Agenda item

Purpose: To inform Members of the latest financial performance of the Council.  

The Committee considered the quarter 2 financial performance report (Agenda Item 7).

Andy Walker opened the item by making the following points:

·                    Quarterly budget reports were generally agreed and made public at the Executive prior to presentation at the Select Committee, but an exception had been agreed in this instance due to the cancellation of the Executive scheduled for 25 November 2010.

·                    The predicted revenue overspend for the 2010/11 financial year was £1,402k.  This was a £12k decrease on the previous quarter and a £106k decrease on the month 5 forecast. 

·                    The service area forecasting the majority of the overspend was Adult Social Care.  The current forecast for the year end position for that service was an overspend of nearly £2m.  The overall Council overspend was able to be reduced due to underspends in other service areas/directorate budgets.  The £2m overspend in Adult Social Care was not likely to change and while it was hoped there would be some reduction to the overall overspend, it was not expected to be as significant as in recent years.  A reason behind this was the improved engagement of budget managers which helped to tighten up the monthly monitoring process (current performance was 98% of monthly returns).

·                    An additional £600k was allocated to Adult Social Care from reserves and Andy Walker believed this had been fully committed, but would check this was the case. 

·                    Quarterly reports also included the latest capital position.  £21m of the £61m capital budget remained to be committed. 

·                    The £60k underspend in capital financing and management was due to a reduction in this year’s capital programme and a need to borrow less money.  The £60k was therefore as a result of a reduced borrowing cost.  The £201k underspend shown against movement through reserves related to the Part II information provided to Members. 

Discussion then turned to the accuracy of forecasting and whether expected changes were taken into account at an early stage.  An example was given as the number of capital depleters where it was unclear if the additional number expected had been accounted for.  It was agreed that this particular issue would be discussed in further detail at January’s meeting when the Adult Social Care budget was on the agenda.  Andy Walker added that Corporate Directors took a view on actions to be taken to mitigate overspends and adjusted the forecast if necessary. 

The pressure the remaining £1.4m overspend would have on balances was then discussed.  Andy Walker explained that meeting this sum from reserves would keep the Council’s balances at the locally determined level of 5% of the overall net budget, this level was based on risk.  Official guidance was awaited to confirm if 5% would continue to be a requirement in future. 

Members questioned if other risk funds could be used to mitigate against the overspend and, if so, whether these funds lessened the need for reserves.  Andy Walker explained that these funds were set against and could only be used against identified risks.  They were regularly reviewed.  There were also a range of risks to cover within budget planning which was what the level of reserve was based on. 

Guidance was expected in relation to the capitalisation of highways revenue expenditure which might allow some flexibility on highway maintenance spend.  Andy Walker agreed to provide an update once guidance had been received. 

The potential delays to capital expenditure in Cultural and Housing Services were queried.  Andy Walker informed Members that around half of the Cultural Services sum related to museum maintenance/repair, some of which was planned for use within the financial year.  The delayed expenditure in Housing was primarily caused by the processing of the Disabled Facilities Grant, although it was hoped that much of this would be spent by year end.

It was agreed that further detail would be requested on the following points:

·                    The reasons behind the significant pressure in car park income (a forecast shortfall of £220k).

·                    To explain the reductions in spend on minerals and waste and urban design.

·                    To clarify the legal cost pressures in Environmental Health. 

RESOLVED that:

(1)       Andy Walker would confirm whether the £600k allocated to Adult Social Care from reserves had been fully committed. 

(2)       The predicted number of capital depleters and whether they had been incorporated into the budget would be discussed in more detail at January’s meeting. 

(3)       Andy Walker would provide an update on the capitalisation of highways revenue expenditure once guidance had been received. 

(4)       Further information would be sought from service areas in relation to the points made regarding car park income, reductions in spend on minerals and waste and urban design, and legal cost pressures in Environmental Health.