Cabinet
31 October 2011
Overview and Scrutiny
16 November 2011
Agenda Item No______8_______
BUDGET MONITORING 2011/12 – PERIOD 6
Summary:
Conclusions:
Recommendations:
This report presents the budget monitoring position for the revenue
account and capital programme to the end of period 6 (30 September
2011) and also includes a review of the current capital programme.
The position at the end of September 2011 is showing a small
overspend for the current financial year of £13,645. The overall
financial position will be considered in further detail over the coming
months as work on the future budgets and funding the grant cuts is
undertaken.
It is recommended that:
1) Cabinet note the contents of the report and the revenue account
forecast for the current financial year;
2) That Cabinet note the current position on the 2011/12 capital
programme and approve the amendments in relation to the revenue
contributions to capital for the additional costs in relation to the
provision of electricity at Holt country park and the capitalisation of the
new evaporative cooling system for the ICT server room.
Cabinet member(s):
Ward(s) affected:
All
All
Duncan Ellis, Acting Financial Services Manager, 01263
516330, Duncan.Ellis@north-norfolk.gov.uk
Contact Officer, telephone number,
and e-mail:
1.
Introduction
1.1
This report compares the actual expenditure and income position at the end of
September 2011 to the current budget for 2011/12 as set by Full Council in February
2011.
1.1.
The budget process for 2012/13 is ongoing and as part of that the budget for the current
financial year will be revised and reported to Cabinet later in November, to Overview and
Scrutiny in December and then for approval by Full Council on 14 December 2011. The
information contained within this report will be used to inform the revised budget along
with the latest financial projections for future years.
Cabinet
31 October 2011
Overview and Scrutiny
16 November 2011
1.2.
The base budget for 2011/12 includes savings of £558,268 and additional income of
£578,188 totalling £1,136,456 and this report includes the latest position on both of
these areas.
1.4
The budget monitoring position at the end of July was reported to Members in
September, this report now provides the latest updated position on both revenue and
capital.
2.
Background
2.1
The service accountants have been working with budget managers on the revised
budget alongside work on the budget monitoring. The revised budget report that will be
reported to Cabinet in November will pull together all of this work, therefore the position
being reported now at the end of September is a snapshot but seeks to highlight the
more material variances against the current budget which are expected to have a full
year effect.
2.2
As discussed within the previous budget monitoring report there are a number of Central
Government consultations which have the potential to impact on local government
finance:
•
•
•
The Local Government Resource Review - launched on 18 July 2011 closes on
24 October 2011 and covers proposals for the localisation of Business Rates. A
set of eight technical papers have now been published which will help to inform
this consultation.
Council Tax Benefit – consultation runs until 14 October 2011 dealing with
localising support for Council Tax in England
Housing Benefit Reform – Supported Housing - consultation launched on 19 July
2011 and closing on 19 October 2011 addresses the issues of effective help to
people with specialist housing need
2.3
By the time this report is discussed at Cabinet on 31 October the consultation responses
in relation to the above areas will have been submitted. Following these consultations
there are varying timescales for the resultant changes to be implemented. However,
little work can be done on the financial impact for the Council at present as the detail of
how the schemes will operate in practice is still as yet unknown. The implications will
however need to be assessed at the earliest possibility opportunity because they may all
potentially impact on the Council’s finances over the medium term.
3.
Budget Monitoring Position – Revenue Services
3.1
The general fund summary (Appendix C) shows the overall high level position at the end
of period 6 and is currently showing a year to date variance of £56,801. Further details
on each of the service areas are included within Appendix D.
3.2
The following tables provide details for each of the service areas, the more significant
variances along with those which are anticipated to have a full year effect.
Cabinet
31 October 2011
Overview and Scrutiny
Community
Development Management – The anticipated
full year effect is due partly as a result of
compensation payments of £10,126 made as a
result of planning appeals. This is a cost that is
not budgeted for and is beyond the control of the
budget manager. In addition to this an additional
£50,000 of income was added for 2011/12 in
anticipation of the introduction of a new fee
setting regime but this is now unlikely to happen
in the current financial year and income is
expected to be down by £20,000. This variance
has been reflected within the savings table
below within section 4 below.
Strategic Housing – The variance to date
relates to rolled forward provisions for old HRA
electricity accounts which have not as yet been
offset by expenditure (£22,861), higher than
anticipated levels of recoverable income in
relation to homelessness accommodation
(£4,440) and £64,528 less income to date
received from VAT shelter receipts although this
is only a timing issue. A (£3,999) income
contribution has also been received from the
Rough Sleeper fund. A full year effect is
anticipated in relation to the electricity provisions
as reported during P4, although some of this
may be required to fund water charges.
Housing Service Management – this variance
relates to the vacant Development officer post.
This post has been offered up as part of the
2012/13 savings exercise and will therefore not
be filled in the current financial year.
Transport – There is currently an underspend
being reported in relation to this service area. A
payment in respect of 2010/11 (quarters 3 and
4) to bus operators was expected which was
estimated at £37,070, the final invoice has
however now been received and this is
approximately £17,000 lower than expected and
has resulted in a full year underspend.
Sub Total Community
16 November 2011
Over/(Under)
spending to
date
£
23,796
Estimated
full year
effect
Performance
Indicator at
Period 6
where
applicable
£
30,126 781
applications
have been
received to P6
in the current
year compared
with 847 for
the same
period in
2010/11
29,591
(20,000)
(11,961)
(29,000)
(20,672)
(17,000)
20,754
(35,874)
Cabinet
31 October 2011
Overview and Scrutiny
Environment
Licensing – there is currently an underspend
showing at present within licensing, of this a full
year saving of (£10,000) is expected in relation
to taxi test recharges as reported at period 4.
Parks & Open Spaces – this service is currently
only showing a small overspend, there is
however expected to be a full year overspend
due mainly to costs in relation to one-off
remedial tree works of £8,380, repairs to
irrigation equipment of £4,000 and a reduction in
income for verge cutting which was formerly
recharged to the County. This is however offset
by an underspend within the Woodlands
Management service area.
Sports Centres – While there is only a minor
variances showing on this service a full year
effect is expected due in the main to reductions
in income. It has not been possible to meet the
5% participation increases which have impacted
on projected income due to the continuing
difficult financial climate. Outreach work with
schools and the income generated from this has
also reduced due to the pressure on school
budgets. The installation of the new Multi Use
Games Area was delayed and so no income has
yet been generated from this and holiday
activities are down on last year again. The
membership scheme has not sold as many as
estimated. This variance has been reflected
within the savings table below within section 4
below.
To address the lack of income the Sports
Centres will be increasing the amount of
publicity across the facilities. The new Multi Use
Games Area will be advertised and promoted to
attract new customers along with the
membership scheme. Schools within the district
will also be written to to further promote the
outreach service.
Woodlands Management – the variance
showing to date is mainly due to salary savings
of (£11,632), additional costs of £10,694 relating
to the purchase of materials and equipment hire
and additional income of (£7,313). The salary
savings and additional income are expected to
have a full year effect.
16 November 2011
Over/(Under)
spending to
date
Estimated
full year
effect
£
(12,889)
£
(10,000)
1,193
23,282
211
34,177
(12,385)
(23,939)
Performance
Indicator at
Period 6
where
applicable
Dual use and
sports hall
usage April to
September
Actual 275,515
Target
258,450
Cabinet
31 October 2011
Overview and Scrutiny
16 November 2011
Public Conveniences – this variance relates to
additional repairs and maintenance costs of
£15,954 (anticipated FYE of £18,000) and a
one-off discretionary contribution of £2,000
relating to the transfer of Morston Quay PC’s.
Waste Collection and Disposal – The overall
position at the end of period 6 shows a minor
overspend. Of this £8,606 relates to additional
staffing costs, £16,232 relates to contractor
variation orders, £6,566 is due to additional
trade waste disposal costs and there is an
unfavorable variance of £4,859 in relation to
prescribed fee income. These additional costs
have been offset by extra recycling credit
income of (£21,440) and (£3,883) in relation to
the disposal of clinical waste. The full year effect
relates to a number of cost variances which total
£34,000 as highlighted above but these have
been offset by an overall favorable income
variance of (£52,500) relating to additional
income from the MRF profit share of (£92,000)
set against a reduction of £39,500 in relation to
lost prescribed waste customers.
17,014
20,000
11,743
(18,500)
Cleansing – this budget is currently showing a
small underspend although a full year overspend
is predicted due to additional costs of £15,000 in
relation to the NI 195 audit payment to Kier,
which is offset by savings of £10,000 from the
cleansing contract and maintenance to litter
bins.
(2,705)
5,000
Civil Contingencies – The majority of the
variance on this budget relates to the post for
the Civil Contingency Manager which has been
vacant for the first 6 months of this year.
Interviews have recently been held and an
appointment has now been. There is a full year
effect of £18,000 anticipated at present as
reported at period 4.
(28,316)
(18,000)
Sub Total Environment
(26,134)
12,020
Recycling rate
for all
recyclables up
to the end of
August is
44.84% (based
on estimates
for disposal),
target 47.5%.
Cabinet
31 October 2011
Overview and Scrutiny
Information
Election Services –The current overspending
represents the payments to election officers
which are to be recovered from the returning
officer.
Member Services – the variance relates to
savings on salaries (£3,866) and Members
travel, subsistence and allowances (£13,484)
along with other minor variances. These
variances are expected to produce a full year
saving.
Legal Services – the service fee income is
currently (£14,240) higher than the base budget.
The full year effect of this is expected to be
(£29,000) but £17,000 of this is planned to be
invested in a new electronic case management
system which will significantly improve efficiency
so the net saving is forecast to be (£12,000).
Graphical Info System – there is a small
variance currently showing but there is expected
to be a full year saving of (£8,000) due to
savings in relation to licences which are no
longer required.
Customer Services, Corporate – The reason
for the underspend to date is due partly to lower
than anticipated salaries and oncosts (£6,859),
equipment and stationery not yet purchased
(£6,730), additional postage recharges (£7,865)
and other minor variances. At present no full
year effects have been anticipated.
Sub Total – Information
16 November 2011
Over/(Under)
spending to
date
£
25,893
Estimated
full year
effect
£
0
(21,074)
(25,829)
(16,179)
(12,000)
(1,742)
(8,000)
(25,806)
0
(38,908)
(45,829)
Performance
Indicator at
Period 6
where
applicable
Cabinet
31 October 2011
Overview and Scrutiny
Resources
16 November 2011
Over/(Under)
spending to
date
Estimated
full year
effect
£
(22,980)
£
(6,700)
Markets – the current underspend relates
mainly to reductions in payments for other fees
and charges (£1,528) and additional/early
receipt of market charges (£10,797). A full year
effect of (£3,500) is anticipated in respect of
additional market fee income.
Local Taxation – The variance to date includes
one-off restructuring costs that are to be funded
from the restructuring reserve. There is not
anticipated to be any full year effect at this
stage.
(13,918)
(3,500)
23,280
0
Benefits – The variance to date reflects £55,420
of additional Benefits software costs relating to
the Atlas project but this is due to be fully funded
by a grant from the Department of Works and
Pensions. There is also a variance of £7,284 in
relation to the write off of bad debts which is not
budgeted for at service level and an underspend
of (£4,037) in relation to training costs. In
addition to these variances there is also a
system debtor for £248,175 that will not be offset
until the year end. None of these items are
however expected to have any full year effects.
Administration Buildings Svs – there are a
number of variances within this service area but
those expected to have a full year effect are as
follows; £5,453 additional salary costs following
backdated regradings; £12,424 additional
contract cleaning costs following removal of
properties from Kier contract; (£1,000) additional
service and other recoverable charges.
Foreshore – the current underspend in this area
relates to (£6,654) staff vacancy; (£3,891)
250,247
0
(1,825)
16,877
(9,913)
(6,000)
Car Parking – the current underspend is made
up of a number of variances which include
(£4,179) reduced repairs and maintenance;
(£5,499) reduced rental payments; (£1,195)
reduced NNDR Costs; £8,022 additional
management contract costs offset in part by
increased income which is as follows; (£17,446)
additional car park fee income; (£3,613)
additional ECN income; £3,125 reduced season
ticket income. The full year effect is in respect of
the reduced rental payments following surrender
of the Horning Swan Lease.
Performance
Indicator at
Period 6
where
applicable
Cabinet
31 October 2011
Overview and Scrutiny
reduced repairs and maintenance costs. A full
year effect is anticipated in relation to the salary
saving.
Corporate and Democratic Core – The
majority of this variance to date (£68,290)
reflects the creditor provision for audit fees
charged to 2010/11. A small full year effect is
anticipated in relation to savings within the
corporate subscriptions budget.
Pathfinder – It was originally anticipated that
the Pathfinder scheme was to have been
completed by 31 March 2011. This is not now
the case and the unspent grant monies from
previous years will be used to fund the ongoing
expenditure and as such there is no full year
effect expected.
Coast & Community Partnership – the
majority of the current variance is due to
expenditure not yet incurred by both North
Norfolk Youth Voice (£8,286) and North Norfolk
Community Partnership (£6,687). The full year
effect however relates to the loss of a £10,000
contribution form the North Norfolk Community
Partnership which has been partly offset by
reduced expenditure of (£3,923) which results in
a net overspend of £6,077 at the year end.
Sub Total Resources
16 November 2011
(72,254)
(4,426)
76,241
0
(17,584)
6,077
211,294
2,328
4.
Budget Monitoring Position – Savings and additional income 2011/12
4.1
As part of the budget setting process for 2011/12 a number of savings and additional
income streams were identified and recommended for approval within the report
presented to Cabinet on 14 February 2011. The following table provides details of the
amounts included within the 2011/12 base budget along with an updated forecast for the
current year. Where a variance is shown comments have been provided within section 3
above.
Table 1 – 2011/12 Savings and Additional Income
Service Area
2011/12
Base
Budget
£
Planning and Building Control
35,707
Conservation and Design
10,000
Land Charges
8,587
Regeneration Management
4,000
Housing Service
21,337
Environmental Health
8,400
Sports Centre
10,115
Media and Communications
47,240
Legal Services
55,000
Customer Services
10,544
Car Parking Management
40,000
2011/12 Variance
Updated
Forecast
£
£
35,707
0
10,000
0
8,587
0
4,000
0
21,337
0
8,400
0
10,115
0
47,240
0
55,000
0
10,544
0
40,000
0
Cabinet
31 October 2011
Overview and Scrutiny
Service Area
16 November 2011
2011/12
Base
Budget
£
77,254
56,284
68,800
105,000
558,268
2011/12 Variance
Updated
Forecast
£
£
77,254
0
56,284
0
68,800
0
105,000
0
558,268
0
Revenues and Benefits
Organisational Development
Financial Services and Internal Audit
Partnership and Community Engagement
Sub Total Savings
Additional Income/Grant:
Planning Fee Increase
50,000
30,000
20,000
New Homes Bonus
350,000
350,000
0
Homelessness Prevention Grant
120,470
120,470
0
Leisure Facilities Income
37,718
7,718
30,000
Car Parking
20,000
20,000
0
Sub Total Additional Income/Grant
578,188
528,188
50,000
Total Savings/ Income
1,136,456 1,086,456
50,000
(Note – All savings are shown gross. Any one off redundancy or severance costs
associated with delivering these savings will be met as one off costs from the
restructuring earmarked reserve).
4.2
The majority of the planned savings are still on target for the current year, the
implications of the others i.e. the planning fee income and the income in relation to
leisure facilities will need to be considered as part of the ongoing financial projections.
5.
Budget Monitoring Position – Non Service Expenditure and Income
5.1
There is a detailed half yearly report on Treasury Management within this agenda and
therefore the comments have not been duplicated within this report.
5.2
The 2011/12 budget anticipated that £550,000 would be earned in interest. Surplus
balances available for investment were anticipated to average £22.8m at an interest rate
of 2.42%.
5.3
However, as highlighted within the P4 budget monitoring report during the first 4 months
of the financial year the average amount invested was £25.5m at an average rate of
interest of 1.94% resulting in an overall interest earned figure of £166,631. This was
£29,243 below the budget position at the end of period 4.
5.4
Following on from this, in the first 6 months of the financial year the average amount
invested was £26.0m at an average rate of interest of 1.92%, resulting in an overall
interest earned figure of £253,344. This is £40,467 below the budget position at the end
of period 6.
5.5
A number of institutions have recently been downgraded by the rating agencies and 4 of
them (Clydesdale Bank plc, The Royal Bank of Scotland plc, National Westminster Bank
plc and Nationwide Building Society) are now below the Council’s minimum credit rating
criteria for lending. The downgrades follow a reassessment by the rating agencies of
government support (or parental support in the case of Clydesdale), rather than
representing a deterioration in the financial strength of the UK government or banking
system.
Cabinet
31 October 2011
Overview and Scrutiny
16 November 2011
5.6
In addition, the maximum period of investments with UK banks has been reduced from 1
year to six months (3 months in the case of Santander) in response to the extreme
tension and negative sentiment affecting the financial markets as a result of the lack of
progress in solving the sovereign debt problems in Europe.
5.7
A consequence of these developments is that the rate of interest which the Council can
achieve on its investments will be lower than was assumed when the budget was set.
Although the balance available for investment continues to remain above budget, the
lower rates over the second half of the financial year will result in a shortfall of interest
against budget. At this stage it is anticipated that interest received by the Council will be
around £81,000 less than the original budget by the year end.
5.8
The Council’s treasury advisor will consider their investment advice on the minimum
credit rating threshold, and review whether it provides the prudent and pragmatic
investment counterparties which the Council requires. If they change their view, they will
recommend it is implemented in the 2012/13 strategy.
5.9
The Council can confirm that it complied with its Prudential Indicators for 2011/12 which
had been set at Full Council on 14 February 2011. The latest position on the Prudential
Indicators is included within Appendix B which forms part of the Half Year Treasury
Report 2011-12 which appears elsewhere on this agenda.
6.
Budget Monitoring Position – Summary
6.1
The following table provides a summary of the full year projections for the four service
areas along with an updated use of reserves figure where applicable, at present due to
the anticipated shortfall in relation to the investment income it is not now anticipated that
any contribution will be made to the general reserve at the end of the year.
Service Area
Community
Estimated Full Year
Effect
£
(35,874)
Environment
12,020
Information
(45,829)
Resources
2,328
Service Variance Total
(67,355)
Contributions to/(from) Reserves:
General Fund Reserve
Other Reserves
Non Service Expenditure and Income
0
0
81,000
Total Impact
13,645
6.3
Overall the revenue position shows a small projected overspend of £13,645. This
position will continue to be monitored and this report will inform the financial planning
and budget process. The overall position will continue to be monitored and used to
inform the revised budget which will be reported later in November.
7.
Budget Monitoring Position – Capital and Prudential Indicators
7.1
Members were provided with an updated capital programme for both current and future
years as part of the 2010/11 final accounts report in June 2011. Appendix E shows the
Cabinet
31 October 2011
Overview and Scrutiny
16 November 2011
latest position for the updated programme, both for General Fund and the Coast
Protection, and provides details of spend up to period 6 along with comments on
individual schemes where applicable.
7.2
7.3
The following commentary provides an update on non housing schemes;
(a)
Fakenham factory extension – following identification of drainage issues the
tenders for this scheme are currently being re-priced, and works are likely to
commence later this month or during November.
(b)
Provision of Electricity at Holt Country Park – Following the approval of the
capital scheme for the provision of electricity at Holt Country Park at £13,000,
further revenue funded works have been identified which have increased the total
scheme expenditure to £21,522. The additional expenditure is to be financed
from a revenue contribution to capital outlay (RCCO), which is being funded from
salary under spends of £3,500 in relation to Holt Country Park, and savings of
£5,000 from the Mobile Gym revenue budget.
(c)
Carbon Reduction Scheme – Works have recently been undertaken to introduce
an evaporative cooling system to the ICT Server room. Originally it was
anticipated that the value of works would be below the de-minimus level for
capitalisation (£10,000), and as such these works were to be funded from
revenue. However the cost of the works has come in at £14,100 which enables
the works to be capitalised and so it is recommended that the funding for this
provided as a revenue contribution to capital (RCCO) from the Carbon
Management earmarked reserve.
There have been some further alterations to the structure of the programme and where
schemes are shown within it as follows but there have been no adjustments made to any
budgets;
(a)
The balance of the budget relating to the previous Benefits software update of
£66,156 has now been transferred to the scheme for the procurement of the new
system so the budget has been adjusted from £240,000 to £306,156.
(b)
A new sub-section of the programme has been added to cover the ‘Leadership of
Place’ schemes being undertaken within North Walsham. The relevant budgets
contained within the Public Convenience Improvements (£68,000) and the Car
Park Improvements schemes (£30,000) that relate to works within North
Walsham have therefore been moved to this new section, along with the £70,000
budget for general North Walsham Regeneration Schemes.
(c)
There were previously 5 separate lines in the programme for planned works to
the Cromer offices, the budgets for these (which totalled £275,000) have now all
been amalgamated under the single heading of ‘Administrative Buildings.
7.4
The Housing Renovation and Disabled Facilities Grants schemes are progressing, but,
as with the budget available for Strategic Housing and Choice Based Lettings System,
they will all be subject to Member decisions, based on the Housing Strategy document
which is to be approved by Cabinet, and will be reviewed as part of both the Revised
budget process and the 2012/13 base budget work.
7.5
Coast protection and coastal pathfinder projects are progressing. Updates on the
progress of the pathfinder capital projects are being reported to the Coastal
Management Board.
Cabinet
Overview and Scrutiny
31 October 2011
16 November 2011
7.6
Capital Receipts - The updated capital programme for 2011/12 assumes that new
capital receipts of £85,000 will be generated in the year from the disposal of the public
convenience on the East Promenade in Sheringham. This disposal has now been
completed and the Council achieved a capital receipt of £104,000 in relation to the
disposal which is £19,000 higher than the original estimate. The Council has also now
received the gross income of £1.34m in relation to the disposal of Lockerbie flats and
once this has been reduced by the relevant disposal costs this money can be used to
help finance the capital programme.
7.7
In addition the housing capital programme assumes capital receipts of £130,000 from
preserved right to buys. Two right to buys have been completed in the current year so
the forecast budget has already been achieved and so the position will be reviewed, in
consultation with the Victory Housing Trust, as part of the revised budget process. The
position as regards capital receipts and financing requirements will continue to be
monitored through the year to ensure that the current capital programme remains
affordable.
8.
Implications to the Council
8.1
The detail within section 3 of the report outlines the significant variances against the
profiled budget to the end of period 6 and also those anticipated to have a variance at
the year end. Overall the total of the projected service variances at the year end is a
small overspend of £13,645. Therefore the current forecast for the year assumes that
the revised budget remains achievable.
8.2
Work on the revised budget for 2011/12 along with the detailed budget for 2012/13 and
future years are ongoing. As part of the overall budget process the level of the general
reserve will be reviewed taking into account a number of financial risk factors and
potential liabilities. In addition all earmarked reserves will be reviewed alongside current
commitments.
8.3
The overall budget will continue to be monitored by officers and reported to Members on
a regular basis. Detailed work is in progress by Officers and Members of Cabinet on the
future funding shortfall facing the authority over the coming years.
9.
Recommendations
9.1
It is recommended that:
1) Cabinet note the contents of the report and the revenue account forecast for the
current financial year;
2) That Cabinet note the current position on the 2011/12 capital programme and approve
the amendments in relation to the revenue contributions to capital for the additional costs
in relation to the provision of electricity at Holt country park and the capitalisation of the
new evaporative cooling system for the ICT server room.