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Cabinet
Wednesday, 6th December, 2006

Appendix 1

CURRENT REVENUE FORECAST FOR 2006/07 & ON-GOING PRESSURES 2007/08

1.1 Directors Group are actively managing the Council's financial position, and the table below summarises the management actions that have already been implemented to reduce the projected overspend to the reported level. Although the table shows at an overall level the Council is projecting a small overspend of £31,000, currently there are large areas of service pressures which are being offset by the £1.2m forecast underspend in capital financing costs. Table 1 also shows that the ongoing pressures net of recovery actions total £2.355m in 2007/08.

1.2 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. The ongoing pressures shown for 2007/08 are being addressed as part of the Service and Financial Planning process, a further report covering these issues is on the agenda for this meeting. That report highlights the need for containment of any service overspends in the current year.

Table 1 - Budget Position, Recovery Actions & Ongoing Effects
             

Strategic Director / Assistant Director

2006/07 Forecast Overspend
£'000

2006/07 Recovery in Apr-Sep Figures
£'000

2006/07 Net Position reported Apr-Sep
£'000

2007/08 Ongoing Pressures
£'000

2007/08 Ongoing Recovery Actions
£'000

2007/08 Net Forecast Position
£'000

Adult Care & Health Services

708

(715)

(7)

1,805

(962)

843

Children's Services

653

(357)

296

1,410

(180)

1,230

Customer Services

1,610

(786)

824

1,289

(1,050)

239

Support Services

126

126

170

(170)

Improvement & Performance

(65)

(65)

230

(230)

Council Solicitor

44

44

43

43

Major Projects

Corporate & Agency

(1,187)

(1,187)

Total

1,889

(1,858)

31

4,947

(2,592)

2,355

REVENUE BUDGET MONITORING APRIL TO SEPTEMBER 2006

1.3 Appendix 2 outlines the Council's current financial position for the 2006/07 financial year to the end of September 2006 by portfolio. The Appendix shows that there is a projected year-end overspend of £31,000 (or 0.03% of the net budget). However within this figure there are areas of over and under spending which are detailed below.

1.4 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. The major changes at portfolio level since the last budget monitoring report for April to June 2006 figures (Council Executive - 6th September) are shown in the table below:

Table 2 - Summary of major changes in revenue year-end forecast vs. budget since first quarter revenue budget monitoring report (Council Executive - 6th September 2006)

Portfolio

Change (£'000)

Main Reasons

Transport & Highways

+718

Overspend on concessionary fares due to provision of free bus travel, shortfall in car parking income and Penalty Charge Notice income, partly offset by reduction in spend on highways maintenance & street lighting.

Children's Services

-351

Flexible use of grant funding for Education Strategic Management in order to reduce the impact of the Home to School Transport overspend.

Sustainability & The Environment

-149

Waste Services savings in gate fees & taxes relating to landfill disposal, plus income from the Landfill Allowance Trading Scheme for the Council's surplus permits. Also, vacancy management in Cleansing and Planning.

Resources

-1,125

Mainly due to underspend on Capital Financing Costs.

Other Portfolios

-81

Details below and in Appendix 2.

Total

-988

  

1.5 Children's Services portfolio - forecast £386,000 over spend

Education Services are predicting a year end overspend of £180,000, with the access service showing an overspend of £334,000 due to school transport costs, the Executive received details of the main factors causing this overspend in the last quarterly monitoring report in September. This is partly offset by a £91,000 forecast underspend on Education Strategic Management, due to flexible use of grant funding. The balance within Education is made up of other smaller underspends in special education and non schools funding, and a £25,000 overspend on School Improvement, due to the implementation of new modules within the Education Management System (EMS).

The balance on the portfolio is made up of an underspend of £31,000 in Youth & Community, and an overspend of £237,000 in Social Services Children's Services due to the increase in Independent Fostering Placements since the start of 2005/06.

1.6 Resources Portfolio - forecast £982,000 under spend

The forecast underspend on this portfolio is made up of a £22,000 underspend in Corporate Support Services due to vacancy management in Human Resources, a £57,000 overspend in Support Services due to unbudgeted costs in Revenues & Benefits incurred on consultancy work in support of the Benefit Fraud Inspection response, and a £170,000 overspend in Traded Services due to school catering income falling below targets and the increased Building Engineering Services contribution not meeting savings targets.

The spend forecast on capital financing costs is for an underspend of £1,200,000. The main factors causing the underspend are as follows:-

§ The budget for borrowing and Minimum Revenue Provision (MRP) in 2006/07 was based on a full spend of capital in 2005/06 (after the re-phasing of £10m of capital to 2006/07 based on the budget monitoring information available at that time). The year end position for 2005/06 included further capital spend slippage of £9m into 2006/07 which resulted in lower MRP payments in 2006/07 and interest savings from the delayed need to borrow.

§ In line with the annual borrowing strategy, further borrowing has been taken out during this financial year in support of the Council's capital programme due to long term interest rates falling below target levels. Capital spend for the first six months of 2006/07 is only 32% of the annual budget, leaving the Council with a positive cash balance which has been invested short term. The interest receipts from these investments have also contributed to the underspend as short-term interest rates earned are around 1% higher than the long-term borrowing rates.

The balance within this portfolio is due to a small overspend on other Corporate budgets of £13,000.

1.7 Economic Development Portfolio - forecast £173,000 under spend

The Training Services budgets have been revised to reflect the new contracts which commenced on 1st August 2006, the projected underspend is £74,000 due to vacant posts and an increase in "Entry to Employment" income. Other underspends are due to vacant posts in the Economic Development Admin team and Employment Development Services. In addition, there is a £29,000 forecast underspend in Corporate Estate due to lower than anticipated premises costs.

1.8 Social Services Portfolio - forecast £74,000 over spend

Adult Services year end forecast is for an under spend of £155,000, due to savings in the residential placement budget. The Learning Difficulties Pooled Budgets are forecast to be overspent by £279,000, due to care placements, although this figure assumes some management actions which are high risk and are being closely monitored. This is offset against a forecast underspend of £49,000 in Elderly Person's Homes and other areas through savings in salaries and overheads.

1.9 Transport & Highways Portfolio - forecast £1,055,000 over spend

The forecast overspend on this portfolio consists of £653,000 in Public Transport due to the new obligation to provide free off-peak concessionary bus travel, a £65,000 forecast overspend on Customer Services overhead costs due to interim management costs, a £439,000 shortfall in Car Parking income due to Pay On Foot deficit and a £180,000 shortfall of Penalty Charge Notice income due to less ticket issues. The Assistant Director Environmental Services is preparing a paper on the Parking Strategy to provide options for addressing these issues, which is due to be presented to the Informal Executive meeting on 22nd November 2006.

These overspends are partly offset by a £301,000 underspend in Highways Maintenance & Street Lighting due to tight control and capitalisation (£150,000), in order to reduce the overall overspend on the Portfolio.

1.10 Sustainability & The Environment Portfolio - forecast £150,000 under spend

Waste Management is forecasting an underspend of £152,000 after offsetting increased recycling costs against the savings in gate fees, taxes relating to landfill disposal and income from the Landfill Allowance Trading Scheme for the Council's surplus permits.

There is a forecast £40,000 overspend in Waste Operations due to increased running costs of the transfer stations, with the remaining £38,000 underspend due to vacancy management in Planning and Cleansing.

1.11 Tourism, Leisure & Culture Portfolio - forecast £76,000 over spend

There is a £153,000 forecast overspend in Destination Management, which includes costs associated with management and monitoring of thermal springs water. Now that the Spa is operating successfully, the service can assess these costs more accurately and submit them for consideration in the Council's budget for 2007/08.

The balance of the Portfolio consists of forecast underspends in Heritage and Leisure Services.

1.12 Community Safety & Housing Portfolio - forecast £201,000 under spend

There is a forecast underspend of £45,000 in Housing, £60,000 in Environmental & Consumer Services and £72,000 in Building Control as a result of vacancy management and surplus licensing income.

The remaining £24,000 forecast underspend in this Portfolio is due to small underspends in the Youth Offending and Drug Action Teams.

2005/06 STATEMENT OF ACCOUNTS ADJUSTMENTS

1.13 As part of the finalisation of the Council accounts for 2005/06 a review of expenditure was undertaken. The consequent changes to the accounts were agreed by the Corporate Audit Committee on 27th September 2006. The impact of this is to increase the revenue underspend by £521,000 in 2005/06 leading to an increase in general reserves. It is recommended that this sum is earmarked within reserves to cover the potential exceptional risk items identified at the time of setting the 2006/07 budget.

CAPITAL BUDGET MONITORING - APRIL TO SEPTEMBER 2006

1.14 In the April to June budget monitoring report that was presented to the Council Executive at the meeting on 6th September 2006, a capital programme of £51.8 million was reported. Since then, the following changes have been incorporated into the programme, funded by Government grant or third party contributions;

Capital Scheme

£'000
   

Westfield Pedestrian Improvement

40

Improving Information Grant

93

Building Safer Communities Grant

52
   

Total Additions

185

1.15 These additions give a revised capital programme of £52.0m as reported in Appendix 3. Further additions to the capital programme of £15,000 additional Regional Housing Grant allocation and £54,000 Rural Bus Challenge Grant allocation, and the re-phasing of £1.5m of Social Housing Grant expenditure are reported in Appendix 5(i), and will be included in future capital monitoring reports.

1.16 Spend to the 30th September 2006 totalled £16.76m or 84% of profiled spend, with a year end forecast spend of £48.60m, or 93% of budget. Details of the current monitoring position are given in Appendix 3.

1.17 The Highways Capital Programme is currently forecasting a year end overspend of £400,000. This is due to the planned capitalisation of £150,000 street lighting costs in order to reduce the forecast revenue overspend for the portfolio, and a £250,000 overspend on schemes in the current year programme. It is proposed that the current Transportation & Highways capital programme for 2006/07 be reviewed in order to identify schemes to be slipped into 2007/08 and funded from next year's capital allocation.

1.18 Current indications are that capital receipts targets assumed in the financing of the capital programme will be met in 2006/07. Progress against target will continue to be monitored as the year progresses and any issues will be highlighted to Projects Programme Board and reported back to the Executive in future budget monitoring reports. The target receipts from Housing Right to Buy sales is set at £1m in 2006/07, actual receipts to the end of September are £1.5m with projected receipts of around £2 million expected by the end of the financial year.