Contact: Nick Gibbins, (01962) 847544; [email protected]

1 Introduction

1.1 Executive members have received further budget monitoring reports reviewing revised budgets for 2007/08, since the previous monitoring report to the Cabinet in November. This report reviews the position at the end of the third quarter on high risk/demand led budgets, overall employee budgets, savings plans and financial health indicators to provide an overall corporate context to budget monitoring.

1 Recommendation

1.1 That the progress made in implementing management action to contain spending within service cash limits and to enable planned underspendings to be identified to be carried forward to 2008/09, be welcomed.

2 Service cash-limited budgets

2.1 Since the previous monitoring report to the Cabinet, good progress has been made in implementing management action to accommodate budget pressures and to identify potential planned underspendings that could be carried forward to 2008/09.

Adult Services

2.2 Adult Services have produced a revised budget for 2007/08 which is in line with the cash limit. This includes £3.5m earmarked as a contingency for winter pressures which has yet to be allocated. If those pressures can be absorbed within existing allocations , Cabinet agreed on 8 February that any unallocated balance up to £3.5m could be carried forward to 2008/09, £2m to invest in the social care building stock, particularly extra care and £1.5m to supplement the contingency for winter pressures in 2008/09. In addition savings of £820,000 have been identified and carried forward to 2008/09.

Children's Services

2.3 An underspending of £1.2m is currently projected on the schools block budget, which subject to the final outturn position and consideration by the Schools Forum will be carried forward to 2008/09. On the remainder of local education authority and children's social care budgets, a balanced revised budget for 2007/08 is now forecast, after applying one-off funding of £624,000 available in 2007/08 and there is potential for an underspending to be achieved at the year end. The underlying pressures relating to spending on home to school transport and looked after children have been taken into account in framing the three year budget plan for 2008/09 to 2010/11.

Environment

2.4 Environment's revised budget allows for the carry forward of planned underspendings of £980,000 to 2008/09. Costs estimated at £260,000 are expected to slip into 2008/09 as a result of delayed Government consideration of the street lighting PFI project, for which approval to the issue of PFI credits has only recently been granted. The remaining underspending is on staffing and support costs, providing additional one-off resources in 2008/09 for the development of transport evidence in growth areas, and for highway maintenance and public transport support as approved by Cabinet on
8 February 2008.

Policy and Resources

2.5 Underspendings of £630,000 are being carried forward to 2008/09 relating to Chief Executive's, County Treasurer's and grants to voluntary organisations, although further savings or £291,000 mainly on Property, Business and Regulatory Services budgets have still to be achieved over the remainder of the financial year. Any underspending on the £780,000 budget devolved to members in 2007/08 will be carried forward in full this year.

Recreation and Heritage

2.6 Spending on Recreation and Heritage Services is expected to be contained within the cash limit, as a result of management action being taken across the department. The main budget pressures relate to the Library Service, which is affected both by the transitional costs of the library restructuring, for which some invest to save funding has been allocated, and by declining income from the hire of DVD's and CD's.

3 Corporate budget monitoring

3.1 In addition to service based budget monitoring, a corporate review is carried out on a quarterly basis focussing on high risk/demand led budgets, overall employment trends, the achievement of budget savings and the monitoring of financial health indicators.

High risk/demand led budgets

3.2 Action taken during the course of the year has resulted in projected spending on high risk/demand led budgets being progressively brought into line with the budget. Projected overspendings at the end of each of the first three quarters have been as follows:

The remaining projected overspending on demand led Adult Services budgets is expected to be covered by additional income and savings on non-demand-led budgets. Activity and spending trends on the relevant budgets are summarised graphically in Appendix 1.

Employee Budgets

3.3 Overall spending on employee budgets is projected to be £2.7m (0.9%) lower than budgeted, based on projections at the end of the third quarter. This allows for the carry forward of appropriate underspendings to 2008/09. An overspending of £0.3m had been projected at the end of the second quarter. Average full-time equivalent (fte) numbers (excluding schools and business units) for the first three quarters average 8,936 FTEs, 0.1% lower than at the end of the second quarter. Appendix 2 summarises the changes in overall employee numbers since April 2006 and the variations at departmental level between actual and budgeted staff numbers, and between employee budgets and projected spending on employees in 2007/08.

Savings plans

3.4 The 2007/08 budget included service savings proposals of £18.9m. Savings of £17.3m (91.6%) are now expected to be achieved in relation to the specific proposals included in the budget requiring alternative savings of £1.6m to be made to balance the overall budget.

Financial Health Indicators

3.5 A set of Financial Health indicators were incorporated within the Medium Term Financial Strategy approved by the Cabinet in May. These are designed to provide an early warning of when action may be required to protect the County Council's financial health. Appendix 3 contains a summary of the targets for 2007/08 and either the latest full-year projections or data for the first three quarters.

3.6 Projections based upon the revised budget for 2007/08 and the review of the current capital programme indicate that the variances associated with budget and capital programme management will be within the target range in the Medium Term Financial Strategy. The level of the capital financing requirement and anticipated borrowing levels in 2007/08 are also likely to be contained within the levels set when the prudential indicators for 2007/08 were approved.

3.7 The income collection indicators are designed to focus on the profile of outstanding debt and the actual profile at 31 December, as at 30 September, is outside the profile incorporated in the Medium Term Financial Strategy. However as in the previous quarter this is primarily because of a further reduction in the overall level of outstanding debt, rather than because of a significant increase in the absolute level of long term debt. The total value of debt outstanding for more than twelve months has increased only marginally from £4.3m to £4.5m. However this includes the value of debt relating to contributions towards care costs which are secured on the client's property and which the County Council is therefore not currently seeking to collect. For the purposes of future monitoring of income collection trends, it is proposed to separately identify and exclude secured debt from the calculation of the indicators.

4 Impact assessment

4.1 The proposals in this report are the result of budget monitoring carried out in accordance with the County Council's financial management policy. This policy applies equally to all services and ensures consistent financial management decisions across all services.

Section 100 D - :Local Government Act 1972 - background documents

The following documents discuss facts or matters on which this report, or an important part of it, is based and have 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.

None.

Financial Health Indicators