Meeting documents

APPENDIX 1

REVENUE OUTURN 2004/05

1.1 Appendix 2 outlines the Council's provisional financial position for the 2004/05 financial year. Before any carry forward rules or approvals are applied, this amounted to a £1,256,000 under spending against the Budget for the year. This compares to the figures last reported to the Executive in March of a £173,000 over spend.

1.2 The explanations for the variations are given in Appendix 3 and some are highlighted below.

1.3 The main area contributing to the underspend is the loan charges and interest received corporate budgets. The Council has experienced a favourable cash flow position during this financial year and has benefited from lower than expected interest rates. The lower than anticipated spend on capital schemes has delayed the need to enter into long term borrowing. In turn this has led to savings in both the loan charges and interest received budgets which resulted in under spends of £1,562,000 at year end.

1.4 The main area of over spending is the Social Services portfolio. There are under spends in all other portfolios with the exception of Tourism, Leisure & Culture which is showing a small overspend. However this is a general statement and there is wide variation between services within those broad headings and also the reasons for these over and underspendings. There is more detail available in the appendices (particularly appendix 3) and also in the background papers to this report.

1.5 Only two Directors' areas do not show a net under spend. These areas are Social Services and the former DEEDs. Following the carry forward proposals made, Social Services, Corporate Director and the former DEEDs show a net overspend. The reasons for this position are outlined in table 5 of appendix 4.

1.6 Initial discussions with our external auditors have highlighted that some expenditure currently charged to capital in 2004/05 for legal fees may need to be funded from revenue spend due to capital accounting rules. The final decision of the auditor will not be made until after this report has been finalised but given the reported underspend on revenue in 2004/05 it is recommended that a provision of £235,000 is made within revenue balances pending the final decision.

1.7 The car parking service reported a favourable variance of £223,000 in 2004/05, this was due to strong income performance particularly from penalty charge notices. Within the 2005/06 budget there is an assumption of continuing strong performance along with a fee rise. This fee rise will be introduced with a change of payment regime, namely the more customer friendly "pay on foot" machines. The new payment regime makes future income forecasting more uncertain. It should therefore be noted that the over achievement of income in 2004/05 has helped the Council's revenue position and that this be recognised should the change in payment regime in 2005/06 have any adverse effects on the car parking service income targets during the year.

CAPITAL OUTTURN

1.8 On the 17^th February a capital programme of £33.5 million was approved by Council. At the 1^st December meeting of the Executive a revised programme of £54.7 million was approved. The following additional changes have since been incorporated into the programme, giving a revised total of £58.08million:

There has been some movement of schemes between Portfolios.

1.9 Spend to the 31^st March totalled £49.694million (£43.25million net of grant funded Stone Mines and SRB expenditure), this represents a spend against forecast of 77%.

1.10 Details of the outturn position are given in Appendix 5.

1.11 In previous years all under and overspends on the capital programme have been automatically carried forward into the proceeding financial year. In view of the identified pressures on the capital programme in 2005/06 and future years, it is recommended that the carry forward of capital scheme underspends from 2004/05 are reviewed prior to roll forward. This will tighten the process and make sure that all carry forwards are justified. It is recommended that the responsibility for agreement of capital carry forwards is delegated to the Head of Finance & Resource Planning in consultation with the Executive Member for Resources.

CURRENT SPENDING - 2005/06 BUDGET POSITION

1.12 The first monitoring report for the current year will now be presented to the Executive in September. Monthly reports will be circulated to Executive members from early July onwards for both revenue and capital expenditure.

1.13 Also the Executive will already be aware of the pressures and the potential revenue and capital implications arising from major projects.

1.14 Action will be taken to try to mitigate any cost pressures in the current financial year.

1.15 As reported in Appendix 3 Training Services incurred an overspend of £142,000 in 2004/05, this was after using £70,000 of its ring-fenced reserves. Appendix 4 requests that £55,000 is carried forward for recovery from the Head of Economic Development service areas in 2005/06 with the balance of £87,000 requested to be written off. A decision has been made to scale back the provision of Training Services in 2005/06. The estimated one-off costs involved with the re-provision of the service are £300,000. It is recommended that a sum of £300,000 is earmarked from the Council overall underspend in 2004/05 to be held in revenue balances as a provision for these costs.

1.16 Members will recall as part of the grant settlement for 2005/06 the Government issued an Amending Report clawing back grant from the Council in relation to the 2003/04 financial year. The Amending Report corrected errors in the ONS population figures and resulted in the Council having to repay £259,000 of the revenue support grant it received in 2003/04. This was accounted for in the 2005/06 budget with revenue balances earmarked for this charge. The Government intends to do a similar correction for the 2004/05 grant and a further Amending Report will be issued at the time the 2006/07 grant settlement is announced. There is currently no provision for any further grant clawback and it is recommended that £250,000 of the 2004/05 revenue underspend is earmarked in balances for any subsequent grant clawback relating to 2004/05.

DECISIONS REQUIRED RELATING TO OVER AND UNDER SPENDS

1.17 Decisions are needed on some of the items in Appendix 4 relating to under and over-spending in 2004/05. Each section of Appendix 4 is clearly marked for information or for decision. In particular, decisions are required in tables 3 to 6 of Appendix 4. If all these items are approved, this would give a final under spend of £476,500, compared to a forecast overspend in March of £173,000. The budget approved set aside £400,000 of balances specifically to meet overspending pressures within the increase to balances of £850,000. Therefore any use of balances above £400,000 to write off overspends (if that is the agreed net position) would require Council approval.

1.18 If a decision is made to carry forward all the items listed in appendix 4, and write off the over spends and carry forward the remaining balance to the risk contingency budget incorporating the earmarking of items referred to paragraphs 1.6, 1.15, and 1.16, then the final outcome will be a balanced position for 2004/05. Therefore Council will not need to be asked to approve using a further amount of balances to finance any shortfall.

1.19 Table 6 of Appendix 4 contains several requests to carry forward overspends for recovery in future years in accordance with Budget Management Scheme rules. It is important that a realistic and achievable recovery plan is in place for these carry forwards. Carry forward of overspends should only be agreed where this is the case otherwise there is the risk of further overspending in 2005/06 and future years.

1.20 Appendix 4 also contains four requests to write off overspends that cannot be recovered in 2005/06. These relate to Social Services, Human Resources, Corporate Transport savings and Training Services' trading deficit.

Revenue and Capital Resources

1.21 A statement of balances is included as Appendix 6. This was also reported in February 2005 at the time of budget setting and has been updated for known changes (these are highlighted in the appendix in the "movement" column). If the requests shown in recommendations 2.2, 2.3 and 2.4 are approved by Council the overall situation would be as follows:

1.22 For information movements in school balances are also included in appendix 6. These increased in 2004/05.

1.23 Details of revised capital resources are as follows: