PART 1
(OPEN TO THE PUBLIC)
ITEM NO. 6
REPORT OF THE HEAD OF FINANCE
TO THE BUDGET SCRUTINY COMMITTEE ON WEDNESDAY, 4th JULY 2007
TITLE: REVENUE BUDGET 2007/08: BUDGET MONITORING
RECOMMENDATION: Members are invited to consider and comment on the contents of the
report.
EXECUTIVE SUMMARY: This report outlines the current position of expenditure against the
2007/08 revenue budget, the key budget risks identified by directorates and the
implementation of the agreed revenue budget savings for 2007-2008.
BACKGROUND DOCUMENTS: Service budget monitoring reports to lead members.
(Available for public inspection)
CONTACT OFFICERS:
Chris Hesketh Tel. 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 this report.
SOURCE OF FUNDING: Revenue Resources
LEGAL ADVICE OBTAINED: Not applicable
FINANCIAL ADVICE OBTAINED: This report concerns key aspects of the Council’s revenue
finances and has been produced by the Finance Division of Customer and Support Services.
WARD(S) TO WHICH REPORT RELATE(S):
None specifically
KEY COUNCIL POLICIES: 2007/08 Revenue Budget
Report Detail
1
Introduction
1.1
At this time of year work in the Accountancy Division has been focused on the closure
of the final accounts for the previous year and on monitoring the budget for the current
year.
1.2
Both these issues are very important because, although final accounts provide
information on what has already happened, they can also highlight issues which may
present problems in the current and future years’ budgets.
1.3
The Statement of Accounts for 2006/07 was approved by the Accounts Committee and
signed by the Chairman on the 29th June 2007.
1.4
To make maximum use of the resources available, budget monitoring concentrates on
an examination of the major budget heads and the budgets identified as risk areas.
1.5
In addition the overall financial position imposes a need for agreed savings targets to
be met in full and emphasis is being placed on the progress being made on each of the
savings proposals.
1.6
Individual directorates are now preparing or starting to prepare, in one form or another,
regular monthly monitoring reports to their Lead Member.
2
General Fund Services
2.1
Chief Executive’s
At this early stage in the financial year it is anticipated that net expenditure will be
within budget at year-end.
2.2
Community, Health and Social Care
The employees budget to May 2007 is showing a minor underspend of £35,000 (0.7%
of the total budget) including agency staff and recruitment advertising.
As forecasted for the 2007/08 budget, the Learning Difficulties service is under
pressure as a result of the reduction in Supporting People income of £400,000 and the
additional cost of £600,000 in respect of clients moving from Children’s Services. The
service is working on a range of efficiency measures to meet the pressures and have
so far identified savings proposals totalling £790,000. Together with accumulated
surpluses from previous years it is anticipated that the service will remain within budget
for 2007/08.
Close monitoring will need to continue throughout the remainder of the year particularly
in the pressure areas indicated.
2.3
Customer and Support Services
Overall the expenditure on salaries (including overtime and agency) is underspent to
the end of May 2007 by £108,000. The main reason for the underspend is casual
vacancies within the Audit and Finance Support Groups of the Finance Division.
However, some staff have now been appointed and the other posts will gradually be
filled so the underspend will not continue to increase.
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2
2.4
Housing and Planning
The current budget position is not yet being reported until the impact of the
establishment of the new housing organisations on the Housing General Fund and the
HRA is considered at the joint Lead Member meeting of Housing and Customer and
Support Services on the 16th July 2007.
2.5
Children’s Services
The Children’s Services non schools budget is approximately £40,000 overspent at this
stage of the financial year. This includes expenditure of £90,000 on “one off” items
which include the changes to Minerva House reception for DDA compliance and
enhanced privacy for members of the public. It is anticipated that the budget will be in
line at year- end.
Close monitoring of the budget will continue throughout the year particularly in those
areas e.g. looked after children which can be volatile.
2.6
Environment
As there is now no requirement to report the trading results of the Direct Service
Organisations separately the figures form part of the general Environment directorate.
At this early stage in the financial year it is anticipated that net expenditure will be
within budget at year-end.
2.7
Corporate Issues

Electricity tender – a budget provision for a 50% price increase was made but
the re-tender has shown prices to be more competitive with only an overall 10
% increase. This will save £500,000 on the budget provision.

Property Insurance tender – the renewal of the insurance cover from the 1st
June 2007 has led to a reduction in the insurance premium of £350,000.
3
Housing Revenue Account
3.1
As reported at 2.4 above the current budget position is not yet being reported until the
impact of the establishment of the new housing organisations on the HGF and HRA is
considered at the joint Lead Member meeting of Housing and Customer and Support
Services on the 16th July 2007.
4
Direct Service Organisations
4.1
As reported at 2.6 above the Direct Service Organisations information is now included
within the Environment directorate.
5
Progress on agreed savings
5.1
The attached Appendix 1 provides details of the approved savings included in the
2007/08 revenue budget.
5.2
At this early stage of the year there has been no change to the savings position from
what was reported last month.
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3
5.3
The appendix will continue to be updated throughout the year and will be included as
part of the regular monthly monitoring report until all the savings have been
implemented and achieved or alternative savings sought.
6
Budget Risks
6.1
A full budget monitoring exercise is undertaken each month by all directorates to
ensure that any issues and corrective action are identified at an early stage. Areas
that represent greater risks in budgetary control have been identified and will be
subject to greater scrutiny. These are detailed at Appendix 3a and 3b along with the
latest risk position including, where applicable, details of potential reduction through
additional income or reduced expenditure.
7
Prudential Indicators
7.1 The key Treasury Management Prudential Indicators are detailed in Appendix 3.
8
Summary
8.1
Although it is relatively early in the financial year the budgetary control exercise is
already highlighting that the Community Health and Social Care directorate budget is
coming under pressure. The workplan for the Committee has been programmed to
receive a report from the directorate in October 2007.
8.2
None of the other directorates are currently identifying major budget problems.
8.3
Each of the directorates’ budgets has been adjusted for their amount of savings and
monitoring will continue throughout the year until all savings have been achieved or
implemented or alternative savings sought.
9
Recommendation
9.1
Members are invited to consider and comment on the contents of the report.
John Spink
Head of Finance
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4
Appendix 1
Savings (Summary)
Achieved
Budget
Adjusted
On Target
Total
£000
Budget
Adjusted
Behind
Target
£000
£000
Chief Executive
0
250
0
250
Children’s Services
0
425
0
425
Community, Health & Social
Care
0
1,787
0
1,787
Customer & Support Services
0
2,562
0
2,562
Environment
0
588
0
588
Housing & Planning
0
760
0
760
Total
0
6,372
0
6,372
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5
£000
Ref.
Description
£000
Comments
Achieved
Budget
Adjusted
On Target
Budget
Adjusted
Behind
Target
Total
CEX1
Chief Executive
Recruitment Advertising
0
100
0
CEX2
Marketing and Publicity
0
50
0
CEX3
Casual vacancies 2006/07
0
100
0
Total
0
250
0
250
CHL1
Children’s Services
Teacher VER costs
0
125
0
CHL2
Special Needs Transport efficiencies
0
100
0
CHL3
Children’s Grant
0
100
0
CHL4
Admin vacancy recruitment freeze
0
100
0
125 Budget adjusted - being
monitored
100 Budget adjusted - being
monitored
100 Budget adjusted - being
monitored
100 Budget adjusted - being
monitored
Total
0
425
0
425
CHSC1
Community, Health & Social Care
Increased income, fees and charges
0
380
0
CHSC2
Transport efficiency review
0
100
0
CHSC3
E-procurement of Home Care Services
0
20
0
CHSC4
0
25
0
CHSC5
Physical Disability Service - amalgamation
& streamlining
SCL efficiency target
0
60
0
CHSC6
Reorganise Client Affairs
0
15
0
380 Budget adjusted - being
monitored
100 Budget adjusted - being
monitored
20 Budget adjusted - being
monitored
25 Budget adjusted - being
monitored
60 Budget adjusted - being
monitored
15 Budget adjusted - being
monitored
Savings (Analysis)
Appendix 1 Contd.
6
100 Budget adjusted - being
monitored
50 Budget adjusted - being
monitored
100 Budget adjusted - being
monitored
Ref.
Description
£000
Comments
Achieved
Budget
Adjusted
On Target
Budget
Adjusted
Behind
Target
Drug & Alcohol Services - admin review
0
0
0
CHSC8
2006/07 underspending
0
350
0
CHSC9
Use of contingencies
0
602
0
CHSC10
Carers Grant
0
50
0
CHSC11
Homecare work patterns
0
120
0
CHSC12
Community Centres - community group
management
Staffing efficiencies
CHSC13
15
50
50 Budget adjusted - being
monitored
1,787
0
0
78
0
0
44
0
0
34
0
0
26
0
0
15
0
CSS6
Internal Audit - transfer from Wesley St.
and reduce staff
Energy conservation
0
20
0
CSS7
Bad Debts - reduce contribution
0
100
0
CSS8
Reduce travel, accommodation,
conference and seminar expenditure
Delete 1 vacant trainee post and reduce
0
10
0
0
38
0
CSS1
CSS2
CSS3
CSS4
CSS5
CSS9
Customer and Support Services
Finance
Accountancy services increased charges
& restructure
Reduction in Financial administration staff
- CH&SC
Reduction in cost of creditors and debtors
services
Payroll initiatives
7
1,787
78 Budget adjusted - being
monitored
44 Budget adjusted - being
monitored
34 Budget adjusted - being
monitored
26 Budget adjusted - being
monitored
15 Budget adjusted - being
monitored
20 Budget adjusted - being
monitored
100 Budget adjusted - being
monitored
10 Budget adjusted - being
monitored
38 Budget adjusted - being
Appendix 1 Contd.
0
Total
0 Budget adjusted – being
monitored
350 Budget adjusted - being
monitored
602 Budget adjusted - being
monitored
50 Budget adjusted - being
monitored
120 Budget adjusted - being
monitored
15
Savings (Analysis)
CHSC7
Total
Ref.
CSS10
CSS11
CSS13
CSS14
CSS15
£000
external training provision
Reduce SAP consultancy
Vacancy management 2006/07 and
2007/08
sub-total
Human Resources
Merge e-learning development in HR and
ICT
Reduce involvement in National Graduate
Development Programme
Deletion of posts following retirement
Reduce non-staffing Training &
Development expenditure
sub-total
Comments
Budget
Adjusted
On Target
Budget
Adjusted
Behind
Target
0
25
0
0
15
0
0
405
0
0
25
0
0
50
0
0
50
0
0
52
0
0
177
0
0
18
0
0
40
0
CSS17
ICT
Review contracts for printing and disaster
recovery
Reduce overtime and supplies budgets
CSS18
Increase income
0
10
0
CSS19
Enterprise XP - delete support post
0
12
0
CSS20
0
16
0
CSS21
Delete vacant Development post in
Business solutions
Delete Schools Manager post
0
25
0
CSS22
Reduce staff training
0
10
0
CSS23
Reduce contingency on Enterprise XP
0
20
0
CSS16
8
Total
monitored
25 Budget adjusted - being
monitored
15 Budget adjusted - being
monitored
405
25 Budget adjusted - being
monitored
50 Budget adjusted - being
monitored
50 Budget adjusted - being
monitored
52 Budget adjusted - being
monitored
177
18 Budget adjusted - being
monitored
40 Budget adjusted - being
monitored
10 Budget adjusted - being
monitored
12 Budget adjusted - being
monitored
16 Budget adjusted - being
monitored
25 Budget adjusted - being
monitored
10 Budget adjusted - being
monitored
20 Budget adjusted - being
monitored
Appendix 1 Contd.
Achieved
Savings (Analysis)
CSS12
Description
Ref.
Description
£000
Comments
Achieved
Budget
Adjusted
On Target
Budget
Adjusted
Behind
Target
CSS24
Reduce software expenditure
0
5
0
CSS25
Terminate training awards - reduced
catering costs
sub-total
0
4
0
0
160
0
Reduce consultancy for Business
Continuity
Registrars - additional charges and
services
Underspend - Head of Law & Admin
0
25
0
0
18
0
0
20
0
Increase in charges for conveyancing and
local land charges
Reduction in survey cost for multifunctional devices
Reduce PMF system budget
0
35
0
0
5
0
0
15
0
Legal, Democratic & Support Services –
review
Temp vacancies to 31/3/07 - Post Room,
Legal, Elections
sub-total
0
174
0
0
16
0
0
308
0
Total
5 Budget adjusted - being
monitored
4 Budget adjusted - being
monitored
160
Law and Administration
CSS27
CSS28
CSS29
CSS30
CSS31
CSS32
Customer Services
CSS34
Increase call centre charges
0
41
0
CSS35
Structural changes to management team
0
40
0
CSS36
Advice Team income
0
80
0
CSS37
Reduce remote processing
0
21
0
9
41 Budget adjusted - being
monitored
40 Budget adjusted - being
monitored
80 Budget adjusted - being
monitored
21 Budget adjusted - being
monitored
Appendix 1 Contd.
CSS33
25 Budget adjusted - being
monitored
18 Budget adjusted - being
monitored
20 Budget adjusted - being
monitored
35 Budget adjusted - being
monitored
5 Budget adjusted - being
monitored
15 Budget adjusted - being
monitored
174 Budget adjusted - being
monitored
16 Budget adjusted - being
monitored
308
Savings (Analysis)
CSS26
Ref.
CSS38
CSS39
Description
£000
2 Admin posts unfilled for 12 months
pending LIFT opening
Council Tax/NNDR court costs - increase
charge
sub-total
Comments
Achieved
Budget
Adjusted
On Target
Budget
Adjusted
Behind
Target
0
35
0
0
10
0
0
227
0
Total
35 Budget adjusted - being
monitored
10 Budget adjusted - being
monitored
227
Corporate Procurement and Efficiency
0
283
0
CSS41
Aids and adaptations procurement
0
44
0
CSS42
Staff secondment not filled
0
30
0
CSS43
Stationery
0
61
0
CSS44
Postal & courier services
0
13
0
CSS45
Multi-functional devices
0
25
0
CSS46
Agency staff
0
300
0
CSS47
Admin staffing review
0
160
0
CSS48
Think Efficiency savings
0
369
0
0
1,285
0
283 Budget adjusted - being
monitored
44 Budget adjusted - being
monitored
30 Budget adjusted - being
monitored
61 Budget adjusted - being
monitored
13 Budget adjusted - being
monitored
25 Budget adjusted - being
monitored
300 Budget adjusted - being
monitored
160 Budget adjusted - being
monitored
369 Budget adjusted - being
monitored
1,285
Total Customer and Support Services
0
2,562
0
2,562
EN1
Environment
Increase fees and charges
0
217
0
EN2
Commercial waste - reduce disposal costs
0
150
0
EN3
Bulb planting
0
40
0
sub-total
10
217 Budget adjusted - being
monitored
150 Budget adjusted - being
monitored
40 Budget adjusted - being
Appendix 1 Contd.
Mobile phones procurement
Savings (Analysis)
CSS40
Ref.
EN4
Description
£000
Comments
Budget
Adjusted
On Target
Budget
Adjusted
Behind
Target
Total
Recycling - reduce collection costs
0
181
0
monitored
181 Budget adjusted - being
monitored
Total
0
588
0
588
0
122
0
0
270
0
122 Budget adjusted - being
monitored
270 Budget adjusted - being
monitored
38 Budget adjusted - being
monitored
130 Budget adjusted - being
monitored
100 Budget adjusted - being
monitored
100 Budget adjusted - being
monitored
HP3
Car park charges
0
38
0
HP4
Capitalisation of URC salaries
0
130
0
HP5
Directorate reorganisation
0
100
0
HP6
Homelessness
0
100
0
Total
0
760
0
760
Grand Total
0
6,372
0
6,372
11
Appendix 1 Contd.
HP2
Housing & Planning
Highways works budget - no inflation
allowance
Urban Vision Gershon efficiencies
HP1
Savings (Analysis)
Achieved
Appendix 2
Prudential Indicators
a) Authorised Limit for External
Debt, Forward Estimates
2007/08
2008/09
2009/10
£m
£m
£m
Total Authorised Limit for
External Debt
659
695
731
Actual Gross External Debt as at
19/06/07
494
This limit represents the total level of external debt (and other long term liabilities, such as
finance leases) the council is likely to need in each year to meet all possible eventualities
that may arise in its treasury management activities.
b) Operational Boundary for
External Debt
2007/08
2008/09
2009/10
£m
£m
£m
Total Operational
Boundary for External debt
558
594
630
Actual Gross External Debt as at
19/06/07
494
This limit reflects the estimate of the most likely, prudent, but not worse case, scenario
without the additional headroom included within the authorised limit. The operational
boundary represents a key benchmark against which detailed monitoring is undertaken
by treasury officers.
c) Limits on Interest Rate Exposure
Upper Limit on Fixed
Interest Rate Exposure
Upper Limit on Variable
Interest Rate Exposure
Current exposure to variable rate
d) (All years) maturity structure for fixed
rate borrowing
Under 12 months
12 and within 24 months
24 months and within 5 years
5 years and within 10 years
10 years and above
Variable rate debt maturing in any one
year (local indicator)
2007/08
2008/09
2009/10
%
100
%
100
%
100
50
50
50
0
Upper Limit
Lower Limit
%
50
50
50
50
100
%
0
0
0
0
40
Current
Maturity
Profile
%
6.5
0.1
0.7
10.9
81.8
30
0
4.3
12
Appendix 2 contd
Prudential Indicators contd
e) Limits on Long-Term Investments
2007/08
£m
2008/09
£m
2009/10
£m
Upper limit for investments of more
than 364 days
30
30
30
Current total investment in excess of
364 days
10
13
2
f) Comparison of Net Borrowing and Capital Financing Requirement
In order to ensure that, over the medium term, net borrowing will only be for a capital purpose, the
Council should ensure that the net external borrowing does not, except in the short term, exceed the
total of the capital financing requirement in the preceding year plus the estimates of any additional
capital financing requirement for the current and the next two financial years. This forms an acid test of
the adequacy of the capital financing requirement and an early warning system of whether any of the
above limits could be breached.
To date this indicator has been met. The current capital financing requirement is £500m and the net
borrowing requirement £434m. Details are set out in the table overleaf.
13
Appendix 2 contd
Prudential Indicators contd
f) Comparison of Net Borrowing and CFR
Date
Debt
Temporary
Outstanding
Investments
£'000
£'000
Net
Capital
Borrowing
£'000
Finance
Head
Requirement
Room
£'000
£'000
21/05/2007
494,214
54,235
439,979
500,262
60,283
22/05/2007
494,214
58,035
436,179
500,262
64,083
23/05/2007
494,214
56,635
437,579
500,262
62,683
24/05/2007
494,214
58,335
435,879
500,262
64,383
25/05/2007
494,214
62,835
431,379
500,262
68,883
29/05/2007
494,214
62,835
431,379
500,262
68,883
30/05/2007
494,214
62,835
431,379
500,262
68,883
31/05/2007
494,214
60,835
433,379
500,262
66,883
01/06/2007
494,214
63,535
430,679
500,262
69,583
04/06/2007
494,214
64,735
429,479
500,262
70,783
05/06/2007
494,214
63,035
431,179
500,262
69,083
06/06/2007
494,214
66,935
427,279
500,262
72,983
07/06/2007
494,214
66,835
427,379
500,262
72,883
08/06/2007
494,214
72,335
421,879
500,262
78,383
11/06/2007
494,214
71,635
422,579
500,262
77,683
12/06/2007
494,214
70,135
424,079
500,262
76,183
13/06/2007
494,214
69,135
425,079
500,262
75,183
14/06/2007
494,214
68,935
425,279
500,262
74,983
15/06/2007
494,214
71,835
422,379
500,262
77,883
18/06/2007
494,214
64,335
429,879
500,262
70,383
19/06/2007
494,214
59,835
434,379
500,262
65,883
14
Appendix 3a
RISK ASSESSMENT OF REQUIREMENT FOR GENERAL RESERVES 2007/08
For info
2006/07
Provision
RISK ASSESSMENT OF RESERVES FOR 2007/08
Area of
Expenditure
2007/08
Reserves requirement
Explanation of Risk/Justification for Reserves
Minimum Desirable
£000s
0 Pay
Budget assumes an increase of 2% for all staff 2007/08
in line with the Chancellor of the Exchequer’s
assumptions for average public sector pay settlements.
There is a risk that the actual settlement could be
higher at between 2.5% and 3% in line with recent
years.
250 Prices
Budget assumes that price inflation can be managed by
directorates within a zero cash-limited increase or
specific inflation allowances built into the budget.
Higher allowances have been made for expected
above-inflationary increases, such as 50% for an
electricity contract renewable 1/4/07 and 12.5% for
water bills. The scope for other price increases having
an impact is therefore limited, with most risk likely to
be around the care services sector, although separate
assessment of risk has been included elsewhere.
c:\joan\specimen new report format.doc
15
£000s
500
0
Latest Risk Assessment
£000s
1,000 The National Joint Council have rejected the
employers offer of 2%.
250 Risk has reduced. Savings have been made in
tendering for property insurance and the
tendered costs for electricity have shown only a
minor increase compared with the provision for
a 50% increase. The risk of some other
potential price increases, e.g. care charges does
still remain.
1,000 Social Care
2,000 Pressures continuing – see main report.
Experience from previous budgets and from other
local authorities across the country demonstrates that
key areas of service provision to adults and the elderly
can come under pressure from increasing demand for
those services. Insufficient Government funding and
the threat of bed blocking penalties add to the demand
pressures, although the latter is under control at
present. The introduction of pooled budgets also limits
the scope to reallocate resources between budget
heads. There is now growing pressure upon care for
adults with learning difficulties as a consequence of
longer life expectancy and children in care with such
difficulties transferring to the adult service. Additional
funding of £600k provided in the 2007/08 budget will
mitigate the risk.
1,000
The previous problems incurred in 2005/06 around
local authority error on benefit claims has been
stabilised in 2006/07 and through close and regular
monitoring of benefit performance in this area the risk
is now manageable.
0
0 No further risk.
150 Planning - income A number of income budgets, eg planning and
building control fees, parking fines, market and
achievement
commercial rents, are all subject to economic
conditions or external demand influences, any one of
which may unexpectedly develop a significant
shortfall. Income continues to be buoyant and
therefore there is not considered to be a risk at present.
0
0
250 Housing – income Previous concerns about the adequacy of income
sources, notably Supporting People grant, have
diminished as the level of funding has flattened out.
0
250
500 HB and Council
Tax Benefit
Subsidy
c:\joan\specimen new report format.doc
16
1,000 Children in Care
There is a continual risk that demand pressures from a
potential increase in the number and cost of out-ofdistrict residential care placements will exceed budget
provision despite current budget provision being based
on known commitments and forecast trends, and the
base budget for 2007/08 having been increased by
£1m to recognise the growing demands.
1,000
2,000 Risk still remains the same.
500 Children – SEN
Transport
There is a continual risk that demand pressures from a
potential increase in the number of special needs
children requiring transport provision. Additional
funding of £600k provided in the 2007/08 budget will
mitigate the risk.
250
500 Risk still remains the same.
200 Recycling
There is a risk of failing to achieve recycling targets
and thus minimise waste disposed to landfill, with the
result that the Council is penalised through the
mechanism of the waste disposal levy, which is now
based on household waste tonnage disposed of
250
500 Risk still remains the same.
200 Environment budget pressures
The phased withdrawal of the cross subsidy to trade
waste from the household waste levy could result in
customer resistance to the resultant increase in charges
and lead to a shortfall in trade waste income
100
200 Risk still remains the same.
150 Non-achievement It is envisaged that most efficiency proposals built into
the budget plans are capable of being delivered on
of savings
time and that directorates have the capacity and
flexibility to meet any shortfall from within their own
allocations, but there is a risk of some savings not
being delivered on time or not at all and compensating
savings not being found. This is considered to be a
potentially higher risk than previously because of more
challenging targets.
250
500 Risk still remains the same.
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500 Other unforeseen There is a risk that unexpected events may occur
which require expenditure to be incurred or income to
expenditure
/income shortfall be foregone which have not been budgeted for.
1,500 Treasury
Management
Regulations introduced by the Government will allow
local authorities to continue to write down loan
premiums over the life of a replacement loan, thus
removing any risk of additional cost. Equally, the
Council will take steps before 31/3/07 to reschedule
LOBO loans so as to avoid any continuing risk with
the accounting for LOBO loan interest
6,200 Total
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250
0
3,600
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500
0 Risk has diminished due to the promise of
further legislation during 2007/08 by the
DCLG.
7,700
Appendix 3b
HRA RISK ASSESSMENT OF REQUIREMENT FOR BALANCES 2007/08
Amount
£000’s
100
Area of Expenditure
Right to Buy
Applications
500
Housing Repairs
500
Stock Options
100
Void Properties /
Homelessness
200
NPHL Management
Fee
Explanation of Risk /Justification for Reserves
2007/08
Although the dwelling rents income budget has been
based on current levels of completions, an increase
in this resulting from Government Initiatives would
reduce the amount of income collected. However
this is considered fairly unlikely as most tenants are
expected to wait for Decent Homes work to be
undertaken before exercising right to buy.
NPHL have indicated through the budget
discussions that both the revenue and capital budgets
for repairs are possibly under funded. Whilst the
programmes are being tailored to match the
available resources any unforeseen issues or
variations could result in a need for the use of
balances.
As the implementation work progresses it may
materialise that there are further costs to be incurred,
or some of the external assumptions for transfer
costs are not realised and have to be internally
funded.
The requirement to meet Homelessness targets may
result in the need to accelerate bringing void
properties back into use.
Unforeseen issues arising through NPHL that are not
covered by the management fee or could be
accommodated within it.
Latest risk assessment
Awaiting initial monitoring reports for update of
risks.
Awaiting initial monitoring reports for update of
risks.
Awaiting initial monitoring reports for update of
risks.
Awaiting initial monitoring reports for update of
risks.
Awaiting initial monitoring reports for update of
risks.
1,400
Total
The above represents the possible major risks that could occur and demonstrates that the budgeted balances of 1.55% or £1.4m are sufficient to cover
these risks.
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