Skip to content Skip to main navigation
Site map Arabic Urdu Slovenian Farsi Chinese French

Agenda item

February 16/17 Revenue Budget Monitoring Report

Report of the Strategic Director of Finance and Customer Services

 

Cabinet Member:     Councillor Alam

Commissioner:         Ney (in advisory role)

 

Recommendations:

 

That Cabinet:

 

·           Notes the current 2016/17 forecast overspend of £2.017m after the allocation of additional in year budget and that the Council anticipates a balanced outturn position will be achieved through a combination of continued management actions, use of in-year capital receipts and capitalisation of highways spend.  (Paragraphs 3.2 -3.3)

 

·           Notes that a detailed Dedicated Schools Grant (DSG) High Needs Sufficiency Strategy and Financial Plan to address the remaining deficit and future level of service provision were discussed and consulted upon at the 17h March 2017 Schools Forum meeting. (Paragraph 3.15).

 

·           Notes the approved capital programme is forecast to underspend by £9.038m in 2016/17.  Underspends in the Children & Young People’s Service, Regeneration & Environment and Finance and Customer Services Directorates will in the majority of cases be re-profiled into 2017/18, however the underspend in the Adult Care & Housing Directorate is the result  of changes to Government policy leading to a reduction in available funding which has required a review of HRA  investment.  (Paragraph 3.40)

 

Minutes:

Consideration was given to the report which set out the financial position for the Revenue Budget at the end of February, 2017 and was based on actual costs and income for the first eleven months of the financial year and forecast costs and income for the remaining one month of 2016/17.

 

The revenue position, compared with the revised budget approved by Council on 7th December, 2016, showed a forecast overspend of £2.017m. This forecast overspend had reduced by £526k since the December monitoring report to Cabinet.

 

It was currently anticipated that this level of forecast overspend could be funded from a combination of in-year capital receipts and capitalisation of some spend in relation to Highways.

 

The additional budget approval was to be funded from reserves and the extent to which in-year revenue spend across the whole Council could or could not be reduced, would affect the eventual call on reserves.  The above expected position was positive in that the expected call on reserves was lower than that which was reported within the December financial monitoring report.

 

To help further mitigate the potential impact on reserves the robust procurement and recruitment controls remained in place.

 

The majority of the approved budget savings for 2016/17 have or were being achieved, the main exception being the £1m saving from the review of staff terms and conditions of employment agreed by Council in March, 2016 which would not now be delivered in 2016/17. Positive, constructive discussions with the Trade Unions have been taking place about how this saving could be achieved and it was expected that the £2m FYE savings would be achieved from April 2017. The non-delivery of the 2016/17 £1m saving was reflected in the forecast outturn in this report. 

 

There was also a significant forecast overspend (£5.375m) on the Dedicated Schools Grant (DSG), split between the High Needs Block £5.292m and the Schools Block of £0.083m.  Whilst this overspend did not directly affect the Council’s financial position at this time, this position must be addressed to avoid any risk to the Council in the future.   The pressure on the High Needs block was presented to the Schools Forum meeting on 17th March, which also considered the draft SEND Sufficiency Strategy and Financial Plan which would address the remaining deficit and future level of provision.  In 2017/18 the forecast deficit carry forward would be partially mitigated by the transfer of £3m from the Schools Block into the High Needs Block, leaving an estimated £2.3m deficit, which would need to be met from an expected re-basing and uplift for Rotherham of the High Needs Budget from 2018/19 following implementation of the new High Needs national Funding Formula. 

 

Clifton Community School was now scheduled to convert to a sponsored Academy on 1st May (it was reported previously that the conversion would take place first in February and then in March 2017). The school had an estimated deficit of £1.2m. A reserve of £1.2m was created in finalising the 2015/16 accounts specifically to mitigate deficit balances falling on the Council as a result of sponsored academy conversions during 2016/17. 

 

In response to reduced Government funding, the Council needed to find savings of £24m in 2017/18 and then needed to identify around a further £42m savings in the following two years.  A robust budget for 2017/18 including £24m of savings was approved by Council on 8th March, 2017.

 

Control over spending was critical to a robust medium term financial strategy as unplanned spending impacts on reserves levels which were the bedrock of a financially stable organisation and unplanned spending depletes reserves. 

 

Appendix 1 to this report showed the detailed reasons for forecast revenue under and over spends by Directorate.

 

It was noted that the Overview and Scrutiny Management Board had made the following recommendations, which were supported by the Cabinet:

 

a)    That Cabinet be advised that the recommendations be supported.

 

b)    That Cabinet continue to monitor the budget on a monthly basis to identify potential variances at an early stage and implement management actions to deal with potential overspends or underspends.

 

c)    That Overview and Scrutiny Management Board receive a quarterly financial budget monitoring report.

 

Resolved:-  (1)  That the current 2016/17 forecast overspend of £2.017m be noted after the allocation of additional in-year budget and that the Council anticipates a balanced outturn position will be achieved through a combination of continued management actions, use of in-year capital receipts and capitalisation of highways spend.  (Paragraphs 3.2 -3.3)

 

 

(2)  That the detailed Dedicated Schools Grant (DSG) High Needs Sufficiency Strategy and Financial Plan be noted to address the remaining deficit and future level of service provision which were discussed and consulted upon at the 17h March, 2017 Schools Forum meeting. (Paragraph 3.15).

 

(3)  That the approved capital programme forecast to underspend by £9.038m in 2016/17 be noted.  Underspends in the Children and Young People’s Service, Regeneration and Environment and Finance and Customer Services Directorates will in the majority of cases be re-profiled into 2017/18, however the underspend in the Adult Care & Housing Directorate is the result  of changes to Government policy leading to a reduction in available funding which has required a review of HRA  investment.  (Paragraph 3.40)

Supporting documents: