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Agenda item

Budget Monitoring 2018-19 Quarter 3 Forecast

Minutes:

The Group Manager – Financial Planning and Budget Management presented a report, the purpose of which, was to provide update Cabinet with an update on the financial performance of the Council as at Quarter 3, 31st December 2018.

 

The report compared the forecasted spend for the Council against the approved revenue and capital budgets for the year. It also reviewed achievement of prior and current year budget reductions and analysed the use of reserves and balances at this point in the year.

 

Table 1 on page 36 of the report set out the projected revenue outturn position for the Council for the financial year, outlining projected spend against the agreed revenue budget of £266 million and this showed an overall under spend of £5.312 million for the financial year. It was important to note that this under spend has increased significantly due to a couple of late grants incoming from Welsh Government, specifically £620,000 for Social Services and almost £719,000 towards the costs of teachers pay awards. Without these grants the under spend would have been £3.973 million. Overall there was a projected under spend (and not overspend as indicated in this section of the report) on Directorate budgets of £592,000 and an under spend of £6.6 million on council wide budgets. To date, net new earmarked reserves of £1.922 million had been established and there was more detail on these in Table 5 of the report, (paragraph 4.5.4.)

 

Paragraph 4.1.4 of the report identified two areas where funding had been provided for budget pressures, the Festival of Learning and Uniform Grant, but these were no longer required and the funding here has been pulled back corporately in order to meet other pressures.

 

Paragraphs 4.1.5 to 4.1.8 of the report, provided further information around the financial position for the Council going forward, with reference to the final settlement and the challenges facing the Council that lie ahead.

 

Referring to page 38 of the report and linking in with the projected revenue position, Section 4.2 reviews achievement against current and prior year Budget Reduction Proposals. During 2018-19 the Council have monitored performance in meeting those 2016-17 and 2017-18 budget reductions that had not been achieved, alongside new budget reductions for 2018-19.

 

Appendix 1 (page 53) showed the outturn position for outstanding 2016-17 and 2017-18 proposals, and identified mitigating action to be taken by Directorates to ensure these are met in full. It also outlined the new proposals being implemented by Social Services and Wellbeing under their service delivery plan, to meet their historic over spend. Whilst significant progress will be made in 2018-19 towards closing the gap, there will still be a shortfall to meet in 2019-20.

 

Appendix 2 of the report (page 54 onward) reflected the position against all of the 2018-19 budget reductions. This indicated a shortfall of £379,000 across Directorates, the majority of which were outlined in more detail in paragraph 4.2.6. of the report. These will continue to be monitored during 2018-19 and 2019-20 with Directors either implementing them in full or finding alternative proposals.

 

From pages 40 onwards, Section 4.3 of the report provided more detail and commentary on financial performance for each Directorate and in respect of council wide budgets.

 

This linked in to Table 1 in the report and Appendix 3 (page 63)which provided a high level summary of spend against budget for each Directorate, along with Council wide budgets and transfers to reserves.

 

There were projected over spends on Education and Family Support and Communities Directorates, which are offset by under spends on Social Services and the Chief Executive’s budget. Again, it was important to note added the Officer, that the recent grant from Welsh Government for Social Services of £620,000 is masking the true position, which was an overspend on Social Services.

 

Within paragraph 4.3 of the report, there is a section for each Directorate outlining the end of year position, with a table highlighting the major variances and a narrative for each of the variances explaining the reasons for these.

 

There were however, a number of large under and over spends across all Directorates, as outlined in the report.

 

The Education and Family Support section also included a narrative on the position on school balances on page 41, showing a projected reduction in overall balances from a surplus of £360,000 at the start of the year to an overall deficit of £870,000 at year end. This position has been masked by a specific grant of £231,000 from Welsh Government towards increases in free school meals following the roll out of universal credit.

 

Paragraph 4.3.5 on page 47 set out the position on Council wide budgets.

 

Overall there is a net underspend of £6.6 million, but there are a number of one-off movements contributing to this, including:

 

·               £2.4 million under spend on capital financing costs, following the change in MRP Policy. This budget is part of the MTFS budget reductions in 2019-20.

·               Reduced requirements for funding for inflation, budgetary pressures and contingency. Budget pressures no longer required have been clawed back, and the Council have received £719,000 in WG grant towards teachers’ pay increases.

 

Section 4.4 on page 48 of the report, outlined the outturn position for the Capital Programme. The programme approved by Council in February 2018 has been reviewed and amended during the financial year, with the latest update in December 2018. A full breakdown of spend against budget for each scheme along with any additional movements, was shown in Appendix 4 (pages 65 to 67 of the report).

 

Section 4.5 of the report (page 49) provided a breakdown of the movement on earmarked reserves during the financial year.  A full breakdown of movements on reserves to date is provided in Appendix 5 of the report, separating Directorate reserves from Corporate reserves. Reserves had decreased from £48 million to £45 million at the end of December.

 

The main movements are:

 

·      Directorates have drawn down £4.8 million from earmarked reserves.

·       The Council have established £1.279 million new corporate reserves to meet known or probable risks or pressures

The Deputy Leader thanked the Council’s Finance Team for the prudent way it continued to manage the Council’s budget. He added however, that the Council could not rely on promises of grant funding going forward, and this meant that the Authority still faced very challenging times ahead.

The Leader echoed these comments adding that winter was still in progress and this was a time of year where there was added financial pressures associated with gritting roads, keeping schools open in inclement weather and looking after Social Services challenges also.

Other Cabinet Members added there was also financial uncertainty regarding the outcome of Brexit still to be awaited.

 

The Cabinet Member – Future Generations and Wellbeing asked if Officers were yet aware of the financial comparison that would arise moving from Quarter 3 through into Quarter 4.

 

The Group Manager – Financial Planning and Budget Management advised that this was not yet known as the projects detailed in the report were based on the most up to date information available. She added that services were demand led, so this to a degree, made it difficult to predict future financial pressures compared to those that presently existed.

 

She added that recent grant funding allocations had assisted in the support of the budgetary position and there could yet still be more of these to come, which would be maximised accordingly within areas of the Authority this was mostly needed.

 

RESOLVED:                        That Cabinet noted the projected revenue and capital outturn position for 2018-19. 

Supporting documents:

 

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