRATEGY OUTCOMES

4.1 This report is for information and the recommendations do not directly contribute to specific Community Strategy outcomes.

5 CORPORATE IMPROVEMENT PRIORITIES

5.1 The Annual Financial and Service 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 2006 through the Budget setting report.

6 CPA KEY LINES OF ENQUIRY

6.1 This report is for information and the recommendations do not directly contribute to specific high level CPA Lines of Enquiry. However the report does provide the Executive with information on financial performance against the Council's budget as required under the "Financial Management" Key Line of Enquiry, which is part of the Use of Resources element of the CPA.

7 THE REPORT

7.1 The Budget Management Scheme requires that the Council Executive consider the revenue and capital monitoring position on a quarterly basis.

7.2 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.

7.3 Appendix 2 outlines the Council's current revenue financial position for the 2006/07 financial year to the end of June 2006 by portfolio. The Appendix shows that there will be a projected year-end overspend of £1,019,000 (or 1.0% of net budget). Appendix 3 outlines the Council's current capital financial position for the same period and shows spend to the end of June 2006 totalling £4.444m or 96% of profiled spend.

7.4 Significant areas of over and under spend are highlighted in Appendix 1, and further explanations of the reasons for over and under spends in the current year are provided within the notes to Appendix 2 (revenue) and Appendix 3 (capital). Management actions are being taken to ensure that, as far as possible, all overspends will be brought into balance by the year end, however, there are clear pressures emerging at an early stage, and these may increase as the year proceeds.

7.5 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. 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.

7.6 The provisional revenue and capital outturn was reported to the Executive on 7^th June 2006. It was resolved at this meeting "To agree, at this stage, not to write off overspends in Education and Transport, but to create earmarked reserves to cover these overspends subject to reports on Home to School Transport and Transport & Highways to minimise the impact in 2006/07 and future years".

7.7 Appendix 8 provides background on the two overspends with an update on the position in the current year, and in both cases, offers a view that due to the on-going nature of the pressures the services will not be able to recover the 2005/06 overspends in 2006/07. In light of the on-going pressures being experienced in both Home to School Transport and Transport & Highways, it is recommended that the overspends are written off against the earmarked reserves created for these items.

7.8 The reported overspend for Education in the June report was stated at £339,000, and following late adjustments, the final position was slightly reduced to £329,000 as reported in Section 4 of Appendix 8. The final position on the Individual Schools Budget (ISB) was an underspend of £150,236 which is ring-fenced and automatically carried forward into 2007/08. The budget transfer to reflect the ISB carry forward and adjusted Education overspend is included in Appendix 4.

7.9 Revenue budget transfers requiring Council Executive approval are listed in Appendix 4 together with an explanation of why the transfer is necessary.
Appendix 5 indicates the effect upon service and portfolio cash limits if these proposals are approved.

7.10 Appendix 5 includes virements related to the Council restructuring which also requires some amendment to cashlimit headings to reflect the split of service responsibilities at Assistant Director level.

7.11 Changes to the capital programme are listed in Appendix 6, these include the carry forward of slippage from 2005/06. Appendix 7 provides the updated capital programme allocated by portfolio.

8 RISK MANAGEMENT

8.1 A risk assessment related to the issue and recommendations has been undertaken, in compliance with the Council's decision making risk management guidance.

9 RATIONALE

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

10 OTHER OPTIONS CONSIDERED

10.1 None.

11 CONSULTATION

11.1 Consultation has been carried out with the Executive Councillor for Resources, Other B&NES Services, Section 151 Finance Officer, Chief Executive and Monitoring Officer.

12 ISSUES TO CONSIDER IN REACHING THE DECISION

12.1 This report deals with issues of a corporate nature.

13 ADVICE SOUGHT

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

1.1 Appendix 2 outlines the Council's current financial position for the 2006/07 financial year to the end of June 2006 by portfolio. The Appendix shows that there is a projected year-end overspend of £1,019,000 (or 1.0% of the net budget).

1.2 Significant areas of over and under spend are highlighted within this appendix, but further explanations of the reasons for over and under spends in the current year are provided within the notes to Appendix 2.

1.3 Children's Services portfolio - forecast £736,000 over spend

1.4 Resources Portfolio - forecast £143,000 over spend

1.5 Economic Development Portfolio - forecast £118,000 under spend

1.6 Social Services Portfolio - forecast £164,000 over spend

1.7 Transport & Highways Portfolio - forecast £338,000 over spend

1.8 Community Safety & Housing Portfolio - forecast £122,000 under spend

1.9 Directors Group are actively managing the Council's financial position, the following management actions have already been implemented to reduce the projected overspend to the reported level:

1.10 Elsewhere on this agenda is a report on the Council's Service Planning process and Financial Plan position. Given the pressures on resources in the current year and future years, the Directors' Group are actively managing the Council's financial position with a view to bringing the reported revenue position for 2006/07 back in to line with budgets by the end of the financial year. Proposals on how this will be achieved are being developed and will be discussed by Directors' Group in September, and future monitoring reports will provide the Executive with an update on the situation. The Service Planning process also requires services to make plans for recovering in future years any potential overspends from 2006/07 which cannot be contained by the financial year end. This approach will help to remove any further calls on Council's reserves from requests to write-off overspends, in light of the need to increase reserves to reflect the potential risks faced by the Council. Executive members will be regularly briefed on progress by Directors and given an update in monthly monitoring reports.

1.11 On the 21^st February 2006 a capital programme of £44.2 million was approved by Council. Since then, the following changes have been incorporated into the programme;

The resources saved have to be allocated to items deemed to be within the remit of the new Dedicated School's Grant (DSG). The Forum considered the need to invest further in capital projects to enhance the infrastructure of schools.

On 23^rd January 2006, the Forum approved a budget plan that allocated the £185,000 to be used to prudentially borrow a capital sum to be invested in further capital projects in schools. The £185,000 was agreed to be used to repay the borrowing over a ten year period, to finance the £500,000 Seed Challenge and £928,000 Schools Capital Programme borrowing. A further £90,000 was identified for borrowing in 2007/8, although the School's Forum has the ability to reconsider this issue before setting its budget for 2007/8.