Agenda Item No______8______
2011/12 OUTTURN REPORT
Summary:
This report presents the outturn position for the revenue
account and capital programme for the 2011/12 financial
year. Details are provided within the report of the more
significant year-end variance. The report provides
details of recommended contributions to earmarked
reserves for future spending commitments. An update to
the current capital programme is also included within the
report and accompanying appendices.
Conclusions:
The outturn position on the revenue account as at 31
March 2012 shows an underspend for the year of
£241,601. This is after allowing for a number of
underspends to be rolled forward within earmarked
reserves to fund ongoing and identified commitments.
The general fund balance remains within the current
recommended level.
Recommendations:
Members are asked to consider the report and
recommend the following to Full Council:
a) The final accounts position for the general fund
revenue account for 2011/12;
b) The transfers to and from reserves as detailed in
the report;
c) Transfer the surplus to the restructuring reserve;
d) The financing of the 2011/12 capital programme
as detailed within the report;
e) The balance on the general reserve of £1,946,590
at 31 March 2012;
f) The updated capital programme for 2012/13 to
2013/14 and the associated financing of the
schemes as outlined within the report and detailed
at Appendix E.
Cabinet Member(s)
Ward(s) affected
Contact Officer, telephone number and email:
Karen Sly, 01263 516243, Karen.sly@north-norfolk.gov.uk
1.
Introduction
1.1
This report presents the draft outturn position for the 2011/12 financial year.
Commentary on the more significant year-end variances is included within the
report with further supporting information provided within the report
appendices. The 2011/12 revised budgets for revenue and capital were
approved by Full Council on 14 December 2011 and this report now
compares the outturn position compared to those budgets. The report also
includes a current position statement on the level of reserves along with the
outturn position for the 2011/12 capital programme and an update for the
capital programme for the period 2012/13 to 2013/14.
1.2
All budgets have been monitored throughout the year by both Service Officers
and Finance with regular reports being presented to Cabinet and Overview
and Scrutiny. The last budget monitoring position was reported to Members
in March 2012 and reported a projected underspend on the revenue account
of £21,807, this report now presents the final budget monitoring position for
the year. The contents of this report will be considered by the Overview and
Scrutiny Committee on 26 June.
1.3
Following the production of the outturn position the Council’s statutory
accounts are then produced. At the time of reporting the outturn there are still
some entries that are required within the Statement of Accounts, for example
impairment costs that are chargeable to service accounts but are then
reversed out therefore having no impact on the overall general fund position.
These will be entered in the published accounts and will be fully reconciled to
the position now reported. The draft accounts must be produced by 30 June
and then audited with the final audited version being approved and published
by 30 September annually. The audited accounts will be presented to the
Audit Committee on 18 September 2012.
1.4
Any material adjustments to the figures used within this report will either be
reported at the meeting or reflected in the draft Statement of Accounts when
they are produced.
2.
Revenue Account 2011/12
2.1
The revenue account position for the year shows an underspend of £241,601
as detailed at Appendix A. This is after allowing for a number of transfers to
earmarked reserves for current and known commitments. As part of setting
the annual budget each year, the Council approves a policy framework for
earmarked reserves and the optimum level of the general reserve. Earmarked
reserves are typically used to set aside funds for known or specific liabilities.
Transfers to earmarked reserves have been made where an underspend has
occurred within a service mainly due to the timing of work not being
completed as planned and by 31 March 2012 and where no future budget
exists. Further details on the movements to and from reserves are included at
section 3 of the report.
Service Variances
2.2
The following sections of the report seek to highlight the more significant
variances compared to the revised budget. Comments on some of the
smaller variances are included within Appendix B.
2.3
Accounting standards require a number of notional charges to be made to
service accounts. Notional charges include transactions in relation to capital
charges and pension costs and whilst they do not have an impact on the
‘bottom line’ i.e. the surplus or deficit for the year, they are included for
reporting purposes. Appendix A shows the overall revenue position including
notional charges, however to assist the reporting and explaining variances
table 1 provides a summary of the position excluding notional charges.
Table 1 – 2011/12 Revenue Account (Excluding Notional Charges)
Community
Environment
Information
Resources
Net Cost of Services (excluding
notional charges)
Parish Precepts
Non Service Expenditure
Contributions to/(from) earmarked
reserves
Contributions to/(from) general reserves
Net Expenditure to be met from Grant
and Taxpayers
Income
(Surplus)/ Deficit
2011/12
Revised
Budget
£
1,917,349
6,800,894
1,161,179
4,224,472
14,103,894
2011/12
Outturn
£
1,878,364
6,602,837
1,120,551
3,054,620
12,656,372
Variance
(Under)/Over
Spend
£
(38,985)
(198,057)
(40,628)
(1,169,852)
(1,447,522)
1,450,222
142,302
(1,808,522)
1,450,222
(349,912)
(227,277)
0
(492,214)
1,581,245
500,928
14,388,824
617,952
14,147,357
117,024
(241,467)
(14,388,824) (14,388,958)
0
(241,601)
(134)
(241,601)
2.4
The significant variance within the contributions to and from earmarked
reserves largely represents the earmarking of underspends in the year of
which the most significant are in relation to the Pathfinder project and coastal
protection spend. Commentary on these and other significant variances is
provided in the following paragraphs. The explanations seek to identify the
more significant variances and concentrates only on the direct costs and
income movements compared to the revised budget. Where figures are
shown in brackets, this represents an underspend or additional income.
Further comments can be found within Appendix B to the report.
2.5
Community
a)
Development Management £61,594 – As reported within the last budget
monitoring report the income budget for the service anticipated that a new
local fee setting scheme would commence in the year, this was not the case
resulting in an income shortfall compared to the level budgeted.
b)
Planning Policy (£18,386) – The underspend largely relates to professional
fees not yet incurred for work on the Community Infrastructure Levy report
and liability assessment which will require funding in 2012/13, therefore
£15,000 has been carried forward in an earmarked reserve.
c)
Landscape (£36,197) – The period 10 budget monitoring report highlighted a
full year variance for this service. The outturn position now reports a saving of
£10,000 relating to the North Norfolk Biodiversity Strategy which was not
undertaken in the year. There has also been an underspend of £25,000 due
to the completion of the Tree Preservation Orders review being delayed due
to other service priorities and commitments. This has now been rescheduled
for 2012/13 and is to be funded from Area Based New Burdens Grant which
has been carried forward into 2012/13.
d)
Planning Division (£15,669) – The outturn position now reports savings in a
number of supplies and service budgets. Overall a saving of £15,000 has
been rolled forward to mitigate the impact of budgeted savings that will not be
achieved in 2012/13 due to protracted discussions with Central Norfolk
Councils (CNC) regarding the Building Control service.
e)
General Economic Development (£17,839) – The underspend reflects the
budget previously identified to support the Cromer Crab Factory. This had
not been expended by the year-end and has been carried forward within an
earmarked reserve.
2.6
Environment
a)
Environmental Protection (£18,499) – The underspend for the year is made
up of savings within a number of smaller demand led budgets, for example air
quality management, assisted burials, contaminated land and rechargeable
works.
b)
Environmental Health Service Management (£17,733) – The year-end
position is made up of a number of underspends on various supplies and
services budgets including equipment, furniture and computer purchases.
c)
Parks and Open Spaces (£73,423) – The significant variance within the
service is due to two commuted sum payments received. Accounting practice
requires such receipts to be accounted for through the revenue account
before being transferred to an earmarked reserve.
d)
Woodlands Management £20,569 – The year-end position reflects a number
of smaller variances including additional costs in relation to the Access to
Nature Project which have not been fully funded from the grant, pond
dredging and emergency tree works.
e)
Public Conveniences £17,141 – The outturn position is mainly due to an
overspend on costs associated with water and sewerage, mainly due to
increased cost and usage above the level budgeted.
f)
Waste Collection and Disposal £22,516 – The overall overspend for the
service at the year-end is made up of a number of variances within the
individual budget headings, the more significant of which are:
•
•
•
Lower level of recycling credits received than budgeted, £45,818. This
was due to a reduced tonnage of garden waste and dry recyclables being
processed;
Additional cost of processing recyclable materials and plastic sorter
contribution of £20,804;
Garden bin purchases £14,879;
•
•
Additional profit shared received due to a higher resale price of materials
(£33,932);
Additional fee income from prescribed/commercial customers and clinical
waste disposal recharges (£10,874).
g)
Environmental Strategy (£20,219) – Of the year-end variance £14,100 relates
to costs that were previously charged to revenue but can be capitalised. A
compensating revenue contribution to capital outlay (RCCO) has been made
to finance the expenditure.
2.7
Information
a)
IT Support Services (£63,414) – The underspend reported for the service is
largely due to software and computer purchases that were budgeted for within
the revenue account but can be capitalised and funded as part of the capital
programme. A revenue contribution to capital has been made in the year to
fund these.
b)
TIC’s (£49,688) – Of the year-end surplus £34,479 relates to a one-off
adjustment in relation to commission for ticket sales relating to previous
years. Of the remaining variance £7,800 is due to employee costs being less
than budgeted due to staff vacancies.
c)
Media and Communications (£33,975) – The outturn position is made up of a
number of smaller variances including graphics purchases not made in the
year, lower paper usage, equipment rental payments and external media
consultancy services not employed in the year.
2.8
Resources
a)
Car Parking (£42,896) – The overall underspend for the service is largely due
to the following:
• Additional pay and display fee income (£21,570);
• Additional penalty charge notice income (£28,467), this is after allowing
for the increased administration charge which is based on the level of
income;
• Lower management fee (£28,635);
• Additional rental of £17,132 payable partly due to moving to financial
years as opposed to calendar years and additional income collected on
related car parks;
• Additional reactive repairs carried out on a number of car parks totalling
£20,541.
b)
Industrial Estates (£43,063) – Rental payments are no longer payable to
EEDA but have been transferred to an earmarked reserve to fund relevant
regeneration projects.
c)
Benefits (£392,483) – This service includes the total of benefit payments
made in the year which is recovered through subsidy. The amount of benefit
payments made total approximately £34 million. Of the year end variance
£196,036 relates to the balance of the partnership fund and grant established
for the Revenues and Benefits Shared Services project. This has been
transferred to an earmarked reserve to fund the ongoing project costs. The
balance of the variance reflects the outturn position of subsidy payments
including the recovery of overpayments which reflects less than 1% of the
total payments made. The subsidy claim will be audited later in the year.
d)
Non Distributed Costs £212,000 - This service reflects the notional charges in
relation to the International Accounting Standard 19 (IAS19) for Pension
costs. The variance consists of £18,000 for Settlements and Curtailments
which represents the cost of the early payment of pension benefits as a result
of redundancies. Also included is £194,000 for Past Service Costs which
arise as a result of awarding added years or allowing employees to retire
early on unreduced benefits on the grounds of efficiency. The impact of these
costs are reversed out of the account to ensure there is no impact on the
bottom line.
e)
Personnel and Payroll (£39,293) – Of the variance £29,426 relates to an
underspend on the common training budget of which £15,000 has been
transferred to an earmarked reserve to fund training needs in 2012/13.
f)
Administration Buildings (£72,372) – The outturn position includes £41,000 in
respect of a creditor provision no longer required for rentals previously
payable under an old partnership arrangement. Of the remaining underspend
£12,374 reflects repairs and maintenance and £6,900 for equipment rental
hire not used in the year.
g)
Policy and Performance Management (£29,834) – Budgeted expenditure of
£9,248 in relation to the North Norfolk Youth Voice was not incurred in the
year. Other smaller year-end variances include staff training and travel
expenses of £4,635 not spent and computer and related purchases not made
totalling £5,742.
h)
Foreshore (£22,642) – The main year-end variance is due to a reduced
repairs and maintenance expenditure of £18,061 part of which is being used
as a revenue contribution to capital to finance the Old Red Lion capital
project.
i)
Coast Protection (£181,016) – Of the underspend £174,986 reflects delays in
undertaking programmed sea defence works partly due to the Assistant
Coastal Engineer post not yet filled. The underspend has been transferred to
the Coast Protection earmarked reserve to be spent in 2012/13.
j)
Pathfinder (£404,062) – The year-end variance reflects the unspent
pathfinder project grant. The grant remains fully allocated against a number of
ongoing projects and has therefore been carried forward within the Pathfinder
earmarked reserve to fund these commitments.
k)
Coast and Community Partnership (£38,282) – Of the variance £28,144
relates to the balance of the Ideas into Action fund that has been transferred
to the LSP reserve.
l)
Transport (£18,549) – £17,500 of the variance reflects the balance of a
creditor provision from the previous financial year which is no longer required.
This has been released to the general reserve.
m)
Central Costs (£142,685) – The budget assumed that the pay and grading
review would be implemented in the year with one-off costs being incurred by
31 March 2012. This was not the case and therefore the unspent budget has
been rolled forward within the organisational development reserve.
n)
Corporate and Democratic Core (£22,197) – The saving in the year is due to
external professional fees not being incurred in the year and external audit
costs being below the level budgeted.
o)
Corporate Leadership Team £97,205 – The year end position shown at the
service level reflects phase one of the management restructure, the costs of
which have been funded from the restructuring reserve.
p)
Coastal Management (£27,426) – Of the variance £19,739 relates to external
consultancy fees not yet utilised. This underspend has been carried forward
within the coast protection earmarked reserve. Of the remaining underspend
£5,736 relates to the vacant post of Assistant Coastal Engineer.
Non Service Expenditure and Income
2.9
The non-service expenditure and income predominantly relates to investment
income. The 2011/12 outturn position achieved from the Council’s treasury
management activity was £72,435 above the amount anticipated in the
revised budget. Investment income for the year was £536,435 at an average
rate of 2.09% from an average balance available for investment of £25.7m.
This compares to the revised budget which anticipated a total of £464,000
would be earned at an average rate of 1.77% from an average balance of
£26.2m.
2.10
The variance in investment income above the revised budget results from the
sale of £4m of European Investment Bank bonds in December 2011. These
bonds were sold for £116,068 more than the value of the bonds in the
Council’s accounts, and this gain was placed in an earmarked reserve. The
gain in the year has been reduced (from £116,068 to £72,435) because the
proceeds from the sale of the bond were re-invested in the money market at
current (lower) interest rates.
2.11
The Treasury Management Annual Report is included as a separate item on
this Agenda and provides more details on the performance of the Treasury
Management activity for the year.
3.
Reserves
3.1
The Council holds a number of earmarked reserves which are held to meet
known or predicted liabilities and which are separate from the general fund
reserve. Earmarked reserves provide a means at the year-end for carrying
funds forward to the new financial year to fund ongoing commitments and
known liabilities for which no separate budget exists.
3.2
The general reserve is held for the purpose of providing a working balance to
help cushion the impact of uneven cashflows to avoid temporary borrowing
and also as a contingency to help cushion the impact of unexpected events or
emergencies.
3.3
Section 2 of the report highlighted some areas where an underspend had
occurred in the year and a transfer to reserves had been made to ensure
funds are available to meet future spending commitments. Unlike capital
budgets, underspends on revenue budgets in the year are not automatically
rolled forward at the year-end where there is an annual budget provision.
Where the underspend represents a grant received which has not yet been
fully utilised or there has been a delay in the planned use, the unspent grant
has been rolled forward within an earmarked reserve.
3.4
The revised budget assumed a net transfer of £1,808,522 in the year from
earmarked reserves, actual transfers from earmarked reserves total
£303,677. Appendix C shows the budgeted and actual net movement to and
from earmarked reserves in the year along with comments on the more
significant movements.
3.5
A detailed statement of the position on all reserves is attached at Appendix D.
The overall position gives a total of reserves and balance of £7,850,944 at 31
March 2012. The appendix also shows the planned use of reserves over the
medium term in light of the movements for 2011/12.
3.6
The general reserve balance at 31 March 2012 is £1,946,590. After taking
account of the planned spend in 2012/13 the forecast balance at 31 March
2013 is £1,645,066, although this does include £300,000 within the reserve
which the current financial forecast assumes will be used over the following
two financial years. The recommended balance on the general reserve will be
reviewed as part of the financial planning process over the coming months.
4.
Summary – Revenue Account 2011/12
4.1
The Council’s budget which includes all service budgets were reviewed and
updated as part of approving the revised budget in December 2011.
4.2
The outturn position for the year ending 31 March 2012 is a £241,601
surplus. This is after allowing for a number of underspends identified within
services to be rolled forward within earmarked reserves to meet spending
pressures and commitments in 2012/13. This report recommends that the
surplus be transferred to the Restructuring and Invest to Save earmarked
reserve.
5.
Capital Programme 2011/12
5.1
This section of the report presents the financing of the capital programme for
2011/12, along with an updated programme for 2012/13 to 2013/14.
Appendix E provides the detail of the outturn on the 2011/12 capital
programme for non-housing, housing and coast protection along with the
financing of each. The updated capital programmes for the period 2012/13 to
2013/14 are attached at Appendix F.
5.2
The outturn position for the 2011/12 capital programme highlights where
schemes have slipped between financial years. The reasons for slippage
include where schemes have not progressed as originally planned, and the
funding has been carried forward to the new financial year, or where schemes
have progressed ahead of schedule, which has required funding to be
brought forward from 2012/13. The following paragraphs provide further
details of each of the capital programmes for non-housing, housing and coast
protection schemes.
Non Housing
5.3
The non-housing capital programme as detailed in Appendix E provides
details of the outturn expenditure for the individual schemes. Explanations
have been provided where there is a variance between actual expenditure
and the profiled budget. Expenditure for the year on these schemes totalled
£1,231,730 compared to an updated budget of £2,289,369, giving a variance
of (£1,057,909). There has been a requirement to claw back at total of
£151,219 from 2012/13 capital budgets where schemes have either
commenced earlier or progressed faster than originally anticipated. The
outturn position now reported shows slippage of (£1,337,920), together with
other movements in year of £128,793.
5.4
The following provides further comments on the schemes showing variances
at the end of the year:-
5.4.1
Stalham Sports Improvements - The Stalham multi use games area was
completed during 2011/12, and came in £5,284 under budget.
5.4.2
Playgrounds – The Playgrounds budget is split into two elements; one for
Playbuilder and the second for a scheme for Sadlers Wood which is to be
fully funded from a Section 106 contribution. In 2011/12 the Playbuilder
scheme was completed, but this resulted in an over spend of £1,385. This
additional expenditure is to be funded from capital receipts. The remaining
budget available for Sadlers Wood, of £30,800 is to be slipped for use in
2012/13.
5.4.3
Provision of Electricity at Holt Country Park – The scheme is showing an over
spend at the end of the project, of £1,562. This additional funding will be
financed through a Revenue Contribution to Capital Outlay (RCCO).
5.4.4
Worstead Churchyard Wall – The works initially identified under this scheme
were completed in 2011/12 and came in £870 under budget. Unfortunately
due to a motor accident there are additional works to be undertaken to the
wall, which will be financed through an insurance claim.
5.4.5
New Schemes - As part of the year end process four schemes that had
originally been coded to revenue have been established as being eligible for
capitalisation. The costs of these schemes have therefore been transferred
to capital and financed through Revenue Contributions to Capital Outlay, and
in the case of the Benefits Atlas Project, from grant received. The schemes
are detailed in Table 2.
Table 2 - 2011/12 New Schemes
Capital Scheme
Benefits Atlas Project
Bulk Software Purchases
IT Hardware Purchases
CCTV Hardware Purchases
Total
Expenditure
£
52,485
31,393
30,379
19,128
133,385
5.4.6
Budget claw backs - There were three schemes that have either started
slightly earlier than anticipated, or where the spend level in the year was
higher than anticipated. Where this is the case, and there is budget available
within the 2012/13 capital programme, this has been clawed back to cover the
expenditure. The updated programme for 2012/13 onwards (Appendix F)
reflects these adjustments. The schemes and amounts are listed in table 3.
Table 3 - Capital schemes slipped from 2012/13
Capital Scheme
Fakenham Factory Extension
Administrative Buildings
Asbestos Works
Total
Claw Back Amount
£
150,654
474
91
151,219
Housing
5.5
The outturn on the general fund housing programme is also shown in
Appendix E, together with the financing details for all of the individual
schemes. Expenditure for the year totalled £1,649,864 compared to the
budget of £4,126,481. The outturn position as reported shows slippage
amounts of (£2,490,055), alongside one claw back of budget totalling
£13,437.
5.6
The original financing of the housing capital programme assumed receipts of
Disabled Facilities Grants totalling £443,000. However, further allocations in
the 2011/12 financial year have resulted in a total of £526,957 being received,
which has been used to finance a higher proportion of the direct grant
payments in relation to Disabled Facilities.
5.7
For Private Sector Renewal Grants the outturn position shows an over spend
against the updated budget of £13,437. £319,246 of the budget originally
identified for 2011/12 was requested for slippage to 2012/13 when the revised
budget report was taken to Cabinet in November 2011. The additional
expenditure incurred will therefore be funded by means of a claw back of
budget of the equivalent value into 2011/12.
5.8
There is an under spend in 2011/12 of £258,473 against Disabled Facilities
Grants. The nature of these types of grants means that they can be approved
and therefore committed, up to a year in advance of the works actually being
completed. The under spend is therefore requested to be carried forward into
2012/13.
5.9
The Housing Associations budget was also subject to slippage of £2,011,582
against a budget of £2,856,481, following delays experienced in the
implementation of eligible schemes.
5.10
Approval is also sought for slippage of £20,000 in relation to the Strategic
Housing and Choice Based Lettings system, with a further £200,000 being
requested for the Empty Homes Project, which are due to continue into
2012/13.
Coastal Protection
5.11
The outturn on the Coast Protection capital programmed for 2011/12 is also
shown in Appendix E. This shows a total expenditure in the year of
£1,174,102, compared to a budget of £1,654,657. Slippage of £480,465 is
requested into 2012/13 for the Cromer Coast Protection Scheme 982
(£19,520), the SMP Preparation of Common Version for Approval and Other
Additional Studies (£2,769) and the Pathfinder project (£458,176).
5.12
The expenditure incurred on the Coast Protection capital programme is fully
funded from the Environment Agency Grant and DEFRA Pathfinder Grant.
6.
Capital Programme 2012/13 Update
6.1
Appendix F shows the updated capital programmed for the period 2012/13 to
2013/14. The programme has been updated to take into account slippage of
approved capital projects between financial years, along with the following
amendments / additions.
6.1.1
New Trade Waste Bins - On the 22 February 2012 Cabinet agreed to
increase this budget by £61,700, to reflect the additional cost associated with
the purchase of a new waste vehicle. This has been reflected in the appendix
with the revised scheme total budget amounting to £272,700.
6.1.2
North Lodge Park – At the Cabinet meeting on the 16 April 2012 approval
was given to the inclusion of a budget of £197,000 for the provision of a high
quality play area and the opening up of other space within North Lodge Park,
in order to provide a wider variety of activities. This budget is now shown
within the appendix, being fully funded from capital receipts.
6.1.3
Budget Claw Backs – As discussed above in 5.4.5, during 2011/12 there were
three projects that either started earlier than anticipated, or where the
expenditure incurred in year was higher than anticipated. Where this was the
case, and budget was available in 2012/13, this was clawed back to 2011/12
to cover the additional expenditure. The updated programme for 2012/13
onwards (Appendix F) reflects these adjustments.
6.2
As part of the 2012/13 Base Budget Report that was presented to Cabinet on
6 February 2012, and approved by Full Council on the 22 February 2012,
there were three new capital schemes recommended and approved. These
have also been included within Appendix F, and are summarised in table 4.
Table 4 - 2012/13 New Capital Schemes
New Capital Schemes
e-Financials Financial Management System
Software Upgrade
Refurbishment Works to Seaside Shelters
Car parks Resurfacing and Refurbishment
Total
Scheme Total
£
33,000
155,000
186,000
374,000
6.3
The financing of the amended capital programme is detailed within Appendix
F. The financing at this point in the year assumes capital receipts totalling
£3,603,791 will be used to finance schemes in 2012/13. The progress of
achieving the capital receipts as forecast will continue to be monitored
throughout the year as part of the budget monitoring process.
6.4
In addition to the changes previously incorporated into the Capital
Programme Appendix there are two further amendments which have been
included which are requested for approval, details of which are identified
below.
6.4.1
Procurement for Upgrade of Civica System – In January 2012, a grant was
received from EEDA as a contribution towards the Upgrade of the Civica
system. The sum of £53,800 was received and this has replaced the
equivalent sum of capital receipts required to be used to fund the scheme in
2012/13.
6.4.2
Sheringham Prom Lighting – In March 2012, a capital contribution (receipt in
advance) of £25,000 was received from Sheringham Plus, to fund additional
prom lighting in Sheringham.
A further £8,000 has been identified as
receivable in 2012/13, from Sheringham Town Council. Both sums have been
identified as being in addition to the existing scheme budget of £45,000,
bringing the total budget available up to £78,000.
6.5
Housing Capital Programme – The updated Housing capital programmed is
included within Appendix F, and reflects the slippage from 2011/12.
6.6
The Housing capital programme continues to be financed from capital grants,
preserved right to buy receipts, the Capital Projects Reserve and housing
capital receipts. The receipts position will continue to be monitored to ensure
that the programme remains affordable.
6.7
Coast Protection Capital Programme – The 2012/13 Coast Protection capital
programme was approved by Full Council on 22 February 2012. There have
been no changes to the programme since the budget report, other than those
related to slippage, which have already been detailed in paragraph 5.11
above and these adjustments are reflected within Appendix F.
7.
Forecast 2012/13 Update
7.1
The budget for 2012/13 was approved in February 2012. At the same time
financial projections for the following three years to 2015/16 were also
presented. The budget for 2012/13 includes savings and additional income
totaling £897,096. This year is the final year of the two-year finance
settlement for local government previously announced as part of the 2010
Comprehensive Spending Review.
7.2
Forecasts of future grant allocations have been made for the period 2013/14
to 2015/16 but these will not be confirmed until later in the year. At the time of
producing the budget the forecast gaps for future years were £266,508 in
2013/14, £1,072,432 in 2014/15 and £1,232,022 in 2015/16. This assumed
grant reductions of 7% in the first two years, reducing to 3% in 2015/16. In
response to changes introduces as part of the Finance Bill it would be
prudent to revise these forecasts. The forecast for 2013/14 onwards will be
updated as part of the financial planning process which will commence over
the coming months.
7.3
As part of the financial planning process all earmarked reserves and
commitments against current balances will be reviewed. The balance on the
general reserve at 31 March 2012 was £1,946,590. After taking account of
budgeted and projected transfers from the reserve over the current and
following two financial years the forecast balance is £1,345,066. At this time it
would be prudent to maintain sufficient reserves to cushion the impact of
future grant settlement announcements being worse than anticipated. A
review of the general reserve will be carried out as part of the forthcoming
financial planning process.
7.4
Two significant internal changes that have previously been identified as
having a financial impact on the Council are the Management Restructure
and the Pay and Grading Review.
7.5
Members were appraised of the Senior Management Restructure at the
meeting of Full Council in April 2012, the report outlined that ongoing savings
of £150,000 had been included in the revenue budget from 2012/13 and that
this was the minimum level of saving that could be expected. The restructure
is yet to be finalized and therefore more accurate projections of the level of
savings cannot be made at this time, but will be factored into the detailed
financial forecast that will be updated later in the year.
7.6
Council approved the implementation of a new pay model at the meeting of
Full Council on 18 April 2012. Staff are due to be moved to the new terms
and conditions and new pay model on 2 October 2012. The report to Full
Council outlined the estimated financial implications of the pay and grading
review along with the changes from the review of car allowances. The appeal
process for the pay and grading review has not yet been completed and
therefore where appeals are successful this will reduce the level of savings
forecast and potentially increase the costs of back pay entitlement
7.7
An estimate of the costs and savings from the pay and grading review has
been factored into the 2012/13 budget and future projections, although the
budget for 2012/13 did assume an implementation date of 1 April 2012 and
was also based on the previous model. The full financial implication in terms
of a net saving of the new model and results of the appeals is yet to be
quantified but it will almost certainly be lower than the level assumed in the
base budget for 2012/13 due to the six months delay in implementation
compared to that budgeted. An earmarked reserve is currently being
maintained and will be used to fund the one-off costs for pay and grading
along with cushioning the impact of a reduced level of savings if required,
however the ongoing impact will need to be considered as part of the updated
financial forecasts included in the Financial Plan 2013/14.
7.8
As part of the 2012/13 budget process a new reserve was established for the
earmarking of the New Homes Bonus, a report is being brought forward next
month in relation to how this money will be utilised.
8.
Financial Implications and Risks
8.1
The underspend for the 2011/12 financial year has been earmarked for
known and potential liabilities. A number of significant risks still remain in
terms of the current and future financial years, the most significant of which
are highlighted below.
8.2
Local Government Finance Bill - implications arising from the localization of
council tax support and retention of Business Rates both in terms of
preparing schemes and the ongoing impact to the council in terms of funding
schemes and implications to the grant funding.
8.3
Savings and Additional Income – The base budget for 2012/13 includes
savings and additional income totaling £897,096. These will be monitored
throughout the year and highlight corrective action where necessary to
ensure the budget remains achievable.
8.4
Pay and Grading – The delay in implementation and changes to the model
since the budget was set for 2012/13 will have an impact on the overall
financial impact of the review some of which can be mitigated by the
earmarked reserve.
9.
Sustainability
9.1
None as a direct consequence from this report.
10.
Equality and Diversity
10.1
This report does not raise any equality and diversity issues.
11.
11.1
Section 17 Crime and Disorder considerations
This report does not raise any Crime and Disorder considerations.