You are on page 1of 7

AGENDA ITEM NO.

3(1)

CABINET 5TH JULY 2011


SUBJECT: REPORT BY: PROVISIONAL OUTTURN FOR 2010/11 DEPUTY CHIEF EXECUTIVE

1. 1.1

PURPOSE OF REPORT This report informs Members of the Provisional Revenue Outturn for the Authority for the financial year 2010/11. The Summary Outturn position is attached as a table in Appendix A. The movement on General Fund balances is shown in Appendix B. This information is provisional at this stage, as it is still subject to an annual audit by the Authoritys External Auditors PricewaterhouseCoopers.

2. 2.1

SUMMARY In advance of the Statement of Accounts being audited and presented to Council in late September, this report provides an overview of the Councils performance against the budget for the year. Members receive detailed budget monitoring reports as part of the Scrutiny process during the financial year. A summary of the budget performance for the year is covered in Section 4 of this report. The overall budget picture presented shows a generally healthy financial picture with a number of one-off fortuitous revenue savings. It needs to be recognised that a large proportion of the surpluses were savings made in advance of the budget for 2011/12, and have been included in the Budget Strategy as agreed by Council 24th February 2011. These surpluses including Pay Award contingency, Treasury Management, Job Evaluation protections, part year savings for Ty Darren and Hawtin Park and business rates (NNDR) have been used in the budget for 2011/12 as part of the savings requirement in the MTFP. In addition it is important to note that the actual outturn position is largely in line with previous forecasts and that all Directorates are managing within approved budgets. In respect of the General Fund, the forecast position for 2010/11 as reported to Council on 24th February 2011 was 12.1m. The actual position for 2010/11 is 15.3m, a variance of 3.2m to forecast. The main variances to forecast are: Increased contribution from Service Reserves One-off Business Rates saving in respect of Appeals made by the Authority Release of some funds in respect of the Icelandic Bank Impairment Council Tax surplus higher than the projected 750k Flemmings one-off VAT claims made by the Authority Job Evaluation protected salary saving 990k 360k 750k 340k 460k 300k

2.2

2.3

2.4

The General Fund Balances now represent a very healthy 4.9% of revenue budget spend.

3. 3.1

LINKS TO STRATEGY The Provisional Outturn Report encompasses all the resources used by the Council to achieve its strategies.

4. 4.1

FINANCIAL IMPLICATIONS After adjusting the figures in the table included in Appendix A, for the Council Tax surplus, DLO/DSO surpluses/losses, Flemmings VAT refund, Icelandic Impairment release, surpluses earmarked for 21st Century Schools and one-off savings in respect of the NNDR rebate, the adjusted underspend against budget reduces to 6m. It is important to note that the Budget Strategy set against a backdrop of public sector spending cuts, has been to make savings in advance of requirements. This creates financial stability, allows time to plan and creates surpluses that can be reinvested into capital spend where the cuts to budget are significant. The capital programme was cut by WG by 19.2% in 2011/12. Further cuts to the capital programme have been indicated by WG for 2012/13 and 2013/14 of 1.8m which is a reduction of a further 18.6%. Directorates are responsible for their end of year balance. Currently 50% of these underspends are carried forward and are available to meet the requirements of these service areas. Overspends would normally be funded from future budgets or balances brought forward from previous years. There are no Directorate overspends in 2010/11. The table in Appendix B shows the movements on the General Fund balances from 31st March 2010 to 31st March 2011. The paragraphs which follow comment particularly on the last column in Appendix A, the overspend/underspend for each service area. Education and Leisure - (3,260k underspend) (3,298k excluding Schools)

4.2

4.3

4.4

4.5

The Directorate is reporting an underspend for 2010-11 of 3,260k. This represents an underspend in all 3 of the Service Areas of Planning & Strategy (P&S) (1,151k), Learning, Education & Inclusion (LEI) (1,226k) and Life Long Learning & Leisure (LLL) (883k). The Individuals Schools Budget, which is fully delegated to the Authoritys Schools was overspent in year by 38k, this variance will be funded from the Schools balances brought forward of 6,840k (School balances are currently 7.43% of their total budgets). Consequently, the revised in year underspend for the Directorate (excluding Schools) is 3,298k. The most significant variances were reported in year, with the exception of NNDR rebates relating to school sites totalling 304k. This follows recent re-assessments of the sites and subsequent arrears dating back to the Financial Year 2005-06, consequently this is largely a one off saving. In summary the most significant budget variances are as follows: 000 NNDR Rebates (2005-06 to 2010-11) Home to School / College Transport Pension Retirement Costs (School Based Staff) Planning & Strategy (Administration) Additional Support (Primary & Secondary) SEN Out of County Placements Better Schools Fund (BSF) Match Funding Leisure Services Community Education Library Service 304 346 219 245 699 234 134 405 192 190

4.6

4.7

As Members are aware the transport budget can be very volatile, however despite the renewal of over 200 contracts with travel providers from September 2010, the Authority has been successful in its contract negotiations in a time of increasing fuel costs. An underspend on the Early Retirement budget (for school based staff) was predicted, the very nature of this budget does mean that there is a degree of uncertainty. The underspend on Administration is predominantly due to full year vacancies for 2 senior posts in the Division, a vacant secretarial post, savings due to staff movement in year, maximisation of grant expenditure, additional income and a reduction in general office costs. The most significant saving relates to the Additional Support budget that funds non-teaching support for individual pupils with exceptional special needs in mainstream schools. Whilst this was projected in year it is important to point out that this variance includes a one off 200k saving which is not on-going. This variance to budget is a direct consequence of measures instigated and this forms a significant element of the Directorates Medium Term Financial Strategy which was included as a saving in the Budget for 2011/12. The saving of 234k on SEN Out of County placements is the result of a number of high cost children leaving the provision. The 134k saving with regards to the Better Schools Fund is the consequence of a greater than anticipated reduction in the 2010-11 grant awarded to the Authority, the grant is match funded (40%) consequently the Authoritys match funding requirement was reduced. Again this saving has been used in the Budget Strategy for 2011/12. The underspend on Leisure Services is largely attributable to NNDR and energy savings, 60k and 300k respectively. These savings are largely one off, but ongoing savings have been used in the Budget Strategy for 2011/12. The variance on Community Education is largely due to savings on energy & caretaking, in part due to the full year closure of Blackwood Youth Centre. In addition there were planned savings on rental costs as the Authority looked to reduce the number of sites utilised, again as part of the Medium Term Financial Strategy. The underspend on the Library Service is principally due to in year staff movement, vacant posts and energy savings. This budget will be required moving forward for the Library Developments in Blackwood, Bargoed and Risca. Members are reminded that 1.7m of the Education and Leisure Directorate reserves have been ringfenced for the 21st Century Schools Programme. Social Services (994k underspend)

4.8

4.9

4.10

4.11

The 2010-11 outturn position for the Social Services Directorate is an underspend of 994k. The main reason for the variance to budget for each Division are explained below:Childrens Services (549k Underspend)

4.12

The most significant area of underspend within Childrens Services is in Management, Fieldwork and Administration (424k) and this is due to ongoing difficulties in recruiting to a number of key posts in the Division. A report outlining a proposed recruitment and retention strategy to address this issue is due to be presented to Cabinet in the near future. The Youth Offending budget underspent by 91k but this was one-off in nature and due to a decision made by the Local Management Board to reimburse partners with surpluses accumulated in previous financial years. The net position on other Childrens Services budgets is an underspend of 34k. Adult Services (423k Underspend)

4.13

There were significant overspends within Adult Services in External Residential Care (634k) and Supported Living (486k) due to increased demand on these service areas. These overspends were largely offset by underspends of 286k on Management, Fieldwork and Administration budgets, 257k in Own Day Care, 336k for Independent Sector Domiciliary Care Providers arising from the implementation of a standard hourly rate, additional one-off deferred property income of 217k and an underspend of 168k on Resettlement budgets

(mainly due to one-off Continuing Healthcare income). A net underspend of 279k is reported on the remaining Adult Services budgets, a proportion of which is due to savings achieved in advance of the 2011/12 financial year. Resourcing and Performance (22k Underspend) 4.14 Within the Resourcing and Performance Division there are overspends of 179k on the Repairs, Maintenance and Security budget and 68k against the Transport budget. These overspends have been offset by an underspend of 171k in Management and Administration arising from vacancies and agreed structural reviews and a further net underspend of 98k across other budgets in the Division. Environment Directorate (742k underspend) 4.15 Overall, after approved use of Directorate reserves and the funding of 700k winter maintenance costs from General Fund the Environment Directorate is reporting an underspend of 742k. After use of Directorate reserves Planning is reporting an overspend of 164k. The over spend is less than previously projected mainly due to an improvement in income generation from planning application and building control fee income in the last few months of the year. The Engineering Division is reporting an overspend of 405k, which includes an overspend on winter maintenance budgets of 800k as a result of the severe winter. Winter maintenance overspend of 700k has been financed from General Fund, which leaves a net 294k under spend in this service area. The Public Services Division is reporting an under spend of 679k after approved use of Directorate reserves. As reported earlier in the year, a high level of under spend was being anticipated primarily as a result of a large reduction in residual waste being sent to landfill and reductions in residual and recycling collection costs from operational efficiency savings in the service area. There are relatively small underspends in Public Protection 40k, Building Consultancy 52k and General Fund Housing 143k. There is a 266k general overspend for the Directorate in relation to budget efficiency savings that were not allocated in year to service divisions, as they are controlled at Directorate level. Overall the DLO/DSOs have a small combined loss of 36k. This loss is after the funding of superannuation payments. The Building Maintenance DLO has a surplus of 23k. The position is better than anticipated earlier in the year, the improvement being due to additional work under taken during the latter part of the year. NCS has a surplus of 155k. This DLO has benefited from improved productivity this year and a general increase in work and income generation. In addition to the above, NCS Caerphilly have concluded their work for the first 5 year contract in respect of the Maintenance of Sirhowy Enterprise Way. At the commencement of the contract it was anticipated that over the 5 year period of the contract surpluses incurred early in the contract period may have been required to smooth out any losses incurred towards the end of the contract period. It was therefore agreed that a prudent approach of ringfencing the surpluses for the 5 year period be adopted. It is pleasing to note that at contract completion there is a ringfenced surplus of 488k, furthermore NCS have now negotiated a new contract to continue with the maintenance of the road for the foreseeable future. It is proposed that 100k of the 488k be retained as a contract provision, with the release of the remaining funds of 388k, to be allocated to the Highway Maintenance budget for 2011/12. This will allow further much

4.16

4.17

4.18

4.19

4.20

4.21

4.22

4.23

needed carriageway resurfacing works to be undertaken. 4.24 Grounds Maintenance DSO has a loss of 309k. This DSO has suffered from disruptions to work this year due to the severe winter weather, which, has impacted on the volume of work and income generation. Building Cleaning DSO has a surplus of 106k. This DSO has had a very successful year, expanding its business and income generation and benefiting from improvements in sickness absence and reduced requirement for additional pay costs for staff cover. Vehicle Maintenance and Fleet Management services combined have a loss of 11k. Former Chief Executives (656k underspend) 4.27 4.28 The main variances are as follows: The Chief Executives post, where an underspend of 35k has been made. This is due to salary savings (21k) in respect of the appointment of a new Chief Executive as part of the CMT restructuring arrangements, together with underspends on training, travel expenses and office running costs totalling 14k. Democratic Services, where an underspend of 67k has been made due to savings on the Mayors car (12k), Training/Conferences/Hospitality costs (22k), Members Childcare (15k), and other Supplies & Services (18k). Registration Services, Policy Unit and Performance Management Unit have a combined underspend of 144k, comprising in the main of increased income for the Registration Service of 42k and underspends in respect of supplies and services, and vacancy management, in part due to non cover of a maternity leave.. Economic Development generated surpluses of 410k, due in the main to vacancy management savings of 174k, additional grant income of 79k and additional net income to budget for Industrial Estates of 62k. There were small underspends for Fast Forward of 28k and for supplies and services budgets (67k). Corporate Services (251k underspend) 4.32 The main variances to budget include 230k underspends in respect of vacant posts primarily in Customer First and Communications. These were planned savings pending the decision taken by Council in respect of a savings target for 2011/12 of 300k in respect of Communications and Customer First. There was an overspend in Legal Services, as anticipated of 72k, which was offset by underspends in other service areas, including Corporate Finance and Human Resources totalling 93k. Miscellaneous Finance - (3,544k underspend) 4.33 This underspend includes a Pay Award contingency surplus 1.1m, a Treasury Management surplus 900k and a surplus on the Job Evaluation protected salary budget of 300k. These savings are on-going and have been used towards the Authoritys savings target in the Budget Strategy for 2011/12. An amount of 2m has been set aside from these surpluses for the 21st Century Schools programme. In addition to the above there are 2 substantial one-off surpluses. The first is in respect of a successful backdated claim for VAT, which relates to under-declared or overpaid VAT potentially going back as far as the inception of VAT in 1973 called Flemmings claims. This followed the successful case won by Flemmings that concluded in a House of Lords judgement in January 2008. The second is a release to General Fund in respect of a reduction in the Icelandic Impairment provision.

4.25

4.26

4.29

4.30

4.31

4.34

4.35

Members are reminded that the provision for the Icelandic Impairment includes notional loss of interest and notional calculations for the net present value of money. Further releases could follow annually if the current estimated return of the investments remains unchanged or improves. The Authority has been successful in its bid to stage a number of prestigious events, particularly Proms in the Park along with the Tour of Britain Cycle Race. This in addition to the proposed Pride in your Place Awards. These events require one-off spend of 70k, to ensure that the Authority is properly and favourably presented. It is proposed that due to the healthy General Fund reserves, referred to in paragraph 2.4, that this 70k is taken from these balances. Council Tax Collection (1090k surplus)

4.36

4.37

This represents an increase from the previous year of 150k and continues to reverse the trend that has seen surpluses reducing in value in recent years during the recession. Council Tax surpluses were as low as 574k in 2008/09. Housing Revenue Account (1988k underspend)

4.38 4.39

The main variances to budget include:Salary savings of 670k which are mainly due to unfilled vacancies and associated mileage and an underspend of 1.185m on building maintenance. The underspend in respect of building maintenance has been committed and is in effect slippage of programmed spend to 2011/12. Non-pay related budgets (which include office running costs, one-off projects, other staff related costs, and tenant related expenditure) have underspent by 1m. This along with additional HRA income of 178k has allowed for a revenue contribution to capital for HRA related spend of 1.184m. HRA Working Balances stand at 4.7m at the end of 2010/11. Of this amount 1.5m is earmarked for the 2011/12 capital programme. In addition there are further commitments identified from the unspent Planned Programme in 2010/11 of approximately 2m. Capital Programme

4.40

4.41

4.42

The outturn for the capital programme for 2010/11 resulted in targeted spend available of 52.6m after including all in year grant allocations and S106 monies. An amount of 5.2m remains unspent at financial year end, the majority of this represents slippage in key schemes which will be carried forward to 2011/12. Meetings will be held with Heads of Service in July 2011 to identify slippage and underspends for all capital schemes. This will be reported to the Capital Strategy Group.

4.43

4.44

5. 5.1

PERSONNEL IMPLICATIONS There are no personnel implications.

6. 6.1

CONSULTATIONS There are no consultation responses, which have not been reflected in this report.

7. 7.1 7.2

RECOMMENDATIONS It is recommended that Cabinet consider and approve this report. It is recommended that Cabinet consider and approve the use of the Sirhowy Enterprise Way PFI reserve in paragraph 4.23. It is recommended that Cabinet approve the proposal to use 70k of General fund balances referred to in paragraph 4.36, prior to consideration by Council.

7.3

8. 8.1

REASONS FOR THE RECOMMENDATIONS To ensure that Cabinet Members are made aware of the provisional final outturn for 2010/11.

9. 9.1

STATUTORY POWER Local Government Act 1972.

Author:

Nicole Scammell, Head of Corporate Finance Tel: 3031 E-mail: nicolescammell@caerphilly.gov.uk Anthony OSullivan, Chief Executive Nigel Barnett, Deputy Chief Executive Sandra Aspinall, Director of Education & Leisure Albert Heaney, Director of Social Services Mike Eedy, Finance Manager Stephen Harris, Finance Manager Jane Southcombe, Group Accountant Andrew Southcombe, Principal Group Accountant Nicola Roberts, Principal Group Accountant Cllr Allan Pritchard, Leader of Council/Cabinet Member for Constitutional Affairs Cllr Colin Mann, Deputy Leader/Cabinet Member Corporate Finance, Procurement & Sustainability

Consultees:

Background Papers: N. Scammell ext 3022 Final Accounts working papers for 2010/11

Appendices: Appendix A Appendix B

Table Provisional Outturn Summary 2010/11 Movement on General Fund

The recommendations are endorsed by Corporate Management Team.