Meeting documents

1 THE ISSUE

1.1 This report is the second quarterly monitoring report for the Authority as a whole for the financial year 2006/07and covers the 6 months to the end of September 2006. The report presents essential background information to the financial plan report elsewhere on this agenda. The report also includes a number of budget virement 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 Directors 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 budget control.

2.2 This year's revenue budget position and the ongoing pressures for 2007/08 highlighted in Table 1 of Appendix 1 are noted.

2.3 The capital expenditure position for the Council in the financial year to the end of September and the year end projections detailed in Appendix 3 of this report are noted, including the proposed review of the Highways capital programme to identify schemes that can be slipped into 2007/08 to contain the 2006/07 spend within budget.

2.4 The Executive agrees that the £521k of extra revenue reserves arising from final adjustments to the 2005/06 audited accounts be earmarked for the potential exceptional risks highlighted in the 2006/07 Budget Report.

2.5 The virements listed in Appendix 4(i) are approved and the changes in the capital programme listed in Appendix 5(i) are noted.

2.6 The Executive notes the latest Annual Efficiency forecast for 2006/07 as detailed in Section 7 of this report.

3 FINANCIAL IMPLICATIONS

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

4 COMMUNITY STRATEGY OUTCOMES

4.1 The report concerns the financial management of the Council which underpins implementation of the corporate plan, and hence the delivery of 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 The report provides 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 1 provides details of the current revenue budget position for 2006/07 highlighting a projected year-end overspend of £31,000 (or 0.03% of net budget). However, it should be noted that at present the service pressures highlighted in 2006/07 are only being balanced as result of the forecast underspend of £1.2m on capital financing charges. Appendix 1 (in table 1) also includes the effects of ongoing spending pressures on next years budget, current forecasts show pressures of £2.335m for 2007/08 net of recovery actions. Director's have agreed to 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 budget control. The 2007/08 pressures are being addressed as part of the Service Planning and budget process, these issues are included in the Financial Plan report which is also on this meeting's agenda.

7.4 Appendix 1 also provides information on adjustments made to the 2005/06 revenue and capital accounts following a review of expenditure. It is recommended that the £521k of extra revenue reserves arising from final adjustments to the 2005/06 audited accounts is earmarked to cover the potential exceptional risk items identified at the time of setting the 2006/07 budget.

7.5 Appendix 2 provides more detailed explanation for the revenue variances in 2006/07. Appendix 3 outlines the Council's current capital financial position for the same period and shows spend to the end of September 2006 totalling £16.758m or 84% of profiled spend, with a year end forecast spend of £3.423m or 6.6% below budget. The capital figures include a projected overspend of £400k in the Highways programme. It is proposed that a review of the Highways programme is carried out to identify schemes that can be slipped and funded from the 2007/08 allocation to contain spend within budget in 2006/07.

7.6 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. 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.

7.7 Revenue budget virements requiring Council Executive approval are listed in Appendix 4(i) together with an explanation of why the virement is necessary.
Appendix 4(ii) indicates the effect upon service and portfolio cash limits if these proposals are approved. The majority of these arise from clarification of budget management responsibilities following the Council's management restructure.

7.8 Changes to the capital programme are listed in Appendix 5(i), while Appendix 5(ii) provides the updated capital programme allocated by portfolio.

7.9 The Mid-Year Update for the 2006/07 Annual Efficiency Statement has been completed by Finance & Resource Managers based upon the monitoring figures included in this report, and has been submitted to the Department for Communities & Local Government. This forecasts that by then end of 2006/07, the Council will have achieved cumulative efficiency gains of £6.715m, £156k above the Government target of £6.559m. Full details of the Mid-Year Update can be viewed using this link to the Council's Public website. http://www.bathnes.gov.uk/BathNES/councilanddemocracy/councilbudgetsandspending/AnnualEfficiencyStatements/2006-07MidYearUpdate.htm

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.