Meeting documents

1 THE ISSUE

1.1 This report presents the first monitoring information for the Authority as a whole for the financial year 2005/06 to the end of June 2005. 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 Appendices 4 are approved and the changes in the capital programme listed in Appendix 6 are noted.

2.3 the current position of available capital resources is noted.

2.4 the Income Sustainability Budget (£250,000) is deleted from the 2005/06 capital programme

2.5 an initial budget for the cost of the Spa claims settlement team at £1,594,250 is approved, made up of a virement of £352,000 from the main Bath Spa Project budget and the remainder (£1,242,250) from the capital programme contingency, within which full provision was made in 2005/06 for expenditure of this nature, and to note that a further report will be made to the Council Executive later in the year.

3 FINANCIAL IMPLICATIONS

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

4 THE REPORT

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

4.2 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.

4.3 Appendix 2 outlines the Council's current revenue financial position for the 2005/06 financial year to the end of June 2005 by portfolio. The Appendix shows that there will be a projected year-end overspend of £565,000 (or 0.33% 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 2005 totalling £3.506m or 28% of profiled spend.

4.4 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.

4.5 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.

VIREMENT REQUESTS 2005/06

4.6 Revenue budget transfers requiring Council Executive approval are listed in Appendices 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.

4.7 Changes to the capital programme are listed in Appendix 6, these include the carry forward of slippage from 2004/05. Appendix 7 provides the updated capital programme allocated by portfolio.

5 RISK MANAGEMENT

6 RATIONALE

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

7 OTHER OPTIONS CONSIDERED

7.1 None.

8 CONSULTATION

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

9 REASONS FOR URGENCY

9.1 Not urgent.

1.1 Appendix 2 outlines the Council's current financial position for the 2005/06 financial year to the end of June 2005 by portfolio. The Appendix shows that there is a projected year-end overspend of £565,000 (or 0.33% of the net budget).

1.2 Significant areas of over and under spend (including changes from previous reports) are highlighted in 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 £82,000 over spend

Heritage Services is projecting a £316,000 deficit for the year. The Council Executive has previously decided that surpluses and deficits are ringfenced to Heritage, but there is insufficient funding available within the Heritage trading reserve. If the current projection is maintained, it will therefore be necessary for Heritage Services to apply for a loan from Council balances for repayment over future years.

1.6 Transport & Highways Portfolio - forecast £40,000 under spend

1.7 Elsewhere on this agenda is a report on the Council's Financial Plan position. Given the pressures on resources in 2006/07 and future years the Directors Group are actively managing the Council's financial position with a view to bringing the reported revenue position for 2005/06 back in to line with budgets by the time of the next report in December. Executive members will be regularly briefed on progress by Directors and given an update in monthly monitoring reports. An underspending on capital financing costs is also anticipated, due to slippage in the capital programme in 2004/05 and 2005/06. The implications are currently being analysed and will be reported in detail in the next report.

1.8 On the 22^nd February a capital programme of £49.3 million was approved by Council. At the June meeting of the Executive additions of £273,000 were reported, in addition the following changes have been incorporated into the programme;

1.9 The Social Services slippage reflects the reprogramming of the Elderly Persons Homes reprovision programme from the early estimated programme. The Housing slippage is due to the set aside of £1.5 million from the Social Housing Grant for the extra care scheme as part of the EPH reprovision. It was originally anticipated that the land transfer for the extra care schemes would happen in 2004/05 but is now planned for autumn 2005/06. The remainder is due to some schemes where expenditure is now programmed for the start of 2005/06.

1.10 These additions give a revised capital programme of £54.9m as reported in Appendix 3. Further additions to the capital programme including the remainder of the slippage from 2004/05 are reported in Appendix 6 and will be included in future capital monitoring reports.

1.11 The following budgets have been approved by the Executive Members for Resources through the Weekly Decision Register process to be funded from the "Small Must Do Schemes Budget" (£250,000) contained within the capital programme approved by Council in February:

1.12 Spend to the 30^th June 2005 totalled £3.56m or 28% of profiled spend. Details of the current monitoring position are given in Appendix 3.

1.13 Details of revised capital resources are as follows:

1.14 As reported in the Financial Plan report elsewhere on this agenda, the Council's likely receipt from Housing Right-to-Buy sales is likely to fall well below target in 2005/06 and 2006/07. The Financial Plan includes an assumption of £6M receipts but the outturn for 2004/05 was £5M and evidence of a slowdown in sales has continued into 2005/06. Based on first quarter results, receipts of only £2M can be safely forecast for this year. The implications of this reduction for the future financing of the capital programme is serious but for 2005/06 the combination of higher forecast non-housing receipts (likely to be around £1M in excess of target) and slippage on key major projects means that the impact can be managed for this year at least without significant deferral of planned schemes. However, this situation will not persist into next year unless substantial additional receipts are achieved, and it is suggested that this situation be monitored very closely over the coming months.

1.15 To bring the programme into line with revised resource forecast, and to reflect the current anticipated position on these schemes, it is recommended that the allocations for the following schemes are adjusted to reflect current projections:

Threeways School (formerly Bath Special) - defer £3.8M to 2006/07; and

Elderly Persons Homes - defer £1.5M to 2006/07

Income Sustainability - there are no planned schemes against this budget heading and it is therefore recommended that the £250,000 allocation be deleted from the 2005/06 programme.

1.16 Spa Claims draw down from Contingency - Council in January 2005 received a report revising the budget for the Bath Spa Project and was advised:

1.17 The Council has subsequently engaged Taylor Wessing to act as its legal advisers, with a brief including all necessary activity in relation to the initiation, defence or settlement of claims. It is currently estimated that the cost of the claims settlement team and other costs for devising and preparation for litigation on the Spa will be £1,594,250 for work agreed to date, with a report to follow later in the year detailing further work required. Of this sum £352,000 can be vired from the main Bath Spa Project and the remainder of £1,242,250 was specifically included within the capital contingency, and approval is now sought from the Executive for a budget for this purpose to be funded from the contingency.

1.18 The sums must be viewed in the context of the very significant scale of the potential litigation on the Spa Project, with possible claims by and against the Council of potentially many millions of pounds.

1.19 This virement will leave a total cash backed contingency of £2.6M in 2005/06.