Agenda Item No_______11_____
BUDGET MONITORING 2012/13 PERIOD 4
Summary:
This report summarises the budget monitoring position
for the revenue account and capital programme to the
end of July 2012 (period 4).
Conclusions:
The overall position at the end of period 4 shows a
forecast overspend of £69,074 for the current financial
year on the revenue account. The forward financial
projections for the period 2013/14 to 2016/17 are
currently being worked upon for the financial strategy
that covers the same period and will be presented to
Members in October.
Recommendations:
It is recommended that:
1) Cabinet note the contents of the report and the
current forecast for the current financial year;
2) Cabinet note the current position on the approved
capital programme and approve the recommended
amendments.
Cabinet Member(s)
Ward(s) affected
Cllr Wyndham Northam
All
Contact Officer, telephone number and email:
Karen Sly, 01263 516243, Karen.sly@north-norfolk.gov.uk
1.
Introduction and Background
1.1
This is the first budget monitoring report for the current financial year and
compares the actual expenditure and income position at 31 July 2012 to the
profiled base budget for the same period. The base budget for 2012/13 was
approved by Full Council in February 2012, subsequent updates to the
budget have been made to reflect the carry forward of funds from the 2011/12
financial year as reported to Cabinet and Scrutiny in June within the 2011/12
outturn report and also for in year virements.
1.2
The base budget for 2012/13 includes savings and additional income totalling
£897,096 within service areas. In addition to this savings totalling £375,446 to
be delivered from two internal workstreams, pay and grading and
management restructure are included in the budget for 2012/13. An update
on the progress for delivering these savings is included within the report at
section 3.
1.3
An updated capital programme for the period 2012/13 to 2013/14 was
included within the 2011/12 outturn report presented to Members in June
2012. This report includes the latest monitoring position for the 2012/13
capital programme and also highlights any scheme updates where applicable.
1.4
The format of the revenue budget monitoring reports has been updated to
reflect the new management structure. The revenue financial reports
including the annual budget book were previously aligned to each of the
former Strategic Directors, i.e. Community, Environment, Information and
Resources. The presentation of revenue financial information is now aligned
to each of the Heads of Service plus Corporate services which includes
Legal, Members services and Corporate Leadership team. It is noted that
some restructurings below the Heads of Service is still to be completed and
there may be some further reallocation of services between the Heads of
Service although it is anticipated that this will be minimal and this will be
reflected in subsequent reports.
1.5
The capital reporting format has been updated to reflect the current corporate
plan priorities. Further comments on this format are included at section 6.
2.
Budget Monitoring Position – Revenue Services
2.1
The general fund summary at Appendix A shows the high level budget
monitoring position at 31 July 2012. This shows a year to date variance of
£119,228. Appendix B provides further details of the individual service
variances. The following tables seek to provide reasons for the more
significant variances along with those which are anticipated to have a full year
effect.
Over/
(Under)
Spend to
Date
£
Assets and Leisure
Car Parking – The current underspend reflects a number
of variances on both income and expenditure compared to
the profiled budget. These include additional repairs and
maintenance totalling £24,900 of which £20,000 related to
ticket machines. There is also an additional management
fee relating to the previous financial year of £12,000.
Additional car park fee and excess charge income totalling
£59,800 has been received for the first four months
compared to the profiled budget which has negated the
impact of the overspend on expenditure. Due to the
demand led nature of the income budget and the
fluctuations relating to the weather, no full year impact is
currently anticipated, although the position will continue to
be monitored.
Administration Buildings – The variance to date and the full
year impact is mainly due to a reduction in the National
Non Domestic Rate (NNDR) costs following a revaluation
of Cromer and Fakenham Connect offices. This has been
offset by professional fees which were incurred in order to
achieve the NNDR reduction. The net effect is an
underspend of £14,000.
Estimated
Full Year
Impact
£
(20,693)
0
(20,305)
(14,000)
Over/
(Under)
Spend to
Date
£
(24,563)
Estimated
Full Year
Impact
£
Leisure Complexes – The variance to date and full year
impact reflects an inflationary increase on the
Management fee.
5,744
14,000
CCTV – Contributions including those made voluntarily no
longer anticipated.
1,111
3,045
(18,526)
0
(7,220)
(19,000)
64,273
8,500
(4,304)
4,000
4,176
11,400
7,379
2,000
Sports Centres – The variance to date includes a credit of
£31,972 that reflects a payment that has not yet been
invoiced to NNDC for 2011/12. The remaining variance
and the full year effect is the combined impact of staff
savings from a vacant post (£6,000) and sports hall
income being less than budgeted of £13,000.
7,000
Community and Economic Development
No Major Variances
Customer Services
Homelessness – The variance to date reflects income
received in respect of Your Choice Your home which is yet
to be offset by expenditure.
Customer Services (Corporate) – The full year impact
reflects a post that has become vacant in the year which is
not currently planned to be replaced.
Development Management
Development Management – The variance to date is due
to actual planning income being less than the profiled
budget, although there are a number of larger applications
anticipated that would turn this situation around. The full
year implication reflects a shortfall in income anticipated as
part of the 2012/13 budget for pre application advice and
for certificate of proposed lawful development.
Planning Policy – The 2012/13 budget assumed a
reduction in the level of external grants paid by NNDC of
£9,500, the actual reduction is only now expected to be
£5,500.
Planning Management and Support – A savings proposal
was accepted as part of the 2012/13 budget which
covered a review of the management support. This has not
yet commenced and therefore the saving will not be
delivered in the current year as budgeted. This variance
was highlighted as part of the 2011/12 outturn report and a
service underspend was rolled forward as part of the year
end process to mitigate the impact in 2012/13.
Local Land Charges – The full year effect reflects the
Over/
(Under)
Spend to
Date
£
additional income that was included as part of the 2012/13
budget process which is not now anticipated as the revised
charging structure is still to be agreed.
Environmental Health
Environmental Protection – The full year impact is due to
the delay in implementing staffing restructure within the
service. There is estimated to be an impact in the current
year only.
Cleansing – Of the variance to date £12,375 reflects an
underspend on employee costs due to a vacant post. The
remaining variance and full year effect relates to additional
income anticipated from dog and litter bins.
Estimated
Full Year
Impact
£
(2,809)
9,047
(18,346)
(3,690)
(88,695)
0
Non Distributed Costs – This service includes the pension
payments in relation to past employees. Inflation is
chargeable on these payments, although this is normally
contained by reductions in the payments following the
death of members. The full year effect reflects inflation
which has not been offset by reduced payments.
2,499
10,272
Corporate and Democratic Core – The variance to date
reflects an outstanding creditor from the previous financial
year in respect of external audit costs. The full year effect
reflects the saving now anticipated to the audit fee
following from the changes to the external auditing
arrangements from 2012/13 onwards.
(109,311)
(50,000)
(24,891)
0
79,463
0
(175,018)
(17,426)
Financial Services
Local Taxation – The variance to date reflects a one-off
grant received to assist in funding costs associated with
the design and implementation of the new localised
Council Tax Scheme.
Organisational Development
Human Resources and Payroll – The variance to date is
due to the corporate training programme not yet being
delivered. All training needs will be assessed following the
interim appraisal process.
Registration Services – The variance to date reflects
income that has not yet been invoiced in relation to
elections due to work still outstanding in agreeing returns
and information.
Corporate
No Major Variances
TOTAL
3.
Budget Monitoring Position – Savings and Additional Income 2012/13
3.1
The base budget for 2012/13 includes savings and additional income totalling
£897,096 within the service areas. The following table shows a summary of
the savings across each of the service areas. The detail for each of the
service savings is included at Appendix C. Table 2 below summaries the
position for each service heading.
Table 2 – Savings and Additional Income 2012/13
Assets Coastal Defence & Leisure
Customer Services
Community and Economic Development
Development Management
Environmental Health
Financial Services
Organisational Development
Corporate
Total
2012/13
Base
Budget £
231,778
165,976
5,000
111,500
201,837
93,285
20,160
67,560
897,096
2012/13
Updated
Budget £
231,778
165,976
5,000
85,598
192,790
93,285
20,160
67,560
862,147
Variance
£
0
0
0
25,902
9,047
0
0
0
34,949
3.2
The variances on the service savings are included in the position reported
within section 2 of the report.
3.3
In addition to the service savings, two on-going work streams for pay and
grading and management restructure were originally forecast to deliver
savings of £225,446 and £150,000 respectively in 2012/13. The original
saving to be delivered from the pay and grading review assumed a start date
of 1 April 2012 and was based on the previous version of the pay scale
model. Full Council approved the implementation of a new pay model at the
meeting of Full Council on 18 April 2012 and new contracts have been issued
to staff to move to the new terms and conditions and new pay model on 2
October 2012. The level of savings originally anticipated from the review will
not now be achieved. The full implications of the pay and grading will be
factored in to financial projections as they are revised over the coming
months, however the initial forecasts suggests that the net impact to the
2012/13 budget will be in the region of £150,000.
3.4
An earmarked reserve has been established to fund one-off costs in relation
to the pay and grading review, for example for the payment of arrears where
individuals are entitled to back pay to the date of implementation (April 2009).
If required this reserve can be used to cushion the impact of a reduced level
of savings as a one-off to allow the ongoing implications to be addressed as
part of the financial planning process.
3.5
Members will be aware of the progress that has been made regarding the
restructure of Management Team. On-going savings of £150,000 have been
included in the revenue budget from 2012/13. Based on the appointments
made to date the actual savings are forecast to exceed the level included in
the budget for 2012/13 by approximately £100,000. The restructure is yet to
be finalised and as further appointments are made the forecasts will be
updated and factored into the detailed employee budgets as part of the
budget process. Overall between these two corporate savings workstreams
there is an estimated full year cost of £50,000.
4.
Treasury Management
4.1
The budget for 2012/13 anticipated that a net total of £269,900 would be
earned in interest. This assumed an average balance of £26m at a rate of
1.03%.
4.2
At the end of period 4, a total of £76,524 had been earned resulting in a
shortfall against the year to date budget of £14,421. The rate of interest
achieved was 0.95% from an average balance available for investment of
£24.3m.
4.3
Based on the actual results to period 4, a total interest receivable figure of
£222,000 is forecast for the year from an average balance £24.4m at an
average rate of 0.91%. This will result in a shortfall against the full year
budget £47,900.
4.4
Although the maximum duration for investments with certain counterparties
has recently been extended on advice from the Council’s treasury
management advisors, the interest which can be earned from term deposits is
anticipated to remain very low throughout 2012/13. The balance available for
investment is also lower than anticipated in the budget. Options to enhance
the rate of return from investment in pooled property funds are being
considered, which may reduce the anticipated shortfall.
4.5
Table 1 below sets out investment activity for the first quarter of 2012/13.
Table 1
Banks &
Building
Societies
Money
Market
Funds
Bonds
The Debt
Management Office
4.6
Balance
Investments
31/03/2012
Made
£000s
£000s
17,900
20,100
Investments
Repaid
£000s
(19,000)
Balance
30/06/2012
£000s
19,000
Increase/
(Decrease)
£000s
1,100
1,210
26,355
(23,775)
3,790
2,580
1,000
0
0
3,130
0
(3,130)
1,000
0
0
0
20,110
49,585
(45,905)
23,790
3,680
Credit Risk
Table 2 below shows the level of risk within the Council’s investment portfolio
on both a value weighted and time weighted base.
Table 2
Date
30/06/2011
30/09/2011
31/12/2011
31/03/2012
30/06/2012
Value
Weighted
Average –
Credit Risk
Score
AA
AA
AA
A+
A+
Value
Weighted
Average –
Credit Rating
Time
Weighted
Average –
Credit Risk
Score
AA
AA
AA
AA
AA
3.24
2.74
3.23
4.59
4.61
Time
Weighted
Average –
Credit Rating
2.69
2.96
3.47
3.39
3.06
Scoring:
Value weighted average reflects the credit quality of investments according to
the size of the deposit, time weighted average reflects the credit quality of
investments according to the maturity of the deposit.
AAA = highest credit quality = 1, D = lowest credit quality = 15,
The aim is to achieve a credit rating of A- or higher, with a score of 7 or lower,
to reflect current investment approach with main focus on security.
The reduction in value weighted credit score from AA to A+ is a result of the
sale of £4m of AAA rating Eurosterling bonds in December 2011. Overall the
score remains above the minimum of A-.
5.
Budget Monitoring Position – Summary
5.1
The following table provides a summary of the full year projections for the
service areas along with an updated use of reserves figure where applicable.
Table 3 – Summary of Full Year Effects 2012/13
Estimated Full Year
Effect £
Service Areas (Table 2)
Corporate Savings (Para 3.5)
Non Service Expenditure (Para 4.3)
Transfers from Reserves
Total Impact
5.2
(17,426)
50,000
47,900
(11,400)
69,074
Overall the revenue position shows a projected overspend of £69,074 for the
current financial year. This position will continue to be monitored to ensure
that the overall revenue budget remains achievable for the year. The
information contained within this report will be used to inform the financial
projections for the period 2013/14 to 2016/17.
6.
Budget Monitoring Position – Capital
6.1
Members were provided with an updated capital programme for both current
and future years as part of the 2011/12 final accounts report to Cabinet in
June 2012. Appendix D shows the latest position for the updated programme,
both for General Fund and Coastal Protection, which has been realigned to
the priorities included within the Corporate Plan 2012-2015. The appendix
also provides details of the individual schemes spend up to Period 4.
6.2
The following sections provide an update on the capital programme,
incorporating the inclusion of three further schemes, all of which have
received Cabinet approval.
6.3
Sheringham Skate Park – At the Cabinet meeting of the 16 July 2012,
approval was given for a £20,000 contribution from capital receipts towards
the Sheringham Skate Park. This scheme has been separately identified
within the capital programme.
6.4
Big Society Fund – The capital programme now includes the £200,000 capital
budget for the Big Society Fund. At the current time there is spend totalling
£110,858, which relates to all schemes which received approval under round
one of the grant applications process which took place in May 2012.
6.5
Cromer to Winterton Coastal Protection Scheme – This scheme has received
approval from the Environment Agency, and has been included within the
appendix with a total budget of £110,000.
6.6
Cromer Red Lion Toilet Refurbishment – The works in relation to this scheme
have now been completed. Unfortunately, the scheme has gone over the
original budget identified, and as such it is requested that the under spend on
the completed Public Conveniences Improvements scheme of £7,095 is vired
to partially cover this overspend.
6.7
Car Park Improvements works – There are currently two budgets within the
capital programme relating to car park improvements. It is requested that the
remaining budget of £6,456 on the Car Park Environmental Improvements is
combined with the new scheme of Car Park Resurfacing and Refurbishment,
to give an updated budget of £192,456 for improvement works to car parks.
7.
Conclusion
7.1
The overall revenue budget is showing an estimated full year overspend for
the current financial year of £69,074. The overall financial position for the
current and future years will be considered in further details over the coming
months as part of the budget and financial planning process.
8.
Financial Implications and Risks
8.1
The detail within section 2 of the report highlights the more significant
variances including those that are estimated to result in a full year impact. In
addition the progress made in achieving the two workstream savings targets
from the management restructure and pay and grading will continue to be
monitored and managed to ensure that the overall impact to the Council’s
budget is mitigated.
8.2
The budget for 2012/13 includes service savings and additional income
totalling £897,096. The progress in achieving these is being monitored as part
of the overall budget monitoring process and where applicable corrective
action will be identified and implemented to ensure the overall budget remains
achievable.
9.
Sustainability - None as a direct consequence from this report.
10.
Equality and Diversity - None as a direct consequence from this report.
11.
Section 17 Crime and Disorder considerations - None as a direct
consequence from this report.