Meeting documents

1 THE ISSUE

1.1 This report presents the provisional revenue outturn for 2001/02, with some recommended technical adjustments. The report includes an outline of known potential pressures for the current year, as a preface to a request to carry forward specific budget items to 2002/03. Finally, the report presents the capital expenditure for 2001/02, with some proposed adjustments to capital budgets and proposals for financing the capital expenditure.

1.2 RECOMENDATION

That the Executive:

2.1 Note the provisional revenue Outturn for 2001/02 in Appendix 1 at £1.014m overspent, rather than the previously reported and expected £1.6m.

2.2 Approve the final technical adjustments necessary to revenue budgets in 2001/02 as set out in Appendix 2.

2.3Consider the carry forward proposals in the tables in Appendix 3 as exceptions to the budget management scheme.(If any are not approved, the figures relating to 2.4, below will need to be adjusted accordingly)

2.4 Agree that the resulting surplusresulting surplus should be set aside in the 2002/03 budget as a contingency for potential additional unavoidable costs in 2002/03.

2.5 Note capital expenditure of £30.06 million summarised in Appendix 4.

2.6 Approve the Capital budget adjustments and funding in Appendix 5.

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3 THE REPORT

BACKGROUND AND CONTEXT

3.1 This report provides information about how the Council did in terms of its spending against its budget in 2001/02, and its position compared to the forecast made for the 2001/02 overspend when setting the budget in February.

3.2 The report follows the same format as monitoring reports by Committees, as this was the applicable reporting format in 2001/02 financial year. Requests for carry forward are however listed according with a reference to Portfolio for ease of reference (see Appendix 3).

3.3 In September, the final accounts will be reported in their statutory accounting format for approval, e.g. in terms of the balance sheet and statutory accounting requirements. Any significant changes between now and then will be reported if necessary.

3.4 All Committees received financial reports throughout the year highlighting the known pressure areas, and identifying those actions that can be taken to reduce these to manageable proportions. Since the financial situation last year was forecasting a large overspend, actions were taken to limit these overspends and find some additional savings during the last financial year.

3.5 A Budget Management Scheme is in force, which specifies how over and under spending should be treated in any year.

REVENUE OUTURN 2001/02

3.6 Appendix 1 outlines the Council's provisional financial position for the 2001/02 financial year. Before any carry forward rules or approvals are applied, this amounted to a £1m overspending against the Budget for the year. This compares to the figures last reported to RCC in March of a £1.6m overspend. The explanations for the variations are given in Appendix 1. The over spend is less than predicted mainly due to the actions taken during the year to relieve spending pressures.

3.7 As a final tidying up of budgets, Appendix 2 identifies some adjustments altering some Committee cash limits (final budgets) that have been requested for 2001/02 that need to be approved by the Council Executive. The effects of these virements are incorporated in the results reported in Appendix 1.

CURRENT SPENDING - 2002/03 BUDGET POSITION

3.8 A number of early financial pressures have already come to light in the current year. These include:

· Expenditure on the Corporate Estate - The problems of increased need for accommodation is likely to continue into the current year. Added to the impact of delays in planned office moves, an over spend in corporate budgets of around £200k to £300k could be expected unless accommodation changes can be made more swiftly, and properties vacated can be let.

· The Recreation Ground Legal Challenge - The Council has already set aside a small budget provision, which may not be enough to cover the costs.

· The 2002/03 pay award. A 3% pay offer has been rejected and there is a current ballot on industrial action being taken by UNISON.

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Financial plan items e.g. increased costs in decriminalised parking due to changes in location and more comprehensive understanding of the needs. There is also concern about some items which have been flagged up subsequent to the last financial plan review such as investment in waste (PTE19) that the service does not now think will achieve future savings.

3.9 Whilst action will be taken to try to mitigate these cost pressures as in 2001/02, a significant number have already been taken into account in the Financial Plan, and it is difficult to foresee that management actions could offset them entirely, particularly as some are very significant.

DECISIONS REQUIRED RELATING TO OVER AND UNDER SPENDS

3.10 Decisions are needed on some of the items in Appendix 3 relating to under and over-spending in 2001/02. Each section of Appendix 3 is clearly marked for information or for decision. In particular, decisions are required in tables 3 to 6 of Appendix 3. If all these items are approved, this would give a final overspend of £1.6m, compared to a forecast overspend in February of £1.950m. The budget approved for 2002/03 set aside £1.95m to meet overspending pressures.

3.11 A Summary of Revenue Expenditure against Budget for 2001/02 with the proposals in appendix 3 approved would be as follows:

3.12 If a decision is made to carry forward all the items listed in appendix 3, not all of the contingency set aside for over spending will be required, as the recommended outturn is significantly better. Having made the decisions on the items set out in Appendix 3, tables 3-6, there is a further decision to be made about the use of the contingency set aside by Council in February.

3.13In view of the significant additional pressures in the current year, a decision is required to determine whether the savings from last year should be held as a contingency sum to meet some of these overspending pressures in the current year.

3.14 A decision can also be made about whether that nonethis sum should be allocated at this stage or whether allocation from this contingency reserve need only be made when better and more comprehensive information on all financial pressures is known. In any case, further monitoring reports should be requested and the overall position monitored during the year.

CAPITAL AND CAPITALISATION

After excluding the effect of corporate projects, the expenditure on the main service programme was £21.39 million, which is 81 % of the budget (£26.46 million). The expenditure on key programmes reached 90% or more of the budget in key programme areas including Highways and Social Housing.

4 CONSULTATION

4.1 This report was sent to Trade Unions on 3^rd July 2002.

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Appendix 3

Budget Items to be considered for carry forward to 2002/03

TABLE 1:

For Information only

A Summary of Appendix 3

The approved budget for 2002/03 made provision for a write off of overspends of up to £1.95m net.

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Under spendings were made in services which were designed specifically to help the financial situation in 2001/02. asAs a resulta result, all requests contained in this appendix can be met from within the budget provision.Appendix 3 (continued)

Budget Items to be considered for carry forward to 2002/03

TABLE 2: Under spends already approved under Budget Management scheme (BMS) and Statutory Requirements (SR)

This table is for information - no decisions are required

TABLE 3

For decision - Slippage of Financial Plan items from 2001/02 to 2002/03 on carry forward.

This column indicates where figures are approved within the rules of BMS. If no figure it will need a decision to approve it

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This column lists the figures requested

Appendix 3 (continued)

Budget Items to be considered for carry forward to 2002/03

TABLE 4:

For decision - Under spend carry forward requests not automatically approved

This column indicates where figures are approved within the rules of BMS. If no figure it will need decision to approve it.

This column lists the figures requested

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Appendix 3 (continued)

Budget Items to be considered for carry forward to 2002/03

TABLE 5:

For Decision - Requests for overspend write off from services in 2001/02

TABLE 6:

For Decision - Carry forwards of overspends anticipated from 2001/02

Appendix 5

Proposed Additions and Amendments to the Capital Programme in 2001/02

For decision

A) To approve the following additions to the 2001/02 programme

For Information - Note on Potential further capitalisation of SouthStoke costs

The Councils' liabilities from the Southstoke legal challenge amount to £1.136 million and were paid or provided for during the year. The additional costs arising from the case were reported to the RCC committee and were noted as a call on balances in setting the Financial Plan for the current year. Officers applied to the Secretary of State seeking authority to capitalise these exceptional costs, with the aim of mitigating the effect on the Council's finances. In April 2002, despite informal advice to the contrary, DTLR officials advised the application had been rejected. Having reviewed the reasons given for the decision, officers now consider there is insufficient 'new evidence' to make it worthwhile appealing to the Secretary of State.

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Appendix 5 (continued)

Proposed Additions and Amendments to the Capital Programme in 2001/02

For Decision - B) Funding of the Capital programme

To approve the following funding of the programme: