MUNICIPAL YEAR 2006/2007 REPORT NO 255 MEETING TITLE … Monito… · problems of the Enfield...

Revenue Monitoring Report February 2007

MUNICIPAL YEAR 2006/2007 REPORT NO. 255

MEETING TITLE AND DATE: Cabinet 18th April 2007

REPORT OF: Director of Finance and Corporate Resources Contact: Stan Barker DDI. 020-8379 4213 or ext. 4213

1. EXECUTIVE SUMMARY 1.1 This report sets out the Council’s revenue budget monitoring position for

2006/07 based on information to the end of February 2007. The report indicates a potential overspend within departmental budgets of £543k. This figure includes a one-off contribution to the bad debt provision for temporary accommodation as a result of a review of the methodology following external audit comments. This is offset by net corporate savings of £1,210k, leaving an overall potential underspend on the budget of £667k.

1.2 The report also alerts Cabinet to the serious implications of the financial

problems of the Enfield Primary Care Trust (EPCT). At a board meeting in March the EPCT reported a deficit of £13.1m. The Council have now received notice (30th March) from the EPCT, that it is withdrawing £2.1m of “Section 28a” funding for Older People’s Services in 2007/08 rising to £2.5m in 2008/09. The Council does not regard this as acceptable and is taking advice on options for remedy. It is worth noting that the EPCT was warned by the Audit Commission as long ago as December 2005 that they needed to take effective action to manage financial risk.

1.3 The problems caused by the EPCT’s unilateral decision to withdraw

funding underlines the Council’s financial exposure to external risks over which it has limited control. It demonstrates the appropriateness of the Council’s approach to prudent financial management in maintaining adequate earmarked reserves, balances and contingencies to ensure that such issues do not lead to immediate problems with the resourcing of the Council’s commitments to the Community.

AGENDA PART 1 ITEM 5

Revenue Monitoring Report

February 2007

Cabinet Member consulted:

Councillor Michael Lavender


2. RECOMMENDATIONS It is recommended that Cabinet: 2.1 Notes the net underspend set out in the report and also the commitments

against the central contingency. 2.2 Notes the action of the PCT in withdrawing Section 28a funding from

2007/08 onwards and the impact this could have on the Council’s financial position.

2.3 Agrees that final decisions on the treatment of the underspend for

2006/07 be delegated to the Chief Executive and Director of Finance and Corporate Resources in consultation with the Leader and Deputy Leader of the Council.

3. BACKGROUND 3.1 The Council’s revenue expenditure against budget is monitored via the

regular monthly monitoring reports to Cabinet. These reports provide a snapshot of the revenue position for each department and for the Council as a whole, and provide details of any projected additional budget pressures.

3.2 The Revenue Monitoring Report is a result of the monthly monitoring process carried out by the individual departments, which encompasses the following principles in order to ensure accuracy, transparency and consistency:

• The monitoring is based on risk assessments to enable greater emphasis to be placed on high-risk budgets throughout the year.

• Comparisons are made between expenditure to date, current budgets and budget profiles.

• Expenditure is predicted to the year-end, taking account of seasonal fluctuations and other determinants of demand.

• The ‘Key Drivers’ that affect, particularly, the high-risk budgets are monitored and reported to Department Management Teams.

• Action plans to deal with any areas that are predicting or experiencing problems staying within agreed budgets are produced.

Departmental Variances

3.3 The February monitor is showing a potential overspend of £543k on Departmental budgets as compared with the figure of £1.145m shown in the last monitoring report. The main reasons for this improvement in the financial position are set out below:

Health and Social Care: The potential underspend, has increased


from £152k to £311k since the January monitoring report.

The movement of £159k relates to a reduction in the level of spend for Adult Social Services by £100k giving a level spend and an increase in the Homelessness underspend of £59k.

Finance and Corporate Resources: £199k Potential Underspend, a reduction of -£458k since the January monitor.

This projected reduction in expenditure relates to Property Services (-£304k) and other smaller underspends in Finance and Democratic Services.

In view of the significant change in the Property Services projection at this stage of the financial year, a detailed review of the Property Division’s monitoring processes will be undertaken as a matter of priority in 2007/08.

3.4 Overall this monitoring report illustrates an underspend against budget

(£667k) as a result of strong treasury management performance. The Treasury Management Team has continued to generate higher than anticipated net income throughout 2006/07 due to favourable interest rates and a higher than estimated cash flow. It is recommended that final decisions on the allocation of the underspend, once the 2006/07 accounts are closed, are delegated to the Chief Executive and Director of Finance and Corporate Resources in consultation with the Leader and Deputy Leader of the Council.

3.5 As noted in previous monitoring reports, the general contingency will be

fully committed in 2006/07 (see paragraph 6.2). The major variances noted in the monitoring process have been taken into account when assessing the Council’s budget requirement for 2007/08. Where relevant they were included in Section 11 of the Budget 2007/08 and Medium Term Financial Plan report to Council 21 February 2007.

4. FEBRUARY 2007 MONITORING - GENERAL FUND

4.1 A summary of the variances to budget in the monitoring position is shown in the table below:

Table 1: Budget pressures at 28th February 2007

(Under)/Over Jan

£’000

(Under)/ Over Feb

£’000

Mov’t In Variance

£’000

Health and Social Care Performance, Partnership and Policy Education, Children’s Services and Leisure Environment, Street Scene and Parks

(152)

(18)

77

580

(311)

(18)

50

630

(159)

-

(27)

+50


(Under)/Over Jan

£’000

(Under)/ Over Feb

£’000

Mov’t In Variance

£’000

Finance and Corporate Resources * Chief Executive Sub total Other GF items: Treasury Management Contingent Items Recycling Credits Purchase of SAP MSS/ESS licenses Local Authority Business Growth Incentive Scheme Contribution to Reserves Sub total – other

259

399

1,145

(1,630)

(442)

230

598

0

0

(1,244)

(199)

391

543

(1,630)

(408)

230

598

(872)

872

(1,210)

(458)

(8)

(602)

-

+34 - -

(872)

+872

+34

Total budget pressures/ (savings)

(99)

(667)

(568)

Details of the budget pressures and variations can be found in sections 5 and 6 of this report.

4.2 The Council’s budget includes a general contingency of £1,000k to deal with unforeseen events, and a number of contingent items that total £3,478k. As noted in previous reports, the contingency will be fully committed this year. The contingent items relate to spending requirements that are expected to arise at some point during the current financial year, but about which there is some uncertainty regarding the timing of the financial impact. The likely need for these items has been closely monitored throughout the year. The latest monitor indicates that contingent items will be underspent by £408k this year but it is important to note that this underspend has resulted solely from higher than anticipated income from the Agency staff contract.

5. SERVICE GROUP MONITORING INFORMATION – BUDGET

PRESSURES 5.1 Health and Social Care – Projected £311k underspend (Movement

since January -£159k)


5.1.1 Community and Housing Services

Community and Housing Services is projecting an underspend of £311k at the end of February 2007.

As highlighted in previous monitoring reports, this favourable variance is due mainly to the continuation of the Homelessness Grant into 2006/07 (resources were included in the budget in anticipation that this funding would be lost) and an underspend on temporary accommodation costs. The underspend has increased by £59k since January due to an increase in the number of property handbacks and properties emptied in advance of these handbacks. After the audit of the 2005/06 accounts and following comments from the auditors, a review of methodology for calculating the bad debt provision for temporary accommodation was undertaken. Whilst the final figure has yet to be confirmed, as previously indicated there will need to be a significant one-off contribution to the bad debt provision of approximately £600k in 2006/07.

5.1.2 Adult Social Services

The overall budget position for Adult Services is forecasting a level spend. This represents an improvement on the anticipated overspend forecast in January. The position remains complex with sustained increases in demand for care. The achievement of a balanced position overall, has required decisions to deliver a managed underspend in care packages for people with disabilities to offset pressures elsewhere. The most significant of which are described below:

Legal Expenses (£80k overspend). The budget for legal costs continues to project an overspend driven by higher usage of Legal Services.

Older People (£140k overspend). Externally purchased home care for older people is projecting an overspend of £100k, offset in part by an in house home care underspend of £75k. However, these variances are after taking into account the allocation of the risk provision set aside in the Medium Term Financial Plan of £846k. This continues to be driven by growth in activity levels between the setting of the budget for the current year of 9,040 average hours per week, and current projections of 10,500 average hours per week. This is the most significant area of pressure for Adult Social Services. Residential services (both in house and externally purchased) are projecting an underspend of £98k due to a reduction in activity offsetting the remaining overspend in externally purchased home care.


Salary costs for social workers, particularly in the Intermediate Care and Hospital teams, are driving an overspend of approximately £135k. The remaining £75k overspend in this area represents an unachieved saving within older people’s day services.

Disabilities (£410k underspend). There is a £250k predicted overspend on Learning Difficulties and Physical Disabilities Assessment & Care Management staffing. Actions are currently in place and this position will continue to improve during the next financial year. It has taken longer than anticipated to conclude the appointment process due to unforeseen delays between offer of appointment and actual start dates. Care purchasing projections across Disabilities are showing an underspend of £800k, of which £550k relates to Learning Difficulties due to decisions made during the year to reduce activity wherever possible. The remaining £250k relates to Physical Disabilities. In addition, this service area is projecting an overspend of £100k for the Preventative Initiative Project which will assist in the achievement of the “Helped to live at home “ targets for 2006/07.

Mental Health (£180k overspend). Included within the projected outturn for this service area is an overspend of £97k for people with no recourse to public funds (the January projection was £90k). There has also been an increase in the number of people accessing drug rehabilitation treatment particularly from the criminal justice pathway, leading to an overspend of £100k. This is largely a consequence of the success of the drug intensive programme in partnership with the Metropolitan Police. Adult Social Services Risks As the year has progressed, the financial impact of demand around care purchasing has gradually become less significant, as, at this stage, any new demand will only result in additional costs for a few weeks. However, recent increases in demand will have a significant impact in 2007/08 and subsequent years. Future Years There are significant ongoing implications for the budget 2008/09 and beyond if demand continues to rise at current rates. This has been recognised in modelling the MTFP for 2007/08 onwards. Further steps will be required to mitigate the risk of significant expenditure pressures arising in the future. In addition, Enfield Primary Care Trust at a Board Meeting in March reported a deficit of £13.1m. The Council have now received notice (30th March) from the Primary Care Trust, that it is withdrawing £2.1m of Section 28a funding for Older People’s Services in 2007/08, rising to


£2.5m in 2008/09. Section 28a of the National Health Service Act 1977 sets out the conditions under which NHS bodies contribute to the costs of local authorities in which both organisations have a responsibility. Across London, in particular over recent months, primary care trusts have been incurring deficits and have often taken the recovery action of withdrawing from Section 28a agreements. Since the needs of the clients have to be met this involves a “cost shunt” from the primary care trust to the local authority. The Council does not regard this as acceptable and will be taking action to challenge this decision. The Council is extremely concerned about the Trust’s deteriorating financial position, the action taken by the EPCT, and the fact that this action has been undertaken just one day before the start of the new financial year. In the most recent published Audit Letter to the EPCT Board (December 2005) the EPCT were warned: “The PCT is facing significant short-term financial risks and needs to take urgent action if it is to deliver a balanced position for 2005/06. The PCT also needs to develop its medium to longer-term planning processes to sustain its financial position on a recurring basis”.

5.2 Performance, Partnership and Policy – Projected £18k underspend (no movement since January)

Performance, Partnership and Policy is projecting an £18k underspend due to a number of small variances within the department. As noted in previous reports, the housing benefit subsidy budgets represent the main area of volatility within PPP and although a review of the budgets suggests a balanced outturn, the position will remain uncertain until the accounts are closed. Members should also note that the HB subsidy claims for 2004/05 and 2005/06 have not yet been agreed by the DWP. The Council is holding provisions of £3m pending agreement to these claims.

5.3 Education, Children’s Services & Leisure –Projected £50k overspend

(Movement since January report; -£27k)

As noted in previous reports the financial monitoring of the ECSL Department is now separated into the schools’ budget and the department budget. The schools’ budget variance described below is not included in the overall revenue variance for the Council as this ring-fenced account is fully funded by the Dedicated Schools’ Grant and any underspends or overspends are rolled forward into the schools’ budget in future years. Schools’ Budget

As reported earlier in the year, the final amount of Dedicated Schools’ Grant (DSG) for 2006/07 announced by the Department for Education and


Skills was lower than estimated at the time of budget setting. The reduction of £195k has been met from the schools’ budget contingency resulting in no overall increase in spending. There is a projected net underspend in the centrally managed SEN budgets of £449k. This is due, in the main, to the inclusion in the 2005/06 financial accounts, of a creditor reserve for recoupment day schools, amounting to £203k which was not necessary and a decrease in the expenditure on the Outborough Day budget, resulting from a net reduction in the number of placements. The movement this month is an increase in the projected underspend of £33k.

The Spring term count for support for pupils with exceptional SEN needs in mainstream schools has identified an increase in the support needed this term changing the forecast to an overspend on the original budget of £14k. This sum will be charged against the provision of £202k contingency included in the schools budget for additional SEN support. The opening of two new secondary SEN resource bases has been postponed as a result of delays in the consultation process with the governing bodies, and they will not be opened this financial year. This has resulted in a saving of £115k. The Spring term count in January of 3 and 4 year old children in private nurseries showed that slightly fewer children were taking up places than forecast. This will result in the budget being underspent by £12k rather than the £99k overspend that was previously reported on the basis of the Autumn term count.

The parent support service is a new service operative from September 2006. There is a saving of £50k in the staffing budget, resulting from the delay in the recruitment of staff due to redeployment issues. A further saving of £65k has been identified due to in the main additional parenting support grant. The expansion of Highlands School to 8 forms of entry and the extension of the buildings gave rise to an increase in the unitary charge of £50k to March 2006, which was only invoiced to the authority in June. In addition a claim has been received from the company managing the second schools’ PFI contract for the excess cost of energy over the allowance in the contract. The validity of this claim is being checked, but in the interim, a provision has been included for additional expenditure of £45k.

The Children with Learning Disabilities & Difficulties service has identified an underspend of £43k due to salary vacancies. The Pupil Referral Unit had previously reported an underspend. This month the variance has increased, partly due to school standards grant income and partly due to staffing costs not being as high as expected due to vacancies. The overall underspend is now £50k.


A one-off contingency payment of £95k was made to a school following agreement on a robust recovery plan. A number of school rateable revaluations have resulted in additional expenditure of £129k. The total underspend to be carried forward into 2007/08 is £665k.

ECSL Department Budget- Projected £50k Overspend

The Department are projecting an outturn position of a £50k overspend, a reduction of £27k since the January monitoring report. Material over and underspends within the department are described below.

• The Youth Offending Service is reporting an overspend of £101k due to the need for additional staffing whilst various personnel issues are resolved and to ensure a satisfactory level of service.

• A projected overspend of £79k in the Leisure, Culture and Youth leadership team is due to costs associated with the reconfiguration of this part of the department.

• Social work costs within the Children in Need and Looked After Children teams are projecting an overspend amounting to £452k as a result of the need to employ additional agency staff cover to maintain a safe service.

• The Section 17 Prevention of Care budget is predicting an

overspend of £118k due to the rise in the number and cost of claims associated with families who have no recourse to public funds.

• The In House Fostering team is projecting an overspend of £86k as a result of the continuing use of agency staff for maternity cover and the need for additional foster carer support to maintain the stability of placements.

• Family Centres are projecting an underspend of £151k in the employee costs budget as a result of planned vacancies and delays in the appointment of permanent staff.

• The external care purchasing budgets are showing a net underspend of £379k.

• A review of the end of year Standard Fund balances has identified an underspend on previous years’ LEA contributions of £118k.

• The projection for transportation expenditure has identified an underspend of £198k. This is due to a review of the methodology for projecting contractors’ and staffing costs.


• Millfield Arts Centre is indicating that there will be a net overspend of approximately £50k.

• The Cheviots service have an overall underspend of £63k, mainly due to salary vacancies and additional income from Children’s Centre grant and the Cheviots Carers Grant.

ECSL Department Budget - Risks Settlement of Asylum Grant Claims 2002 to 2005 – Since 2002 the Home Office has not been in a position to reconcile local authorities’ asylum grant claims. Following some initial work by the Home Office project team, they asked the Council to provide evidence to support the claim for reimbursement for a number of cases for which the Home Office could not confirm eligibility. The work undertaken by ECSL suggests that the scale of any potential repayment is likely to be small.

Employer costs - There is currently an employment tribunal as well as a judicial review case in progress, which may result in compensation payments. It is still not possible to estimate the scale of any payments but there is a risk that a liability to pay will arise before the year end. General Sure Start revenue grant The Department for Education and Skills (DfES) provides grant funding, for the development of early years services in the Borough. Following a grant allocation for Phase 1 up to March 2006, a two-year allocation was given for 2006/07 and 2007/08 for Phase 2 with a crude split of revenue grant of approximately 50% spending in each year. This allocation took no account of the reality of running the recently opened centres built under Phase 1 and opening 11 new centres under Phase 2 to meet the target for the authority of 16 centres in total. 7 of the 16 centres are now designated with 1 more being due to be designated in March subject to OFSTED registration, and a further 3 new centres being under construction. To have achieved this number of designations by this stage has been a significant challenge and a major achievement. However, the remaining centres are proving more difficult to develop. There is currently a shortfall of 4 centres against the target of 16 centres. In order to combat this an external consultant has been engaged to look into 3 other school based schemes that could become children’s centres Also, the possibility of a ward-based children’s centre and extended services model in Lower Edmonton Ward is being investigated. This combination of factors will result in the revenue expenditure being


significantly lower than the grant allocation for 2006/07. The Children’s Centre Board approved an application being made to the DfES to re-profile the grant to recognise the slippage in the development programme. Whilst the DfES have agreed to re-profile the capital grant allocation, they have not agreed to the revenue grant allocation being re-profiled. Consequently the revenue grant for 2006/07 will be underspent by a significant amount though every effort will be made to re-direct expenditure to minimise the grant loss. This could result in an additional underspend against the Council’s or the School’s budget.

5.4 Environment, Street Scene & Parks – Projected £630k Overspend

(Movement of +£50k since the January monitoring report)

The department is still projecting adverse variances on pressures previously identified as summarised below: The latest detailed projections for the Parking account suggest a likely income shortfall of £575k. There was a significant reduction in the number of PCNs issued in January and February, which has led to the increase in the projected overspend. This shortfall is currently being investigated, to ascertain, in liaison with the contractor, the reasons for this reduction which occurred during a period when industrial unrest may have affected performance. There is a previously reported potential shortfall of income at the MOT bay, due mainly to the introduction of new regulations that have increased the time taken to carry out these tests. This is estimated at £15k.

The potential underspend on the PFI street lighting budget is £100k, arising from reduced payments to the contractor in the early months of the contract and lower than predicted energy costs.

Waste Services continue to predict an underspend. However, this is offset by a predicted overspend in the Environmental Crime Team. This overspend arises largely due to redundancy costs following restructuring. The potential overspend in Parks, largely due to the shortfalls in income previously predicted, is £170k. It should be noted that significant additional costs arose as a result of the storms in mid January. Some £70k of unfunded costs on emergency and other works have so far been incurred. These costs do not include the planting of replacement trees, which has still to take place. There are likely savings due to vacancies in the Road Safety section. These are now estimated to amount to some £100k.

5.5 Finance and Corporate Resources – Projected £199k Underspend (Movement since January report -£458k)


The Finance and Corporate Resources Department is reporting an underspend of £199k, a movement of -£458k since the January monitoring report, due mainly to changes in the projections for Property Services. A review of their monitoring processes will take place in 2007/08 in order to ensure that major variances are picked up earlier in the financial year. The main variances to budget in the department are:

• Overspend on Audit and Risk Management of £94k mainly due to an under recovery of income.

• Throughout the year there has been a predicted shortfall in Land Charges income. This however was previously offset by surpluses relating to citizenship ceremonies and births, deaths and marriages income. It has now been identified that the shortfall will only be partially offset by surpluses in these areas leaving an adverse variance of £50k.

• Overspend on Print Services due to increased maintenance costs and under recovery of income £75k

• Underspend on Corporate items of £110k relating mainly to Audit fees (£29k) and telecommunications savings of (£86k).

• Corporate Procurement have now provided further monitoring information which has indicated the likelihood of a £145k overspend in 2006/07 in relation to both employee and other operational costs.

• Property Services underspend of £328k due to an over achievement of income from industrial estates.

• Borough Secretary running costs project an underspend of £80k mainly due to savings in Electoral Registration and Member Services.

5.6 Chief Executive’s Department – Projected £391k Overspend

(Movement since January report -£8k)

The Chief Executive’s Department are reporting a potential overspend of £391k for January. This major overspend relates to additional staff costs within the Customer Service Centre as previously reported.

6. OTHER GENERAL FUND ITEMS

6.1 Treasury Management – Projected additional income £1,630k,

no movement since the January monitoring report)

As reported in previous monitoring reports, when the budget was set interest rates were expected to fall during 2006/07. Since then interest rate movements have reversed due to concerns over inflationary pressures and this has resulted in additional interest being earned on the Council’s balances. There have been three separate one quarter percent increases in the base rate (August, November and January) that have resulted in further interest receipts. The overall increase in interest expected to be earned on Council balances is £1,040k for the year. Members should note that because the Council’s debt is all at fixed rates the Council is not exposed to increases in interest rates on its borrowings and consequently


rising interest rates benefit the Council.

The Council’s overall cash balances have also been more buoyant than expected over the year, resulting in additional income generation of £550k. As previously reported an ongoing saving has been identified on the repayment of premiums of £100k. This saving will also be built into the Council’s Medium Term Financial Plan. Following a re-alignment of budgets bank charges are now shown corporately. A £60k overspend is now predicted on debit and credit card charges. This reflects the introduction of an e-payments service for customers so that they are able to make payments via the internet or the Customer Services Centre. This facility is proving to be very popular with customers but the Council has incurred additional bank charges as a result. The Treasury Team have agreed an interim reduction in charges that has reduced the anticipated overspend from £70k to £60k after discussions with the bank. Due to the high level of transactions a further reduction has now been negotiated. The full impact of this will not be realised until 2007/08. If transaction levels continue at the current rate it is anticipated that this will no longer be a pressure in 2007/08.

6.2 Contingency and Contingent Items – Projected Unallocated Provision

£408k, (Movement since January report +£34k). A decision was made by Cabinet as part of the January monitor to add

£1.6m to the ECSL budget to cover the additional costs associated with the liquidation of Enfield Leisure Centres Ltd. It was agreed that these additional costs would be met from the Council’s contingency (£1m) and other reserves.

All contingent items have now been reviewed to determine whether they are needed in 2006/07. Whilst the previously held funds for loss of rental income and abandoned vehicles will now not be needed, there have been a number of other liabilities that have been identified resulting in a £34k reduction in the projected unallocated provision. The table below summarises the position regarding contingency and contingent items and includes all the remaining allocations that have yet to be made in 2006/07.

Table 2: Contingency and Contingent Items.

Contingency

£’000

Contingent Items £’000

Original Budget 2006/07 1,000 3,478

ELCL Liquidation Costs Approved Allocations

(1,000)

(2,117)

Unallocated Provision at 28.02.07 0 1,361

Other Allocations that will be required in 2006/07:

Abandoned Vehicles

(50)


Contingency

£’000

Contingent Items £’000

Part yr effect reductions and redundancies

Regeneration match funding

Local Development Framework

New Civic Facility – running costs

IT Developments

Revenue Implications - Capital Schemes

Procurement IT

Enfield Arts Partnership PCF Local Development Framework PCF

Corporate Procurement Savings

Agency staff rebate

Development of civic centre reception.

Compensation Payment

Consultancy (Procurement)

By Election Costs

North London Strategic Alliance

Accommodation refurbishment

Gateway to Growth Funding

(500)

(100)

(250)

(42)

(139)

(40)

(146)

(125)

(131)

528

478

(36)

(80)

(142)

(12)

(20)

(96)

(50)

Projected Unallocated Provision 0 408

6.3 Local Area Business Growth Incentive Scheme Grant (LABGI)

On 27th February the Minister for Local Government announced that Enfield have been awarded a £872k Local Area Business Growth Incentive Scheme Grant for 2006/07. The three year LABGI scheme sees councils who have encouraged business growth in their area receiving an unringfenced reward grant from the Government. The grant award depends on the increase in the business rate base in the Borough during the year. A number of developments have contributed to the increase in the number of businesses in the Borough, and the developments in Edmonton and Enfield town centres have seen a large increase recently in the business rate base. Enfield did not receive a grant in year 1 (2005/06) and there was considerable doubt until recently as to whether a grant would be received in 2006/07 as the grant is entirely dependant on the increases in the business rate base being fully reflected in the December data used for the Government’s calculation. As the grant was only paid to the authority in the last week of March, it will be placed in reserves pending a decision on its use. The Council is embarking on an ambitious “place shaping” initiative for which some one-off resources will be required from 2007/08.

6.4 Recycling Credits As previously noted there is a shortfall of £230k against the sum for recycling credits assumed in the 2005/06 accounts. Current tonnage


figures are being carefully monitored in order to identify any ongoing impact on the Council’s net cost of waste disposal.

6.5 Purchase of additional SAP licences for the implementation of managers’ and employees’ self-service (MSS/ESS) As previously reported, a decision was taken in December to purchase SAP licences for MSS/ESS before 29 December 2006 in order to take advantage of the substantial (66.5%) discount offered by SAP UK. The licence costs (£598k) are to be funded from the additional interest receipts earned in the current year.

7. HOUSING REVENUE ACCOUNT (HRA): - Projected £158k overspend (Movement since January report -£153k) The Housing Revenue Account is projecting a £158k overspend on its budgets. This represents a reduction in the overspend of £153k since the January monitoring report. Commercial shops income is projecting an over recovery of income of £350k due to rent reviews during the year and a reduction in the level of voids. This is offset by an under recovery of income from garage rents (£150k). Supervision & Management is showing an under-recovery of income (£60k) on deductions from capital receipts on the sale of Council homes (SOCH) due to changes to the rule on treatment of expenses as overheads. In addition an overspend is projected on the payment of early retirement costs (£34k), and redundancy and pension payments of £795k. These are partially offset by various salary underspends totalling £255k. The redundancy and pension payments overspend (£795K) is as a result of the recent Housing Management restructure which identifies some posts for redundancy and the change in the accounting treatment for pension payments which now requires such payments to be charged to revenue in the year they are incurred. Previously pension payments were accounted for in the HRA over five years.

Repairs expenditure remains volatile. Responsive repairs is projecting a significant increase in expenditure, but this is offset by a corresponding underspend on planned repairs. Any underspend on the repairs budget will be transferred into the Repairs Fund. Private Hotel charges are expected to overspend by £234k, an increase of £54k from the January monitoring report. This is as a result of an unforeseen increase in the number of people placed in private hotels.

As previously reported there is a reduction in the estimated amount needed to contribute towards the HRA bad debt provision. Interest on balances is projecting an over recovery position of £60k.

8. ACHIEVEMENT OF SAVINGS


8.1 The Budget 2006/07 and the Medium Term Financial Plan report

approved by Cabinet on 22 February 2006 included efficiency and other savings of £11.7m to be made during the 2006/07 financial year rising to £14.0m by 2010/11.

Routine monitoring reports comment on progress in implementing the savings and classify each item as green, amber or red. Green signifies that the redirection is on target for full implementation; if implementation issues have been identified, but the redirection is likely to be achieved, it is classified as amber; and if there is a serious problem it will be given a red classification. A summary of the areas where there is concern as to the achievement of the saving, i.e. an amber or red traffic light is shown in Appendix H. It should be noted that, although some items remain red or amber at this late stage in the year, for the most part alternative savings have been found to ensure that overall savings targets are met.

9. ALTERNATIVE OPTIONS CONSIDERED 9.1 Not applicable to this report.

10. REASONS FOR RECOMMENDATIONS 10.1 To ensure that Members are aware of the projected budgetary position for

the Authority, including all major budget pressures and underspends which have contributed to the present monthly position and that are likely to affect the final outturn.

11. COMMENTS OF THE DIRECTOR OF FINANCE AND CORPORATE

RESOURCES AND OTHER DEPARTMENTS Financial Implications 11.1 Section 28 of the Local Government Finance Act 2003 requires the

authority to review the financial position of the authority with regard to the statutory calculations used to set the budget and Council Tax. If in carrying out this review there has been a deterioration in the financial position, the Authority must take action as necessary to deal with the situation.

The Director of Finance and Corporate Resources regularly reviews the financial position of the authority as part of the monitoring process and can confirm that currently there is no deterioration in the financial position of the Authority. However, Members will note the comment in paragraph 5.1.2 regarding recent action by the PCT and the impact this could have on the financial position of the Authority from 2007/08 onwards.

12. LEGAL IMPLICATIONS 12.1 The Council has a statutory duty to arrange for the proper administration

of its financial affairs and a fiduciary duty to taxpayers with regards to its


use of and accounting for public monies. This report assists in the discharge of those duties.

13. PUTTING ENFIELD FIRST

13.1 The report contributes to Objective (5b) – To deliver sound financial

management, efficient use of resources, promotion of income generation and adherence to Best Value and good performance management through the organisation.

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APPENDIX H

London Borough of Enfield Savings Monitoring: February 2007

Area of Saving £000’s Progress in Achieving the Saving

RED CLASSIFICATION

Chief Executive

Rationalisation of Customer Service Centre & Borough Communications Centre (BCC) opening hours.

(80)Customer Service Centre projecting overspend due to increased demand. Saving not achieved but a review of the service (including overlaps with Borough Control) is currently being undertaken.

Regeneration & Sustainable Communities Sustainable Communities- Use of NRF funding.

(220)This one-off saving will not be achieved. NRF funding now subsumed within LAA funding streams.

Education, Children’s Services & Leisure

Supervised contact - parents/children. Reduction from 05/06 MTFP. (Section 20)

(130)This saving is not currently being achieved. This overspend will be balanced by underspends elsewhere in budgets for Children and Families.

Finance & Corporate Resources

Deletion of 1 FTE from the Audit Team.

(30)The proposed deletion of this post has been replaced with an increased income target of £80k to cover the £30k saving and the secondment of a post from the Metropolitan Police for a trial period of one year (£50k). This post will eventually generate income to the Authority under the Proceeds of Crime Act 2002 though the year in which income will be received is uncertain. This item has been flagged up in the F & CR Monitoring Report.

Environment, Streetscene & Parks

Advertising Hoardings, increased income.

(50)

ESSP staff are working with consultants on this issue, but it has been confirmed that there will be no income this financial year.

Additional Car Parking income

(375)Current income levels suggest that this level of income will not be achieved.

Procurement Savings 2006/07

Print savings across the Authority.

(230)The rationalisation of the Print Service has now been undertaken. Although savings of this magnitude are highly unlikely in the current year, savings will be achieved from 2007/08 onwards.

Courier Savings

(25)Although there are efficiencies to be made by introducing a new contract, there will not be an overall saving to the Authority.

APPENDIX H


Security Services

(40)The contract has been extended for CCTV security services, operative from 1st July 2006. The estimated saving in relation to agency security services for CCTV is £30k per annum but this is yet to be validated. In relation to security guarding, there is a six months saving for 2006/07. Annual charge reduces from £340k to £325k.

Water Rates (20)Saving will not be achieved.

AMBER CLASSIFICATION

Corporate Items

HB Subsidy savings. (1,200)The budget remains volatile, but the 2005/06 outturn and the monitor for the current year indicate that this saving is likely to be achieved.

Postage reductions across the Authority.

(40)Currently being implemented.

Community Housing & Adult Social Services

Reduction in unit costs & improved efficiencies within in house services for Older People.

(162)Saving achieved through reductions and efficiencies across the wider Older People’s service.

Adult Social Services-Finance & Performance restructure.

(30)Timescales slipped. Linked to corporate review of debt recovery. Alternative saving will however be found for 2006/07.

Home Meals- stop use of escorts.

(25)Included in the tender of home meals services.

Restructure of Private Sector Housing Team.

(25)Report still pending. Although the restructure not yet complete, it is likely that savings will still be achieved due to the number of vacancies in the team.

Education, Children’s Services & Leisure

Fostering Service reduction FYE of 05/06 MTFP.

(461)Saving built into agency fostering budget, but the monitoring position is predicting a shortfall in the achievement of this saving. Any shortfall will be balanced by underspends elsewhere in budget for Children and Families.

Increase in cross-departmental staff vacancy to 5.6%

(266)Increased vacancy factor applied to the 2006/07 salary estimates. Any under achievement will be covered from managed underspends across the Department.

Environment, Streetscene & Parks

Additional income from On-street Parking

(130)The achievement of this income is dependent on implementing the new charges as set out in the Parking Charges Report. As this decision was “called-in”, the additional income is unlikely to be achieved.

APPENDIX H


Chief Executive

Increase the cost of In-house training by £10 per course.

(25)Full year saving unlikely to be made as cost increase not implemented at start of year. Revised charges have been implemented from 1st October.

Procurement Savings 2006/07

Telecommunication Services re-tender and consolidate contract.

(100)In process of re-tendering and consolidating spend.

MUNICIPAL YEAR 2006/2007 REPORT NO 255 MEETING TITLE … Monito… · problems of the Enfield...

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Transcript of MUNICIPAL YEAR 2006/2007 REPORT NO 255 MEETING TITLE … Monito… · problems of the Enfield...