Meeting documents

1 THE ISSUE

1.1 This report presents the second quarter budget monitoring position for the Council for the financial year 2005/06 as at the end of September 2005.

1.2 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 required by the Budget Management Scheme.

2 RECOMMENDATION

2.1 Note the revenue expenditure and income position for the Council for the financial year to date as at the end of September and the year end projections detailed in Appendices 2 & 3 of this report.

2.2 Confirm the management actions outlined in the report to manage spending within the overall revenue budget for 2005/06.

2.3 Note that the slow down in the capital spending identified to date amounts to £7.9m, slippage in capital income amounts to £5m in 2005/06 and that income from Right to Buy capital receipts is likely to be £1-2m compared to the budgeted £6m. This is consistent in slowing down the programme to available resources and using the opportunity to raise capital receipts to substitute for unsupported borrowing.

2.4 Approve the virements listed in Appendix 4 and note the changes in the capital programme listed in Appendix 6.

2.5 Note the current position of available capital resources and that the review of the capital programme as approved by Council on 17^th November 2005 is now underway.

2.6 Approve the allocations from the Headroom capital provision.

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 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.

4.3 Where there are projected overspends in the revenue budget, 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.

4.4 Appendix 2 outlines the Council's current revenue financial position for the 2005/06 financial year to the end of September 2005 by portfolio. Appendix 2 shows, with management action, a small potential overspend at this stage of the year of 0.2% of the budget or £300-350k. Appendix 3 outlines the Council's current capital financial position for the same period and shows spend to the end of September 2005 totalling £11.690m or 37% of profiled spend and 19% of forecast spend. This is consistent in slowing down the programme to available resources and using the opportunity to raise capital receipts to substitute for unsupported borrowing.

4.5 Assumptions on the funding of the capital programme for 2005/06 included the receipt of £6m in Right to Buy receipts from Somer Housing and the receipt of a Millennium Commission grant for £5m on practical completion of the Spa scheme. Revised forecasts estimate the actual receipts from Right to Buy sales to be around £1-£2m and the Millennium Commission grant is unlikely until early in the 2006/07 financial year.

4.6 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 revenue 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. The management actions being taken are shown in a table within Appendix 1.

4.7 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.

4.8 Changes to the capital programme are listed in Appendix 6, Appendix 7 provides the updated capital programme allocated by portfolio.

4.9 It should be noted that the Council, at its meeting on 17^th November 2005, initiated a review of its capital programme and also received reports on the Elderly Persons Homes Programme, the Schools (Major Projects) programme and the Bath Spa project. The decisions are reflected in Appendix 6 and 7.

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.

1.1 Appendix 2 outlines the Council's current projected financial position by portfolio for 2005/06 as at the end of September 2005. The Appendix shows, with management action, a small potential overspend at this stage of the year of 0.2% of the budget or £300-350k. The major changes at portfolio level since the report for June 2005 are:

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 £403,000 over spend

Education Services are predicting a year end overspend of £348,000. The overspend on access has increased to £361,000 due to school transport costs. The main factors are increased costs from an increase in the number of qualifying pupils, the increased number of term days in this financial year and loss of grant funding for transport of 16-19 year olds. The grant changes relate to pathfinder and learning support grants that are paid by DfES and Learning & Skills Council to the LEA to support transport provision for post 16 pupil in schools and colleges. The grants have reduced in 2005/6 compared to 2004/5 by around £17,000. There is a forecast overspend of £206,000 in strategic management due to redundancy costs as a result of schools reorganisation and falling pupil numbers. These overspends are partly offset by underspends in special education (£215,000) due to higher income from recoupment. The balance within Education is made up of a small underspend in non schools funding.

Heritage Services is projecting a surplus of £391,000 less than budgeted for the year. This is due to lower than planned visitor numbers to the Roman Baths and Museum of Costume leading to reduced admission, retail and catering income. The Council Executive has previously decided that surpluses and deficits are ringfenced to Heritage. If the current projection is maintained, it will therefore be necessary for Heritage Services to obtain an advance from Council balances that will be repaid over future years. As part of the service and resource planning process, the Council may need to consider this position and to adjust financial plan targets to reflect "average" years and to permit the service to balance "good" years with "less than average" years.

The balance of the portfolio consists an overspend of £45,000 in Libraries & Information due to savings targets not being achieved and a £66,000 underspend in Leisure Services mainly due to increased income from the cemeteries and crematorium.

1.6 Sustainability & the Environment Portfolio - forecast £166,000 under spend

Refuse Collection - £59,000 overspend as income from trade waste is declining and the service has to absorb rises in disposal and fuel costs.

Waste Management & Disposal - £200,000 underspend as savings on waste disposal costs are being realised from pursuit of recycling initiatives, including the recruitment of staff at the waste recycling centres to encourage greater sorting of recyclables.

Waste Operations (Transfer & CA Sites) - £100,000 overspend due to cost pressures from maintenance of plant, fuel costs and staffing associated with the recycling initiatives mentioned above.

1.7 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 end of the financial year. The following management actions have been implemented to achieve this:

Education and Youth

Heritage Services

Savings have been made in staff reductions, negotiated contracts and deferred investment of approximately £300k and further savings have been made elsewhere within Operations, however, as part of the service planning process, the Council may need to adjust future financial plan targets.

1.8 Executive members will be regularly briefed on progress by Directors and given an update in monthly monitoring reports.

1.9 On the 22^nd February a capital programme of £49.3 million was approved by Council. At the September meeting of the Executive a revised capital budget of £63.95m was reported including slippage of £14.1m from 2004/05. Since the last report the following changes have been incorporated into the programme making the latest capital programme total £63.86m;

1.10 Appendix 6 and 7 includes some changes to the capital programme relating to the re-phasing of major project budgets to ensure the 2005/06 budget reflects the latest information on spend profiles. These changes are not reflected in Appendix 3 due to timing issues but will be reflected in future monitoring reports.

1.11 Spend to the 30^th September 2005 totalled £11.690m or 37% of profiled spend to end of September of £31,510m. This level of spend equates to 19% of the projected year end spend (£60.96m) and 18% of the current capital budget (£63.86m). Details of the current monitoring position are given in Appendix 3. The revenue capital financing costs will be reviewed as part of the Council's review into the capital programme as agreed by Council at its November meeting.

1.12 Details of revised capital resources are as follows:

1.13 The capital programme for 2005/06 includes a headroom creation scheme budget of £1.4m (including slippage from 2004/05). This funding was earmarked for projects which resulting in efficiencies in Council processes in the future. The following projects are requested to be funded from the Headroom creation scheme budget in 2005/06:-

Corporate Storage Area Network (SAN) = £175k

Agresso Project Costing & Billing = £114k