AGENDA ITEM 9
BOROUGH OF POOLE
CABINET
6th April 2004
CORPORATE FINANCIAL MONITORING
(1 APRIL 2003 – 29 FEBRUARY 2004)
PART OF THE PUBLISHED FORWARD PLAN : YES
1.Purpose & Policy Context of Report
1.1This report gives the Council’s current performance against budget for revenue for the period 1st April 2003 to 29th February 2004 and also the projected revenue outturn for the year.
1.2All Service Units have confirmed their acknowledgement of the issues raised. They have also confirmed that there are no further issues of which they are aware, at this time.
2.Recommendations
Cabinet is asked to:
2.1Note the contents of the report
2.2Agree the changes to the Capital Programme outlined in Appendix B, which are all fully funded.
3.Background
Previous Corporate Monitoring Report, Proposed Actions
3.1The Head of Leisure Services is requested to report to the portfolio holder for Environmental regarding the fall in income from leisure centres and what action can be taken to manage the issue (November Corporate Monitoring). Report attached as Appendix D.
3.3The Head of School Advice & Support report to the portfolio holder for Education regarding the reasons for the forecast increase in requirements for the Hamworthy Schools Capital Project and how the issue can be managed(November Corporate Monitoring). The Head of School Advice & Support is being supported in this task by an Audit review undertaken by Financial Services. The conclusions of the Audit section will be reported to the Management Team and the Head of Financial Services during March for their consideration.
3.4The Head of IT Services report to the portfolio holder for Resources for the Cabinet on 10th February 2004 regarding the reasons for the forecast increase in requirements for the IT Capital Projects and how the issue can be managed. (November Corporate Monitoring) An Audit review of this matter is being undertaken by Financial Services and the conclusions will be reported to the Management Team and the Head of Financial Services during March for their consideration.
3.5Management Team are requested to review the under recovery within Property Services and report to the Resources Portfolio Holder (September Corporate Monitoring). A report is attached as appendix E.
3.6The Head of Housing Management Services is requested to report to the portfolio holder for Housing for the 6th April 2004 Cabinet regarding the delay in establishing the interface from the rents system into the financial ledger (January Corporate Monitoring). A report is to follow
4.Summary Of Issues
Revenue Overview
4.1The current forecast outturn is for potential overall services underspend on the General Fund revenue budget of £1,267,000 against approved resource. This compares with the £839,000 potential service underspend reported as part of the January Corporate Financial Monitoring report.
Projected Year End DifferenceJanuary
Report
£000 / February
Report
£000 / Changes
£000
Education & Adult Learning / (142) / (299) / (157)
Environmental / (57) / (92) / (35)
Community Support / (35) / (105) / (70)
Housing / 0 / 0 / 0
Local Economy / (272) / (303) / (31)
Resources / 134 / (1) / (135)
Other Financial Responsibilities / (467) / (467) / 0
Total Net Variance / (839) / (1,267) / (428)
During February the budgets for Benefit payments and Benefit administration have been transferred into the Community Support portfolio from the Housing Portfolio. Included in the transfer was the previously reported £30,000 pressure on Benefit payments.
Narrative explaining the reasons for this forecast is contained within the attached Budget Summary document (Appendix A).
A brief summary of the key changes since last month is set out as follows:
4.2.1Educations and Adult Learning
The underspend in this area has been increased by £157,000. This variance relates to; -
a)An extra £90,000 saving on Nursery Education due to a fall in nursery age children.
b)A saving of £78,000 that is a combination School Transport and Free School Meals costs, due to a decrease of pupils within the Borough.
c)£27,000 overspend on the Youth Service due to pressure on building maintenance and staff cover for long-term sickness.
d)Various small individual budget savings within Cultural Services that accumulate to £18,000.
4.2.2Community Support (Social Services & Benefits)
There is an increase in the underspending within this portfolio of £70,000. Increases in the underspending within the salaries budgets of the three Social Services Units accounts for £40,000. The remaining additional £30,000 underspending relates to the assumptions around extra Christmas and New Year payments for Independent Sector and In-House Homecare, which were not as high as previously anticipated.
4.2.3Environmental Areas
The underspend in this area has been increased by £35,000 due to additional income from fees and charges at Upton House and additional savings associated with the Sports Development team within Leisure Services.
4.2.4Local Economy
An additional £31,000 of savings has been identified in this area. This variance relates to; -
a)A combination of additional miscellaneous income, cost recovery and various expenditure budget savings, all of which total £22,000 within Development Control Services.
b)A revised prediction that Transportation Services will now break-even in total results in a £9,000 improvement on the previous reported position.
4.2.5Resources
The identification within February of a net £135,000 underspend means the recovery of the previously reported overspend within this area. The change is due to;-
a)Democratic Services identification of £15,000 of costs associated with the March 2003 by-election.
b)A further £37,000 of savings associated with funding set aside for Corporate Initiative projects managed by the Policy Directorate.
c)An underspend of £80,000 within Financial Services. Predominately this relates to funding set aside for the upgrade of the On Line Accounting System (OLAS) and the implementation of the TX3 Time Recording System being re-profiled into the 2004/2005 financial year.
d)An extra £22,000 of income associated with the fee recovery of the recruitment service provided by Personnel Services.
e)An extra £11,000 in income forecast to be generated by Land Charges within Legal Services.
5.Budget Monitoring Reporting Assumptions
5.1Financial reports as set out are produced by Financial Services.
5.2Actual expenditure and income included is that posted to the Council’s financial ledger as at 29th February 2004 and covers the period from 1st April 2003.
5.3The profile of expenditure and income is based on service plan estimates as known.
5.4Year-end forecasts relate to issues of significant variance (circa. £20,000) and where detailed have been confirmed with Service Unit Heads.
5.5All variations to profile have been investigated. Only those that have led to an issue are now reported.
6Timetable for future Corporate Financial Monitoring Reports
6.1The timetable for the production of Corporate Monitoring information has been structured to produce a report for the Cabinet approximately 6 to 8 weeks after the end of the particular month in question. However after the end of March, two Cabinet meetings have been structured for April with the result that it is proposed to take the March Corporate Monitoring report to the Cabinet meeting on the 1st June 2004.
6.2The report to the June Cabinet will not be the final position for 2003/2004. This will form part of the Statement of Accounts report being presented to members as part of the special Cabinet followed by full Council on 27th July 2004.
6.3It is intended that the first Corporate Financial Monitoring report for 2004/2005 will be for the period between 1st April 2004 and 31st May and the report be presented to the 6th July 2004 Cabinet meeting.
R L Jackson - Head of Financial Services
Background Papers - Nil
Tel: 01202 633105 – 12 March 2004
BOROUGH OF POOLE
REPORT TO THE PORTFOLIO HOLDER FOR THE ENVIRONMENT
MARCH 2004
LEISURE CENTRES -SHORTFALL IN INCOME
1.Purpose of Report
1.1In response to Corporate Financial Monitoring, this report concerns the shortfall in Leisure Centre income and what action can be taken to address it.
2Decisions Required
2.1The Portfolio Holder is recommended to report to Cabinet on the matter and action being taken and proposed.
3Background & Information
3.1In the current financial year (2003/04), income for Poole's three Leisure Centres (Dolphin Pool, Rossmore LC and Ashdown LC) is forecast to fall short of target by £73,000.
3.2The reasons for this decline in income is thought to be related to several factors including for example:
- Decline in sporting activity generally in the population
- Affect of under-investment in facilities
- Shift of customers to more upmarket facilities
- Affect of price rises
- Sunbed reduced use
4Action Taken
4.1In the current year financial monitoring has highlighted this expected shortfall and steps have already been taken to reduce this problem as far as possible. In general terms this has included identifying all possible savings in the associated budgets. Specific examples of savings achieved include:
- Reduction in Equipment Purchases
- Reduction in implementing all the Maintenance Schedule
- Reduced expenditure in other sections of Leisure Services
- Savings on Security Officer staffing
- Savings on Sports Development staffing
- NDR charitable relief savings
5Action Proposed
5.1Following the Best Value Review of Sports & Recreation the specific recommendation relating to Leisure Centres was to test the market to see if external funding would be available. This work was completed and it identified a strong market of potential partners who would be interested in working with the Council to manage the three centres and provide investment to improve them. Formal invitations to submit detailedproposals to the Councilwere sent inFebruary to four carefully selected organisationsand all four have confirmed their intention to bid. Proposals must be returned by 14th May 2004 and detailed evaluation will follow before Members are asked to consider awarding a contract later in this year. It is hoped that a new partnership may commence in 2005 with early investment in all three centres. It is intended that the investment, coupled with an increase in marketing and membership options will increase usage and generate additional income.
5.2In the event that the Council finds all of the proposals unacceptable later this year, it will be necessary to consider other options for the leisure centres. This may include seeking other sources of funding and addressing matters such as marketing, promotion and pricing strategy for the centres.
CLIVE SMITH
HEAD OF LEISURE SERVICES
BOROUGH OF POOLE
CABINET
6TH APRIL 2004
REPORT OF THE PORTFOLIO HOLDER FOR RESOURCES: REVIEW OF THE FINANCIAL POSITION IN PROPERTY SERVICES
1.0PURPOSE OF THE REPORT
1.1In the Corporate Financial Monitoring Report of 4th November 2003 the Management Team were asked to review the under-recovery within Property Services, and report to the Resources Portfolio Holder, and present that report to Cabinet.
2.0SUMMARY POSITION
2.1The Property Services budget is currently structured so as to comprise two areas:-
- Expenditure relating to staff and fee income/corporate funding for professional services; and
- Expenditure relating to the Administrative Buildings (the Civic Centre, Civic Centre Annexe, Mitre Court, Crown Offices, Newfields, St John's House, Unit 28 Newtown, Jade Manor Court, Northmead House, Enefco House, Oakdale Community Partnership and Former Central Library)
2.2Property Services have experienced problems this year in the recovery of Capital Team staffing expenditure as a result of the downsizing of the Borough’s capital programme. Similarly the Maintenance Team has been adversely affected by the transfer of some of its work to the ALMO.
2.3This under recovery has been mitigated through reducing staffing costs in both of these teams and making savings in staff costs in other teams. As a result, what could have been a £100k under recovery, has been managed down to a £35k under recovery. Work continues to collect further fee income and it is anticipated that this under recovery will reduce further by year end.
2.4Property Services manage Response Maintenance in the Administrative Buildings. These costs are recharged to occupying Units. However, that recharge budget was set at LGR in 1997 and since then has only been increased to reflect inflation and minor amendments. The recharges set have always proved inadequate for proper Response Maintenance needs, and this budget has always been over spent – regularly to the tune of c. £100k.
2.5In past years that spend has been absorbed by Property Services through income generated. However, for the reasons mentioned above this has not been possible this year. Through only undertaking emergency repairs in the latter part of the year the anticipated over spend is now held at £62K. Both the budget and recharges have been increased for next year to overcome this issue.
SUMMARY TABLE
INFLUENCING FACTOR / FINANCIAL IMPACT / CUMMULATIVE IMPACTSTAFFING EXPENDITURE / FEE INCOME
Downturn in Workload in the Capital Team / (50k) / (50k)Work removed from the Maintenance Team on creation of the ALMO / (50k) / (100k)
Activities to reduce Capital and Maintenance Team staff costs / 14k / (86k)
Other savings across the Unit mainly through holding posts vacant / 51k / (35k)
OVERALL UNDER RECOVERY / (35)k
ADMINISTRATIVE BUILDINGS
Over spend on Response Maintenance / (62k) / (97k)
Further fee income recovery anticipated / 10 – 20k / (87 – 77)k
3.0 BACKGROUND
3.1The budget for the Service for this financial year was set at the full Council meeting of 20th February 2003.
3.2This budget was prepared by the then Head of Property Services, Mrs Diane Spencer, who left the employment of the Borough on April 30th 2003. Over the period to January 2004 the service has been managed by two interim Acting Heads on a part time basis.
4.0 CONSIDERATIONS
Staffing Expenditure and Professional Services Income
4.1The original budget in this area was set at £214k. There is currently anticipated an under-recovery of £35k.
4.2The under-recovery has arisen due to the following factors:-
- An overall trend, within the Borough, to gradually downsize the Capital Spend Programme, has resulted in a downturn in workload within the Capital Team. This workload, of capital projects and feasibility studies, has, for this Financial Year, proved rather volatile, in terms of both timing and fee levels, as capital projects have slipped and been reduced in size. As a result the Team has found it difficult to accurately predict fee income.
- The removal of work for Housing Management Services from the Maintenance Team, arising from the creation of the Arms Length Management Organisation (ALMO).
4.3In the Autumn of 2003, the Acting Head of Service and Policy Director in whose portfolio the service then sat, commenced action to reduce the under-recovery by changing the resource and cost base of the Unit. This included:-
- Transferring three members of staff to the ALMO to reflect the movement of workload.
- Reducing the use of temporary and agency staff in both the Capital and Maintenance Teams.
- Placing jobs at risk of redundancy.
- Not filling vacant posts.
4.4In overall terms, both of the original Maintenance and Capital Team fees forecast have fallen by £50k each. This £100k has been managed down to £86k through the activities in 4.3.
4.5It should, however, be noted that the under recovery attributable to the above has, to some extent, been countered by putting in place other measures to reduce costs across the Unit. These savings have mainly arisen from holding vacant posts within other Teams across the Unit.
4.6As a result of these savings the overall Unit under-recovery is £35k.
4.7The new Head of Service is working closely with Financial Services to:-
- Monitor fee collection closely.
- Maximise fee income.
- Monitor the salary budget
- Improve and develop the units financial management arrangements
It is anticipated that, by the end of the financial year, a further £10-20k of income will have been collected, thereby reducing the overall under-recovery to £15-25k.
4.8The Acting Head of Service, and Financial Services, took a very robust approach to the preparation of the budget for 2004/5, which has, through careful fine tuning, reduced income estimates and salary budgets.
Administration Buildings
4.9The original budget for Admin Buildings was set at a £12k surplus. Currently there is a forecast over-spend on this budget of £62k.
4.10The maintenance regime for these buildings is that Property Services manage the works, and thus spend, but that spend should be recharged to occupying Units so as enable a true reflection of individual Unit costs. Property Services should then, as responsible budget holder, spend within the recharge budget.
4.11The occupying Unit recharge budget was set after local government reorganisation in 1997. Although it has been slightly increased over time, to reflect inflation and minor amendments, since then it has proved inadequate in relation to response maintenance needs. There has regularly been an over spend of just over £100k.
4.12Past practice has been to leave the residual excess maintenance costs in Property Services, as opposed to spreading the over spend across all of the occupying Units. In previous years, the over-spend has been covered by income generated elsewhere within Property Services. Due to the issues mentioned above, this has not been possible this year, hence the over-spend.
4.13To minimise the over-spend, from November 2003, a strict regime of only undertaking emergency repairs was put in place, so as to contain expenditure.
4.14As part of the robust budget build for 04/05, this issue was addressed, and next year’s budget includes an extra £100k for response maintenance in Admin Buildings which will be picked up by occupiers through increased recharges.
Helen Harbour BSc (Hons) MRICS MBA
Head of Property Services
Telephone 01202 261200
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