1 Summary

1.1 This report sets out for Members the latest budget predictions for the year.

1 Revenue

1.1 The latest position is given in Appendix A. The format of the Appendix has changed slightly to that previously presented. Both expenditure to date and to the same time last year are now given as a percentage of the budget and the budget figures have had inflation allocated and so are presented at outturn prices.

Support staff pay

1.2 The first quarter shows a small underspend due to a number of vacancies and delays in recruiting to new posts. In addition the underspend absorbs the higher than planned cost of the pay review estimated at £80,000 for the year. A final report on the pay review will be submitted to Personnel Committee in September. At this stage £41,000 of underspend has been allocated to meet the increased cost of the insurance premiums.

1.3 Nationally support staff have been offered a 3% pay award which has been rejected. This is the level of award assumed when the budget was compiled. Every 1% above this would cost the Authority an additional £63,000 per annum.

Firefighters' pay award

1.4 Firefighters have submitted a national pay claim for 39%. The budget has allowed for 4% from November from when the award is effective. Every 1% above this would cost £103,000 in 2002/03 (£247,000 in a full year).

Number of incidents and retained pay and allowances

1.5 Payments to date represent approximately 27% of the budget reflecting the slightly above budgeted number of incidents for the period (6,442 to 30 June, compared with budget of 5,813) and additional costs (£11,000) associated with the BT telephone line failure in April which the Authority is seeking to recover. It is too early in the year to predict any change in the projected outturn.

Insurance

1.6 Insurance is projected to overspend by £41,000 due to higher premiums. Through the delay in appointing to support staff posts it is anticipated that this can be covered.

Procurement Officer

1.7 At its meeting on 18 June 2002, the Best Value Committee agreed in principle the appointment of a Procurement Officer from September 2002.

1.8 Funding proposals to finance this appointment will be put to the Personnel Committee and in turn the Authority which will mean the appointment is unlikely to be made before the end of 2002.

2 Pensions

2.1 In the first 2½ months there have been seven retirements (six age-related) compared with a budget of 46 (36 age-related) in the whole year. However, given the volatile nature of this budget, it is too early to predict any variances on this budget head.

3 Capital

3.1 There are no known variances in the value of existing capital schemes.

Copnor Fire Station

3.2 At its meeting on 6 June 2002, members approved expenditure to a maximum of £250,000 for repairs to Copnor Fire Station.

3.3 As a result of the revenue underspending in 2001/02, if approved, as recommended in the Final Accounts 2001/02 report elsewhere on this agenda, an additional £123,000 BCA is now available to part finance the repairs.

3.4 The scheme needs members' approval to formally add it to the capital programme and this is requested.

Peninsular House

3.5 Members will be interested to know that Peninsular House (the temporary St Mary's Fire Station) is now sold subject to contract. It is to be sold for significantly more than was paid for it, proving that it was a good financial decision to buy the property rather than rent one.

4 Revised budget process

4.1 Currently a revised budget report is prepared and reported to the Authority in December. The revised budget process provides the opportunity and discipline to undertake a thorough analysis of the current financial position at a detailed level. This compares with the budget monitoring which currently focuses on the higher level summary position and identifies significant variances such as effects of pay awards and large increases in costs (for example insurance premiums).

4.2 It is proposed to replace the revised budget with more comprehensive budget monitoring and monitoring reports. Actions have already been taken to improve the control of pay budgets as demonstrated in the 2001/02 final accounts position. However, budget managers will need to closely review non-pay budgets and, if necessary, request virements to reflect changes in spending priorities. As more officers would be involved in more detailed analysis, the information would have to be slightly more out of date than it is currently. For example, the report to the October meeting of the Finance and General Purposes Committee is usually prepared in the middle of September (after the staff and pensioners have been paid). A report presented at this date would have to be based on expenditure to the end of August.

4.3 It is not proposed to change the basic forward budget process which will continue to force budget holders to examine their budgets on a line by line basis. This will be reported to the Authority as an initial draft in December and should aid the third quarter monitoring process considerably. However, it is intended to bring an indicative report on major pressures and areas for potential savings in 2003/04 to the Authority's September meeting in order to assist in informing both members and the constituent authorities as early as possible of likely requirements.

Recommendation

1 That this budget monitoring report be noted.

2 That it be recommenced to the Authority that capital repairs to Copnor Fire Station be added to the capital programme to a maximum value of £250,000.

3 That it be recommended to the Authority that proposals in this report relating to the replacement of the revised budget report with a strengthened budget monitoring process be adopted.

Section 100 D - Local Government Act 1972 - background papers

The following documents disclose facts or matters on which this report, or an important part of it, is based and has been relied upon to a material extent in the preparation of this report.

NB the list excludes:

1. Published works.

2. Documents which disclose exempt or confidential information as defined in the Act.

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Budget Monitoring 2002/03 pp 3.33d