Agenda item

(To receive a report from Tony Warnock (Operations and Financial Advice Manager), which invites the Committee to review, discuss and note the contents of the report, and consider any comments for the Executive prior to its meeting on the 1 March 2016)

Consideration was given to a report from Pete Moore, Executive Director of Finance and Public Protection, which provided the Committee with the last budget monitoring report for the financial year 2015/16.  The report would then be presented to the Executive for consideration at its meeting on 1 March 2016.  The report compared projected expenditure with the approved budget, and provided explanations for any significant over or under spending.

Tony Warnock, Operations and Financial Advice Manager, supported by Michelle Grady, Head of Finance – Communities, Steve Houchin, Head of Finance – Adult Care, Claire Machej, Head of Finance – Corporate; and Mark Popplewell, Head of Finance – Children's Services guided the Committee through the report and Appendix A presented, making particular reference to the following points; and responded to questions raised from the Committee:-

·         That the report presented was the second budget monitoring report for the year.  It was noted that due to issues with Agresso, normal quarterly reports being compiled in a different way.  It was noted further that the finance team were working alongside Serco colleagues to make sure that year-end figures were available;

·         That the Executive report detailed at Appendix A provided the actual income and expenditure for 10 months of the financial year, along with projections for spendings, and a comparison of the projections against approved budgets;

·         In summary the Committee was advised that the total revenue spending was predicted to be £7.738m less than the total budget, (which excluded the projected underspending on schools budgets).  The total revenue income was predicted to be £2.458m less than the total budget, as a result of reduction in funding. The general reserves were estimated to be 3.5% of the total budget based on current spending; and that the net capital spending was projected to be £22.883m less that the approved 2015/16 programme total;

·         Revenue Budget:- Particular mention was made to:-

Paragraph 1.5 Learn and Achieve £0.624m underspend.  It was noted that the majority of the underspend related to Home to School/College Transport as a result of a reduction in the number of entitled pupils which had allowed for contracts to be affected financially.  It was also highlighted that this was a difficult area to predict and that the level of underspend should be treated with some caution.

Paragraph 1.7 Children are Safe and Healthy – The Committee noted that there was a £0.128m overspend, as a result of an increase in the number of Looked After Children, some of whom had very complex needs;

Paragraph 1.13 – The Committee was advised that based on income collected as at the end of December for Debtor/Non Residential and Direct payments income was significantly higher than expected mainly due to Direct payment refunds through audits that had been carried out;

Paragraph 1.14 – That due to delays in the implementation of Mosaic the additional income derived from the review of the Contributions Policy would be delayed.  It was highlighted that for each quarter delay there was a predicted loss of additional income of £0.250m.  As Mosaic seemed unlikely to be implemented before April 2016, there would be a reduction in the anticipated income by £0.250m for 2015/16;

Paragraph 1.16 – The Committee noted that the Wellbeing Commissioning Strategy was currently projecting an underspend of £2.199m. Full details were contained within the report presented;

Paragraph 1.17 – That the Heritage and Tourism Operation and Development was expecting an underspend of £0.927m, as a result of additional income from visitors to Lincoln Castle;

Paragraph 1.18 –That an underspend of £0.865m was also expected on Highway Asset Maintenance Budgets, as a result of staff vacancies currently being held;

Paragraph 1.19 - That Waste Management was expecting an overspend of £1.269m, as a result of increases to prices and volumes;

Paragraph 1.22 – That Enablers and Support to Council's Outcomes was currently forecasted a year end underspend of £1.710m.  The most significant variances were detailed on page 21 of the report presented;

Paragraph 1.24 – The Committee was advised that the Government had announced £3bn of in year savings to government department budgets for 2015/16.  This had resulted in the Council receiving £2.022m less Public Health grant than anticipated.  The shortfall would be met from the Public Health grant reserve created from underspends of the grant in previous years;

Paragraph 1.25 – The Committee was advised that Capital Financing Charges were currently projecting an underspend of £3.088m;

Paragraph 1.26 – That 'Other Budgets' were projecting an underspend of £1.341m.  Details of the significant variances were detailed on page 22 of the report presented;

Paragraph 1.27 – The Schools Budgets would have an underspend of £2.205m.  It was noted that in line with Department for Education (DfE) regulations, any under or overspends would automatically be carried forward to the next financial year and the Local Authority would consult the Lincolnshire Schools Forum with regard to its use;

Paragraph 1.28 – That the Council's General Funding was currently forecasted to be £2.548m less than the revenue budget approved at full Council in February 2015.  Reasons for the forecast reduction was detailed on pages 22 and 23 of the report presented;

Paragraph 1.29 - The Committee was advised that the Council were planning to use £21.871m from the Financial Volatility Reserve to balance the Council's budgets in 2016/16 and £0.300m from the General Fund to keep this balance at 3.5% of the Council's budget requirement;

·         Capital Programme – Particular reference was made to:

Page 24 – Table B, which provided the Committee with a position statement as at 29 January 2016 – Part 1; and page 25 Table, which provided a position statement as at 29 January 2016 – Part 2;

Paragraph 1.32 – It was noted that Community and Wellbeing were expected to have an underspend of £0.795m, which was due to the slow take up of spend on the library hubs;

Paragraph 1.33 - That the Property and Property Rationalisation Programme were currently forecasting a year end underspend of £4.773m;

Paragraph 1.34 - That the Broad Band Programme was currently projecting an underspend of £7.144m;

Paragraph 1.35 – That the ICT capital programme was currently projecting an underspend of £7.585m.  Details of the significant variances were detailed on page 26 of the report;

Paragraph 1.37 – It was reported that the Council had for 2015/16 set aside £15.000m in a New Development Capital Contingency Fund; and that to date £13.000m had been allocated from this reserve.  Details of how this fund had been utilised was detailed at the bottom of page 26 of the report; and

Paragraph 1.38 – Details of the net capital programme, a table was shown on page 27 of the report.  It was highlighted that the total funding figure of £78,776 agreed to the Net Revised Budget figure shown in Table B on page 25 of the report.

During discussion, the Committee raised the following points:-

·         The forecast variance underspend percentage figure of 29.25% relating to Carers in Table A on page 17 of the report presented.  The Committee was advised that the projected underspend was primarily due to the slower than anticipated uptake of the carers allowances following changes brought in by the implementation of the Care Act 2014.  It was noted however, as members of the public became aware of carers rights, it was anticipated that numbers would rise in the final months of the current financial year;

·         A question was asked whether the reduction in Business Rate income figure of £0.647m (as mentioned on page 22 of the report) was an indicator of the overall picture of businesses in Lincolnshire.  The Committee was advised that the reduction was actually more of a technical issue, due to the rising number of larger Business Rate appeals, and was not therefore reflective of the business level in Lincolnshire;

·         Some members expressed concern regarding the delayed implementation of Mosaic, and that as a result of the delay there was a predicted loss of additional income of £2.250m to the revised Contributions Policy.  Officers confirmed that the Contributions Policy could not be fully implemented until Mosaic was operational;

·         Some concern was expressed with regard to 'Other Programmes' in the New Development Capital Contingency Fund as detailed at the bottom of page 26, that set aside money was going to be used to fund the Bourne and Boston Waste Recycling Centres; when existing contracts could have been tightened preventing the need for new developments.  The Committee was advised that contracts were being managed well, but officers felt that the Council could do it better therefore, the schemes would provide better value for money for the Council going forward;

·         Compensation to Schools – The Committee was advised that a letter had been sent out to schools advising them that Serco would not be charging them for payroll and HR in the current year, as a result of the problems encountered by the schools with Agresso.  It was highlighted that the Council also acknowledged the problems, and as a result would not be charging for their financial support through the year.  The effect would be that the Schools budget underspend would increase.  Clarification was also given that the £10m did take into account the reduction in charges from Serco.  The Committee was also advised that the Council was not likely to receive specific claims as a result  of action already taken;

·         A question was asked whether the underspend of £0.624m in Home to School/College Transport was due to a reduction in the number of entitled pupils, or whether it was as a result of policy change.  It was reported that no policy changes had been made, and that the underspend was as a result of changes in pupil demographics within the secondary education sector;

·         Some concern was raised with regard to outstanding debtor payments and what work was being undertaken to ensure that as much outstanding income was retrieved.  The Committee was advised that 97% of income was collected and that work was being done with Serco to target the remaining 3% debtor payments.  It was highlighted that the Council overall, had good robust processes in place, and a good recovery record;

·         A query was raised with regard to the underspend at paragraph 1.32 for Community Wellbeing and Public Health.  Officers confirmed that the underspend was as a result of non-take up of monies for building improvements; and that the balance would be carried forward to continue to support the hubs;

·         Paragraph 1.32 ICT.  A question was raised as to whether the underspend of £7.585m would be used for computer security.  The Committee was advised that the Council Firewall was adequate; and that the Council continued to maximise its protection with relevant software; and

·         Page 26 – Paragraph 1.37.  The Committee was advised that the £1.000m to Lincoln Castle was the final piece of funding for the Capital spend for Lincoln Castle.

RESOLVED

That the Revenue and Capital Budget Monitoring Report 20015/16 presented be noted and that the comments as detailed above be forwarded on to the Executive for consideration at its meeting on 1 March 2016.