Appendix 4a
BLACKPOOL COUNCIL
REPORT
of the
DIRECTOR OF FINANCE
to the
EXECUTIVE
26TH APRIL 2006
FINANCIAL PERFORMANCE MONITORING AS AT MONTH 11 2005/06
1.
Introduction
1.1
This report is the standard monthly financial performance monitoring report, which sets
out the summary revenue budget position for the Council and its individual directorates
for the first 11 months of 2005/06, ie. the period April – February 2006, together with
an outlook for the remainder of the year. The report is complemented with an
assessment of progress to date against the Council’s latest capital programme.
2.
Directorates’ Revenue Budget Performance
2.1
Separate reports have been prepared for each of the Council’s directorates plus
‘Budgets Outside the Cash Limit’ at Appendices 4d to 4j. These incorporate a
summary financial statement which continues to be prepared on a full accruals basis
and focuses on the forecast outturn for 2005/06 with an accompanying narrative to
explain any areas of significant variance from budget and to highlight any areas of
potential pressure along with action plans agreed with service managers to address
them.
2.2.
The combined effect of the directorates’ financial performances is aggregated in a
summary financial statement at appendix 4b which mirrors the Council’s Revenue
Budget Book. This summary allows proactive month-on-month monitoring of the
Council’s forecast working balances to be undertaken to ensure appropriate and
prudent levels are maintained.
2.3
The Executive of 11th February 2004 approved a process whereby services which trip
a ceiling for overspending against budget of £75,000 or 1.5% of net budget where the
controllable budget exceeds £5.0million are required to be highlighted within this
monthly budgetary control report and required to develop & submit a recovery plan
over a period not exceeding 3 years which is to be approved by the respective Cabinet
Member. The services tripping this threshold at month 11 are listed at appendix 4c,
which shows the progress during the year as requested by the Audit Committee. The
respective heads of service will be asked to account for their services’ financial
performance at future meetings of the Audit Committee.
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3.
Forecast Working Balances
3.1
The impact of directorates’ revenue budget performance and progress in achieving
planned efficiency savings falls upon the Council’s working balances. The forecast
level as at 31/03/06 is £5,184,000. However, this is a notional level which makes the
assumption that directorates live within their cash limited budgets or plan to do so over
a reasonable period. With some plans for recovery stretching up to three years beyond
the current financial year, the actual level of working balances at this year-end will
inevitably be less than £5,184,000.
3.2
The graph below demonstrates the cyclical nature of the Council’s working balances
and underlines the volatility of the financial pressures which it experiences. A key
financial target in its medium-term financial strategy continues to be a stable level of
working balances of £5.0million.
Unallocated Revenue Reserves
6000
5000
4000
£000 3000
2000
1000
0
2002
2003
2004
2005
2006
Year ending 31st March
4.
Capital Monitoring Performance
4.1
Appendix 4k lists individually all currently-approved and live capital schemes whose
total scheme budget is greater than £500,000 and groups as ‘other’ within each
service block all schemes less than £500,000. The emphasis regarding capital
monitoring will be on scheme variances rather than in-year progress since many
schemes cross financial years (and in the case of the Central Sea Wall over 4 years).
Therefore, some degree of flexibility for management of slippage is necessary in order
to balance the overall capital programme each year to the funding allocations
available.
4.2
There is still much to be developed in this area of monitoring and for the time being
schemes will be reported on an exceptions basis with notes incorporated within the
body of the monitoring statement at appendix 4k. The specific schemes
experiencing/forecasting significant financial pressure, as at month 11 are:
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
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



Boundary Primary new school (+£218,000) – collapse & failure of drains being
funded from the 2006/07 programme;
St Georges School toilet/library/expansion (+£204,000) – being funded from the
2006/07 programme;
Stanley Park restoration (+£392,000) – being funded from the 2006/07 programme;
Palatine Sports Centre is showing an overspend of (+£393,000). Additional
resources from the approved capital programme of £376,000 in 2006/07 and other
resources of £17,000 will address this.
Masterplan Phase 1 Central Corridor (+£590,000) – comprising enhancements to
the original scheme and expenditure funded in 2006/07; and
West Street Car Park (+£241,000) – resulting from enhancements to the finish and
delays due to negotiations with a third party.
5.
Conclusions and Recommendations
5.1
Month 11 has seen a slight improvement on directorates’ revenue budgets from a
forecast £2.3million annual overspend at month 10 to the latest £2.2million projection.
In addition 6 capital schemes are forecasting a combined overspend of £2.0million of
which £1.8million will be funded through the 2006/07 capital programme. Continual
monitoring and effective action to make savings are necessary in order to stem these
pressures and allow for their recovery over an appropriate period.
5.2
The Executive is asked to:
i)
ii)
note the report; and
authorise the officers to investigate options for reducing the projected level of
overspending and to report back to the Executive.
M Hanson
Director of Finance
7th April 2006
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