PART 1
(OPEN TO THE PUBLIC)
ITEM NO.
REPORT OF THE DIRECTOR OF CORPORATE SERVICES
TO THE BUDGET COMMITTEE ON WEDNESDAY, 3rd SEPTEMBER 2003
TITLE: REVENUE BUDGET 2003/04 : BUDGET MONITORING
RECOMMENDATION: Members are asked to note the contents of the report.
EXECUTIVE SUMMARY :
The report provides details of the current position relating to budget monitoring for
the revenue budget and of the implementation of the agreed revenue budget savings
for 2003-2004.
BACKGROUND DOCUMENTS : Various working papers and reports. (Available for
public inspection)
CONTACT OFFICERS :
Chris Hesketh 793 2668 chris.hesketh@salford.gov.uk
Colin Kay Tel. 793 3245 colin.kay@salford.gov.uk
ASSESSMENT OF RISK: Key budgetary control risks are identified in an appendix to
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 Corporate
Services.
WARD(S) TO WHICH REPORT RELATE(S) :
KEY COUNCIL POLICIES :
None specifically
2003/04 Revenue Budget
REPORT DETAIL
1
INTRODUCTION
1.1
At this time of year, following completion of final accounts, the work of the accountancy
division is increasingly focused on budget monitoring. With expenditure data available
for a greater proportion of the year, predictions of full-year effects are becoming more
reliable.
1.2
To make maximum use of the resources available, budget monitoring concentrates on
an examination of the major budget heads and on those budgets identified as risk
areas.
1.3
The Council’s overall financial position imposes a need for agreed savings targets to
be met and this report also includes an update on the progress being made on savings
proposals.
1.4
Individual directorates now prepare, in one form or another, regular monthly monitoring
reports to their Lead Members This report is a consolidation of the significant items
from those directorate reports.
2
BUDGETARY CONTROL REPORTS
2.1
Development Services
There is currently a slight overspend on the Salaries budget. This is being subjected to
close monitoring to ensure that expenditure falls back in line with the available budget.
There is still forecast to be a shortfall on the Decriminalised Parking Enforcement
(DPE) budget of £130,000, mainly due to payments to the contractor to maintain
deployment levels sufficient to generate budgeted income.
The DPE shortfall will be offset in 2003/04 by favourable planning fee income streams,
provided that this trend continues (and there is currently no sign of a downturn in the
market).
Pressure is still continuing on the Highways Maintenance budget because of the level
of responsive repair work and to address the rising level of insurance tripping claims.
Changes are in the process of being implemented to improve the accuracy of financial
monitoring information and will be in place for the next report on 1st October.
2.2
Education
The position previously reported with Special Education Needs Support Staff has now
been resolved satisfactorily. The vast majority of staff have been successfully
redeployed, although it has been necessary for 19 VER/severance applications to be
approved.
Concern continues that the Resources budget has not increased at the same rate as
increased teachers’ pensions in respect of previous years VERs. The overspend is
currently £43,000 and the situation is being monitored.
There is mounting budget pressure relating to children placed in independent special
schools. The situation is being investigated and will be subject to close monitoring in
the coming months.
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2
There is a one-off overspend of £218,000 in the Secondary General budget owing to
the write off of debts relating to high schools which have closed. Work is currently in
hand to identify how this cost can be met.
2.3
Community and Social Services
The agency staffing and Home Care cost pressures reported in July are continuing.
There is currently an overspend of £262,000 in the Children’s Resources employees
budget, caused by the use of agency staff. Specific monitoring and control has been
introduced to remedy the situation. This overspend is partly offset by net underspends
elsewhere in the employees budget.
The current full-year projection for overspend on the Home Care budget is £800,000.
The Directorate has instigated a package of measures to control and mitigate this,
including virement of other budgets and reviews of service provision.
Currently, the Directorate is managing to contain expenditure within its overall budget
resource.
2.4
General
Other directorates are not indicating that there are any significant problems and at
present it is anticipated that net expenditure should be contained within budget
allocations.
3
DIRECT LABOUR and DIRECT SERVICE ORGANISATIONS
3.1
The DLOs/DSOs under control of the Education Directorate are currently trading
satisfactorily.
3.2
The Street Cleansing and Refuse Collection DSOs are trading satisfactorily and are
favourable to the plan. The Grounds Maintenance DSO is in line with the seasonal
profile. The previously-reported unfavourable variance on VMM DSO is currently being
investigated and quantified.
3.3
As a consequence of the large loss incurred by City Highways in 2002/03, and early
indications of unfavourable variances in 2003/04, changes and reviews to processes
are being undertaken. Currently, the income shortfall has deteriorated, however this is
a temporary position while the required changes and improvements are being
implemented.
4
HOUSING REVENUE ACCOUNT
4.1
While the net budget position at July 2003 shows an adverse variation, it is still
anticipated that the account balance will meet its budgeted level by the end of the year.
A number of areas have been identified for continued monitoring to ensure that this is
the case.
5
BUDGET RISKS
5.1
A full budget monitoring exercise is undertaken each month by all directorates to
ensure that any issues are identified at an early stage so that corrective action may be
taken.
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5.2
It is useful to identify areas that could represent risks in budgetary control in order that
the budget monitoring exercise can subject them to greater scrutiny. The key budget
risks identified by the various directorates were identified in the report to this committee
in June. Appendix 1 contains the quarterly update for September.
6
PROGRESS ON AGREED SAVINGS
6.1
The attached Appendix 2 provides details of the approved savings included in the
2003-2004 revenue budget.
6.2
While there has not been a significant movement on savings, it should be noted that
most have either already been achieved, or are on target to be achieved, or the effect
may not be quantifiable at this stage in the year.
6.3
The appendix will continue to be updated during the year and it will be included as part
of the regular monthly monitoring report until all the savings have been implemented
and achieved.
SUMMARY
7.1
The budgetary control exercise indicates some potential problem areas. Continuing
close scrutiny will be needed to monitor possible overspends and to allow for early
remedial action to be undertaken.
7.2
Some further progress has been made since last month in respect of the agreed
savings for the year although it must be remembered that the majority have already
been achieved or are on target to be implemented. Some of the proposals will need to
be subject of close scrutiny to ensure that the full amount of the savings will be
achieved.
8
RECOMMENDATION
8.1
Members are asked to note the contents of this report and request reports to the next
meeting from:a) The Director of Education and Leisure;
b) The Director of Community and Social Services;
on how the budget pressures on the Education and Social Services budgets
respectively will be managed.
Alan Westwood
Director of Corporate Services
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Appendix 1
BUDGET RISKS
General Issues
 Capitalisation and the District Auditor
 Exit strategy on externally funded schemes for 2004/5 and beyond
 General capital funding pressures.
 Impact of Single Status reduction to 36 hours
Chief Executive
 Limited resources - unable to meet full agenda
 Matched funding requirements
 External Government funding trends beyond our control, i.e., Community Safety
 Staff turnover particularly in regeneration - in short supply and a critical problem
 Cuts in other service areas through budget pressures
 Strategy & Resources is growing constantly and staff are funded externally but there
may be issues later on if funding not sustained
 Not going to be as much funding after the next 12 months
Community & Social Services
 Residential care home rates
 Residential care allowances - changes by Government
 Hospital discharges (from January 2004)
 Learning disabilities (lot of young people coming from children’s disabilities into adult
disabilities)
 Growth in demand for home care needs lot of effort to control
 Recruitment for residential social workers
 Children - stayed in budget this financial year but it is a very risky area
 Preserved Rights – grant level for 2003/04 is £140,000 less than built into budget
assumptions. A substantial part of this may be met from Supporting People grant.
Corporate Services
 Strategic Partnering
 Potential loss of business (e.g. support services to schools, NPHL, leisure trust)
 NPHL call centre
 Adequacy of Schools Broadband budget provision
 Grant aided initiatives - E-Govt programme, National CRM Academy
 Document management – licence implications
 Council Tax / Benefits system – cost implications
 Legal Services Management system – cost implications
 CPO income (property where owners unknown)
 Income from licensing, registration, land charges etc.
 LIFT
Development Services
 Tripping claims
 Property maintenance and disabled access
 Strategic partnering - resource implications
 Decriminalised Parking Enforcement
 Maintenance of level of planning fee income
 Delivery of the UDP (for 2004/05)
 General volatility of income
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Education & Leisure
Arts & Leisure
 Leisure Trust costing £30k per month in consultancy
 Arts & Leisure savings will need close monthly monitoring and some of them are
optimistic
 Libraries review
 Broadband
 Alternative savings to fitness suite, vending income and top-sliced savings still need
to be found
Education
 Schools funding formula and loss of standards fund is very significant and there will
be an impact school by school
 Payroll SLA
 Second PFI for replacement of three high schools - resources requirement for
advisors’ fees
 Standards Funds grants will be mainstreamed into FSS again in 2004/05 and this will
give net loss for the City Council
 Transport budget review
 Broadwalk Training Centre management plan/ recharges
Environmental Services
 Greater Manchester waste strategy - 25 year contract
 Priority should be given to contaminated land but extent unknown
 Waste management and recycling targets
 PSA achievement
 Income management (income around 25% of the budget)
 Industrial relations
 Security of assets
Housing
 Rent income and void rate
 Homelessness
 Fee income from capital
 Supporting People grant
 Interest rates
 Asylum seekers
Personnel & Performance
 CPA/ IDEA improvement agenda
 HR improvements and developments for the Authority in general
 Strategic Partnering will become resource intensive
 Restructuring - impact of procurement/communications/marketing
 SLA’s and devolved budgets
 Job Evaluation
 Accommodation
 ICT
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Appendix 2
SAVINGS (SUMMARY)
Achieved
Not Yet
Achieved
£
£
Total
£
ARTS AND LEISURE
147
246
393
EDUCATION
190
30
220
ENVIRONMENTAL SERVICES
101
98
199
CORPORATE SERVICES
328
0
328
6
0
6
75
86
161
DEVELOPMENT SERVICES
149
88
237
COMMUNITY AND SOCIAL
SERVICES
201
25
226
CHIEF EXECUTIVE
131
0
131
1,328
573
1,901
HOUSING
PERSONNEL
TOTAL
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Ref.
Description
Achieved
£000
Not
Achieved
Comments
0
175
56
0
0
19
19
25
0
0
25 Savings expected to be achieved
19 Budget reduced accordingly
19 Budget reduced accordingly
0
45
5
8
0
15
8 Alternative savings are being considered
45 Budget reduced accordingly and post deleted
20 Still under construction
3
0
5
18
8 Alternative savings now being considered
18 Alternative savings being sought
147
246
Reduction to the Salford Consortium budget and increase
in LSC funding
Discretionary Student Awards - delete remainder of
contingency budget
Deletion of two support posts wef 30/9/03
Share of top sliced savings
150
0
150 Budget reduced accordingly
20
0
20 Budget reduced accordingly
0
20
30
0
30
20 Budget reduced accordingly
Total
190
30
Total
ARTS & LEISURE
Rates saving by transferring to Leisure Trust or PPP
AL2
Reduction to events budget, deletion of post, reduction of
grants budget, reduced sponsorship for events
Review Library Service provision
Removal of remaining budget for Clifton House Farm
Reduction of Arts grants budget and delete one part time
post - develop links with Lowry Centre
Increased revenue from Fitness Suites
Delete Town Twinning post and grants
Reduction of subsidy to Working Class Movement
Library
General housekeeping savings and increased income
Share of top sliced savings
AL3
AL4
AL5
AL6
AL7
AL8
AL9
AL10
Total
175 Will be achieved if transfer to Trust is completed by
01/10/03
56 Achieved
393
SAVINGS (ANALYSIS)
AL1
EDUCATION
ED2
ED3
ED4
220
Appendix 2 Contd.
ED1
Ref.
Description
Achieved
£000
Not
Achieved
0
98
Comments
Total
ENVIRONMENTAL SERVICES
ES2
Increase in fees and charges
80
0
ES3
Increase in casual vacancy target (share of top sliced
savings)
21
0
101
98
Energy savings initiative
Reduction in Internal Audit
Reduction in staffing costs arising from the termination
of the recruitment & retention scheme
Savings on the purchase of goods and services through
corporate contract arrangements (share of top sliced
savings)
67
33
200
0
0
0
67 Budget reduced accordingly
33 Budget reduced accordingly
200 Budget reduced accordingly
28
0
28 Budget reduced accordingly
Total
328
0
Reduction in supplies and services budget (share of top
sliced savings)
6
0
6 Budget reduced accordingly
Total
6
0
6
Total
98 Savings expected following service changes arising
from current review
80 Fees and charges have been reviewed. Income is
being closely monitored
21 Budget reduced accordingly
199
CORPORATE SERVICES
CS1
CS2
CS3
CS4
328
HOUSING
HO1
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Appendix 2 Contd.
Grounds Maintenance efficiency review
SAVINGS (ANALYSIS)
ES1
Ref.
Description
Achieved
£000
Not
Achieved
Comments
48
27
0
0
0
56
56
0
15
0
15
15 To be top sliced across all directorates based on
advertising spend over the last three years
15
75
86
161
0
0
38
50
38 Ongoing work to achieve full saving
50 Marketing strategy in progress. To be put out to
tender with other security schemes: successful
applicant to ensure self-financing
130 Budget reduced accordingly
19 Budget reduced accordingly
Total
PERSONNEL
PE1
PE2
PE3
Proposals yet to be determined
Total
48 Budget reduced accordingly and posts deleted
27 Budget reduced accordingly and post to be deleted
DEVELOPMENT SERVICES
Cease providing Eccles Town Centre Management
To make the Quay Watch self financing
DS3
DS4
Non filling of vacant posts
Reduction in the supplies and services budget (share of
top sliced savings)
130
19
0
0
Total
149
88
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237
Appendix 2 Contd.
DS1
DS2
SAVINGS (ANALYSIS)
PE4
Deletion of two posts from the Job Evaluation team
Deletion of one post following the VER of existing
Assistant Director
Efficiency and casual vacancy savings (including share of
top sliced savings)
Reduction in advertising costs
Ref.
Description
Achieved
£000
Not
Achieved
Comments
Closure of Moorside and Calderwood Community
Centres
Reduction in planned painting programme
Deletion of refurnishing scheme for Orchard Mount DC
Reduction in equipment budget
Reduction in the purchase of day care from an
independent provider
(SS2 to SS5 are share of top sliced savings)
100
0
67
7
27
0
0
0
0
25
67
7
27
25
Total
201
25
226
27
0
27 Budget reduced accordingly and post deleted
55
10
27
12
0
0
0
0
55
10
27
12
131
0
131
1,328
573
1,901
Total
COMMUNITY & SOCIAL SERVICES
SS1
Budget reduced accordingly
Budget reduced accordingly
Budget reduced accordingly
On target
CHIEF EXECUTIVE
CE1
Total
GRAND TOTAL
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Budget reduced accordingly
Budget reduced accordingly
Budget reduced accordingly
Budget reduced accordingly
Appendix 2 Contd.
CE2
CE3
CE4
CE5
Deletion of ICT Co-ordinators post and associated IT
budget
Reduction in lottery budget
Reduction in annual subscription to Midas
Freeze vacant Economic Development Officer post
Casual vacancies and efficiency measures including share
of top sliced savings)
SAVINGS (ANALYSIS)
SS2
SS3
SS4
SS5
100 Achieved