PART 1
(OPEN TO THE PUBLIC)
ITEM NO.
5A
REPORT OF THE CITY TREASURER
TO BUDGET SCRUTINY COMMITTEE
ON WEDNESDAY 7 MARCH 2012
TITLE: REVENUE BUDGET 2011/12: BUDGET MONITORING
RECOMMENDATION: Members are invited to consider and comment on the contents of the
report.
EXECUTIVE SUMMARY: This report outlines the current position of expenditure against the
2011/12 revenue budget.
BACKGROUND DOCUMENTS: Service budget monitoring reports to lead members.
(Available for public inspection)
CONTACT OFFICERS:
Tony Thompstone, tel. 793 2016 tony.thompstone@salford.gov.uk
ASSESSMENT OF RISK: Key budgetary control risks are identified in this report.
SOURCE OF FUNDING: Revenue Resources
LEGAL ADVICE OBTAINED: Not applicable
FINANCIAL ADVICE OBTAINED: This report concerns key aspects of the Council’s revenue
finances and has been produced by the Finance Division of Customer and Support Services.
WARD(S) TO WHICH REPORT RELATE(S): None specifically
KEY COUNCIL POLICIES: 2011/12 Revenue Budget
Report Detail
1
Introduction
1.1
This report sets out in detail the current position of expenditure against budgets at 31st
January and a forecast for the year-end.
2
Monitoring position as at 31st January
2.1
Budget monitoring to 31st January has identified the following variations in expenditure
to date in respect of each directorate:Net expenditure against budgets up to 31/01/2012
Division of service
Profiled
Expenditure to
Varian
budget to
date
ce
date
£000
£000
£000
Chief Executive’s
8,683
8,681
-2
Children’s
Services
–
56,640
56,196
-444
General Fund
Community Health and
50,179
50,397
218
Social Care
Customer
and
Support
Services
Environment
and
Community Safety
Sustainable Regeneration
Precepts and Charges
Capital Financing
Total General Fund
Children’s Services –DSG
(F)av/
Adv
F (green)
F (green)
A (amber)
18,202
18,170
-32
F (green)
11,989
11,899
-90
A (amber)
126,798
26,109
22,545
321,145
127,198
26,186
21,745
320,472
400
77
-800
-673
A (amber)
A (red)
F (green)
A (amber)
17,123
18,468
1,345
A (red)
2
3
Forecast outturn position
3.1
Arising from the above variations, the revenue outturn position for each directorate is
forecast to be as shown in the table below, with a total underspend of £2.5m on the
General Fund and an overspend of £2m on the Dedicated Schools Grant.
Division of service
Chief Executives
Children’s
Services
–
General Fund
Community
Health
and
Social Care
Customer
and
Support
Services
Environment and Community
Safety
Sustainable Regeneration
Precepts and Charges
Capital financing
Inflation/Contingency
Sub total
Contribution to reserves
Total
Children’s Services -DSG
3.2
4
Forecast outturn position
Budgeted Current Forecast
Outturn
£000
12,735
64,139
£000
12,735
63,639
65,891
Variance
(F)
favourable/
(A) adverse
£000
0
-500
F (green)
F (green)
65,891
0
A (amber)
11,024
11,024
0
F (green)
14,905
14,905
0
A (amber)
31,034
31,210
27,054
-29,431
228,561
0
228,561
31,034
31,610
26,054
-30,831
226,061
2,500
228,561
0
400
-1,000
-1,400
-2,500
2,500
0
A (amber)
A (red)
F (green)
F (green)
F (green)
F (green)
20,557
22,557
2,000
A (red)
The variations in the table above remain consistent with those reported in the 2012/13
budget report to council on 21st February. Detailed explanations of the variations are
set out in the following section.
Explanation of variations
(GREEN) Chief Executive’s
The directorate is expected to remain within budget at year-end.
Children’s Services
(GREEN) General Fund
The forecast for the outturn is unchanged from last month, which is an underspend of
£0.5m at year-end.
(RED) Dedicated Schools Grant (DSG)
The forecast for the outturn has improved from last month, with the forecast revised to
£2m over budget. The main areas of overspending are shown on the next page.
3
DSG Overspend
SEN Panel
SEN Other Faith
Inclusive learning
Independent Special Schools
Recoupment
Early Years
Supply Cover
VER Provision
Schools Contingency
Other
Academy conversions
NNDR
Total
£000
500
350
-400
373
300
-125
300
358
130
36
93
85
2,000
(AMBER) Community Health and Social Care
There is a potential overspend of £383k taking into account the actual progress on
efficiencies to date and estimated progress to the end of the year. This will be funded by
the balance of the social care reform grant £39k and the remaining £344k will be met
from containing expenditure elsewhere in the budget.
(GREEN) Customer and Support Services
The directorate is expected to remain within budget at year-end.
(AMBER) Environment
The directorate is expected to remain within budget at year-end.
(AMBER) Sustainable Regeneration
Currently the directorate is over budget by £400k. The work to control supplies and
services expenditure and to meet income targets is on-going so that expenditure can be
maintained within budget at year-end.
(RED) Precepts and Charges
The estimate for waste tonnage is now expected to be in excess of the original estimate.
This will result in an overspend of £400k at year-end.
(GREEN) Capital Financing
The capital financing budget is expected to be £1m under budget at year-end, due to the
interest rates on loans being lower than forecast in the budget.
Prudential indicators for treasury management can be seen at Appendix 1. To date they
have not been exceeded.
(GREEN) Inflation/contingency
There is a saving against inflation/contingency of £1.4m for unallocated service
pressures. This is the excess of the contingency savings allocated to directorates over
the summer which were originally required to offset the forecast overspending in
Children’s services.
4
5
Reserves Position
The current and forecast reserves position is shown in the table below, taking into
account the forecast overspend the impact on reserves would be as follows :2011/12
£000s
Actual level of reserves 31/03/2011
Projected contribution to/(from) reserves due to forecast outturn
Use of capitalisation direction in 2011/12 for expenditure on
redundancies brought into account in 2010/11
Projected level of reserves 31/03/2012
8,190
2,500
1,194
11,884
It should be noted that in respect of the level of reserves, a capitalisation direction has
been confirmed for 2011/12 by the Secretary of State which allows the adjustment to
reserves to be made as shown above.
The risk assessment of reserves for the 2011/12 revenue budget was for a minimum
level of reserves of £8.750m to be held, whilst a desirable level of reserves would be
£14.0m.
6
6.1
Housing Revenue Account
The HRA is expected to be within budget at year-end.
7
7.1
Recommendations
Members are invited to consider and comment on the contents of this report.
JOHN SPINK
City Treasurer
5
Prudential Indicators
a) Authorised Limit for External
Debt, Forward Estimates
Total Authorised Limit for
External Debt
Actual Gross External Debt as at
31/01/12
Appendix 1
2011/12
2012/13
2013/14
£m
£m
£m
779
851
928
545
This limit represents the total level of external debt (and other long term liabilities, such
as finance leases) the council is likely to need in each year to meet all possible
eventualities that may arise in its treasury management activities.
b) Operational Boundary for
External Debt
Total Operational
Boundary for External debt
Actual Gross External Debt as at
31/01/12
2011/12
2012/13
2013/14
£m
659
£m
719
£m
784
545
This limit reflects the estimate of the most likely, prudent, but not worse case, scenario
without the additional headroom included within the authorised limit. The operational
boundary represents a key benchmark against which detailed monitoring is undertaken
by treasury officers.
c) Comparison of Net Borrowing and Capital Financing Requirement
In order to ensure that, over the medium term, net borrowing will only be for a capital
purpose, the Council should ensure that the net external borrowing does not, except in
the short term, exceed the total of the capital financing requirement in the preceding year
plus the estimates of any additional capital financing requirement for the current and the
next two financial years. This forms an acid test of the adequacy of the capital financing
requirement and an early warning system of whether any of the above limits could be
breached.
To date this indicator has been met. The current capital financing requirement is £579m
and the net borrowing requirement £481m. During January the headroom on this
indicator varied between £96m and £120m.