Agenda item 12
BOROUGH OF POOLE
CABINET
8th September 2009
COUNCIL BUDGET MONITORING
(1 APRIL 2009 – 31 JULY 2009)
PART OF THE PUBLISHED FORWARD PLAN : YES
1PURPOSE OF THE REPORT
1.1This report gives the Council’s performance against budget for the period 1st April 2009 to 31ST July 2009 and also the financial outturn for the year. The purpose of the Council Budget Monitoring reporting process is to:
a)promote principles of sound and effective financial management within the Authority; to promote an efficient closure of the Authority’s accounts with consistency between in year and year-end financial reporting; to ensure there are no surprises in the authority’s year-end financial position.
b)ensure the Council’s budget monitoring process is produced regularly on a timely basis throughout the year with the information presented considered to be reliable, relevant and understandable.
c)ensure the Council manages performance against budget with prompt action being taken when material variances arise or deficits are forecast. The management of these variances being designed to avoid an adverse impact on service delivery or on the achievement of corporate objectives.
1.2All Service Units have confirmed their acknowledgement of the issues raised.
2DECISION REQUIRED
It is recommended that Cabinet:
a)Note the contents of the report.
b)Approve the budget transfer (virement) as set out in section 4.4.
c)Approve the actions proposed in sections 8 and 9.
3EXECUTIVE SUMMARY
3.1Financial position and outlook for the year;
A summary of the Council’s financial outlook for 2009/10, as at the end of July, is that that Council continues to forecast that it will remain broadly in line with the original budget for the year. However the recessionary pressure on the Council’s income and increasing demand for services such as Children Looked After and Adult Social Services continues to be financially challenging for the Authority.
3.2 Appendix A1 summarises the issues, which have been incorporated within the year-end financial outturn (July forecast £201k surplus – May £235k surplus). Significant variances since the end of May report are set out as follows:
Children’s Services
[1]£250,000Children Looked After
The Children Looked After budget was constructed based on a total of 110 young people requiring care services. The latest number in care is 119 with this additionality forecast to translate into a budget variance of £250,000 for the year.
£120,000School Transport
During 2008/09,additional and unforeseen costs ofcollegeand school transport emerged at £55,000 for the year.This was due principally toan increase in6th formpupils at Brockenhurst College andadditional Special Educational Needs (SEN) pupils in independent special schools from September 2008. These pressures have continued in2009/10 for the full financial year.
A review of SEN transport is currently underway and due to report in the autumn. The criteria for subsidised transportfor 6th form pupils has already been tightenedto keep increasedcosts to a minimum. The forecast will be reviewed in late autumn when the costs associated with the newacademic year become more certain.
Community Support (Including Cultural Services)
£150,000Physical Disabilities –Direct Payments
The number and unit cost of direct payments, which enable Physical Disability clients to live independently, is increasing above the profiled budget.
£120,000Older People - Independent Sector Homecare
As reported at the end of May demand for homecare hours to enable older people to live independently continues to rise. Compared to the profiled budget an additional 540hrs of homecare is being provided per month.
Other Financial Items impacting on the General Fund
£216,000Treasury Management - Income
Since March 2009 the Bank of England base rate has remained steady at 0.5%. However the 3 month London Interbank Bid Rate (LIBID) has continued to fall from 1.5% as at the 1st April, to 0.8% as at the end of July, with the forecast being that it will further decline to a low of 0.6% in September. This decline is as a direct consequence of the Bank of England’s quantitive easing scheme, which has recently been extended by £50bn to £175bn.
The impact that the decline in the LIBID rate has on the Council’s interest earned, is in the fact that the rate is the most significant element used in the rate at which the Housing Revenue Account (HRA) is required to pay the general fund for the debt taken out on its behalf. An easing of deposit rates and variations in cash flow forecasts combine with the main variation of the reduction in interest from the HRA to produce the variance now being reported.
(£344,000)Contingency – Revised Resource Allocations
As part of the Council’s Medium Term Financial Plan (MTFP) when available Service Unit resources are identified they are being redirected towards supporting the Councils MTFP, which by implication will be the Council’s corporate priorities, as opposed to addressing any specific Service Unit priorities. These available resources have been identified as a consequence of changing circumstance, be that due to one-off events or due to lower actual provisions for price or volume increases than was assumed within the base budget. Included within the £344,000 are adjustments associated with a one-off National Non Domestic Rates (NNDR) rebate as well as variations to the provisions made for energy costs.
(£158,000)Local Authority Business Growth Incentive Scheme (LABGI)
On the 29th July 2009 the Department of Communities & Local Government (CLG) announced the awards for 2009/10. The payment is from the £100m that has been set-a-side nationally over 2009/10 and 2010/11 with £50m being released in each year. It should be noted that the total amount being distributed over the 2 years has been cut from the original £150m. The Government has confirmed that this grant will continue to be an unringfenced grant.
(£70,000)Growth Fund – Revenue Allocation
In setting its budget for 2009/10 the Council assumed a Growth Point Revenue Allocation of £119,000. On the 19th June 2009 the Homes and Communities Agency (HCA) confirmed that the Council’s revenue allocation for 2009/10 is £189,000.
(£70,000)Dolphin Centre – Additional Rent
In accordance with the terms of the lease the Council has received £70,000 additional rent for the Dolphin Shopping Centre based of their actual performance in 2008/09. This is in addition to the base rent of £790,000.
4. BUDGET TRANSFERS (VIREMENTS)
4.1A virement is a transfer of funding either within a budget or between budgets.
4.2Appendix A2 highlights the virements that have been undertaken during the period between May and July 2009.
4.3In accordance with the Council’s Financial Regulations (as amended by Council on the 9th June 2009) the following rules associated with virements apply;-
- Service Unit Heads can approve virements up to £50,000.
- Virements over £50,000 and up to £500,000 require prior Cabinet approval.
- Virements over £500,000 require prior Council approval.
4.4In accordance with these regulations the following transfers (virements) require the approval of Cabinet
Virements within a Statement of Service
- £181,000Children’s Services
Final adjustments to the grant allocations from the Learning & Skills Council (LSC) for 14-19 year olds and the Dedicated Schools Grant allocation from the Department for Children, Schools and Families.
5CAPITAL
5.1The Council’s current capital programme budget for 2009/10 is £38.3m. This can be compared to the original budget for the year of £49.5m. The reduction is the consequence of significant slippage into future years mainly as a result of the latest profile of spend for Poole Bridge and major schemes within Children’s Services.
5.2The actual capital programme spend of £9m to the end of July 2009 represents an overall spend of 23.4% against the programme and is lower than might be expected at this point in the financial year if a straight line profile of spend is assumed. It is worth noting however that the spend to date figure compares favourably to the 16.4% for the same period in the previous year.
5.3A full set of individual scheme details is attached as Appendix B.
5.4Appendix B12 highlights the changes to the Capital programme that have occurred duringJune and July.Included within these are the following significant changes and reprofiling of scheme expenditure; -
Children’s Services
(£2,100,000)Longspee – Reprofiled into 2010/2011
(£1,500,000)Lilliput - Reprofiled into 2010/2011
(£1,100,000)Hillbourne - Reprofiled into 2010/2011
(£1,000,000)Learning Support Centre - Reprofiled into 2010/2011
(£700,000)Parkstone Grammar – Reprofiled into 2010/2011
(£162,500)Sure Start Grant – Transfer of resources from the Sure Start Capital Grant to compensate the General Fund of the Authority for the additional debt taken over from the Housing Revenue Account (HRA). The process enabled the previous HRA property at 350 Poole Road to be used as a Children’s Centre.
(£144,000)Poole High – Reprofiled into 2010/2011
Environmental Areas
(£500,000)Waste Strategy – Reprofiled into future years
Resources
(£8,230,000)Poole Bridge – Reprofiled into future years
£234,000Hunger Hill Gyratory – Developer contribution
6HOUSING REVENUE ACCOUNT (HRA)
6.1Appendix C presents the Housing Revenue Account for the period between 1st April 2009 and the 31st July 2009 as prepared by Poole Housing Partnership (PHP).
6.2The key issue arising since the end of May report, as highlighted on the Appendix C3 commentary is; -
6.2.1Reductions to the interest payable due the factors outlined in section 3.2 of this report with a consequential increase in the amount paid over to the Department of Communities and Local Government (CLG) in the form of HRA negative subsidy payable.
7BUDGET MONITORING REPORTING ASSUMPTIONS
7.1Financial reports as set out are produced by Financial Services.
7.2Actual expenditure and income included is that posted to the Council’s financial ledger as at 31st July 2009 and covers the period from 1st April 2009.
7.3The profile of expenditure and income is based on service plan estimates as known. All variations to profile have been investigated. Only those items of an exceptional matter or otherwise for member decision are now reported.
8 PROPOSED ACTION - REVENUE
8.1The Director of Children’s Services reports to Cabinet as part of the September Budget monitoring report on the actions being taken to mitigate and minimise costs associated with;
a)increasing number of Children Looked After within the context of maintaining the safety of young people.
b)costs ofcollegeand school transport.
9PROPOSED ACTIONS - CAPITAL
9.1It is it is requested that the relevant Lead Officers review the progress of the following schemes and provide updates in respect of any reprofiling requirements.
Lead Officer / Service Unit / Capital SchemeClive Smith / Leisure Services / Turners Nursery
Jan Thurgood / Social Services / High dependency day centre project
9.2The Head of Transportation Services in consultation with the Chief Financial Officer updates Cabinet on the outturn position for the Canford Bridge Maintenance Scheme.
10.FINANCIAL IMPLICATIONS
10.1 Financial implications are as outlined within the report.
11LEGAL IMPLICATIONS
11.1There are no legal implications.
12RISK MANAGEMENT IMPLICATIONS
12.1There are no risk management implications.
13EQUALITY IMPLICATIONS
13.1Any variations to budget require the responsible officers to be mindful of the equality implications within the Borough. Individual Budget Holders will consider and address these implications in line with their service specific equality impact assessments.
14CONCLUSION
14.1Despite significant changes in service demand the Council’s financial position continues to be broadly in line with the budget. Any year-end surpluses that do arise will be earmarked in support of the Council’s Medium Term Financial Plan.
15UPDATE ON PREVIOUS COUNCIL BUDGET MONITORING REPORT ACTIONS
15.1This section of the Council’s monthly budget monitoring report updates Members on the status of agreed actions from previous monitoring reports. The actions required by Cabinet and an update on the position against each are set out as follows:
Exhibit 1 Update on Previous Council Budget Monitoring Report Actions- Revenue
Agreed Action / Update commentary / Suggested Further Action1 / The Head of Property Services reports to Cabinet on steps to improve the delivery of planned maintenance works to Council Owned Assets within the financial year provided for. / Report to be included as part of the August 2009/10 Council Budget Monitoring Report. / Ongoing
2 / The Director of Social Services reports in the September monitoring report whether there are further actions that will be required in order to deliver the priorities of Adult Social Services within the allocated resources for 2009/10 further to the Action Plan report to Cabinet on the 14th July 2009 arising out of the recent care quality commission inspection. / Report to be included as part of the September 2009/10 Council Budget Monitoring Report. / Ongoing
E WILKINSON
HEAD OF FINANCIAL SERVICES
Contact Officer Adam Richens Head of Accountancy
Telephone: (01202) 63.3399
email:
Background Papers: Nil
Date: 14th August 2009
GLOSSARY OF TERMS
London Interbank Bid (LIBID) Rate
The LIBID rate is the rate at which a bank is willing to borrow money, as opposed to the LIBOR, which is the rate at which banks are willing to lend money from one another.
Quantitive Easing
An extreme form of monetary policy where the Bank of England will buy up a whole range of assets - particularly Government bonds - in the money markets from investors such as banks and pension funds. In turn, in it is hoped, that the banks, will lend the money to consumers, such as home buyers looking for a mortgage or businesses looking for financing.
[1] Saving, Pressure, compared to the previously reported position.