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Assessment of the impact on the Medium Term Financial Strategy

By Bernice Austin,2014-05-15 06:39
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Assessment of the impact on the Medium Term Financial Strategy

    Report of the Head of Finance

    and Revenue Services

    to

     Deputy Mayor and Portfolio Holder for Resources

    For a

    Delegated Decision

    on

     27 August 2009

REVENUE FINANCIAL AND MANAGEMENT REPORT FOR THE PERIOD

    01/04/2009 -30/06/2009

1. SUMMARY

1.1 This report shows the forecasted position for the 2009/2010 financial

    year for the Council‟s General Fund and Housing Revenue Account as

    at 30 June 2009; the significant variances from the budget are

    explained and the impact of these on the Council‟s Medium Term

    Financial Strategy and balances are assessed.

1.2 This report was included on the Forward Plan.

2. RECOMMENDATION

     That the report be noted and submitted to Council for information.

3. BACKGROUND

3.1 Summary Forecast Financial Position

3.1.1 Table 1 below summarises the variances expected at year end for each

    service, further explanations are provided below where there are

    significant variances between the forecasted outturn position and the

    budget.

    Service Forecast

    Variance

    For 31 March

    2010

    (?000)

    Corporate Management 17 favourable Customer Services and Partnerships 498 adverse Financial Services 155 favourable Housing and Property Services 17 adverse Legal and Member Services 47 adverse Operational Services 2 adverse Planning and Community Safety 90 adverse Policy Performance and Research 7 favourable

    TOTAL GENERAL FUND 475 adverse

    HOUSING REVENUE ACCOUNT 55 favourable

3.2 Corporate Management

    3.2.1 Senior Corporate Management ?17,000 favourable

    Corporate Director vacancy between May and August 2009, this post

    has been filled and the candidate is due to start in the middle of August

    2009. This underspend has been earmarked to be used for the Head of

    Planning when this posted is filled.

3.3 Customer Services and Partnerships

3.3.1 Business Technology Network ?18,000 favourable

    Small Business development officer vacancy ?14,000 this is from May

    2009 to March 2010, this job has not been advertised. There is also a

    ?4,000 underspend due to a staff transfer to the Civic Centre from the I

    Centre, this budget is no longer required as there is no accommodation

    charge from the I Centre, therefore freeing up accommodation to let at

    the I Centre.

3.3.2 Economic Development Miscellaneous ?14,000 favourable

    ?14,000 budget saving in 2009/2010 as this is no longer required.

3.3.3 Management Town Centre Unit ?16,000 adverse

    ?15,000 overspend on agency staff to cover staff vacancies due to long

    term sickness to June 2009. At this point is it not clear how long agency

    staff will be used and therefore there is a potential for this overspend to

    increase. Staff salaries are still to be fully incurred and will not

    compensate the overspend on agency staff.

    3.3.4 Car Park Operations ?500,000 adverse

    Based on the current trend estimates and taking into consideration the

    current concessions it is estimated that car parking income will be

    down by ?500,000 by the end of the financial year. This is being

    monitored, at this time it is a ?500,000 overspend, however this will be

    closely monitored.

3.4 Financial Services

    3.4.1 Accountancy Service ?33,000 favourable

    Two Group accountant vacancies between April August 2009 and

    one account assistant post between June August 2009. These posts

    are to be filled and form part of the Financial Services restructure that

    is currently taking place.

    3.4.2 Business Support Unit ?18,000 favourable

    Vacancies between April June 2009. These posts are to be filled and

    form part of the Financial Services restructure that is currently taking

    place.

    3.4.3 Benefits Administration ?113,000 favourable

    Additional DWP grant to be received by the end of the financial year of

    ?133,000, offset against ?19,000 for overtime due to additional

    workload in benefits which is to be financed from the additional DWP

    benefit administration grant.

3.5 Housing and Property Services (General Fund Housing)

    3.5.1 Housing Renewal ?53,000 favourable

    Although the restructure, when fully implemented, will increase staff

    costs slightly in Housing Renewal there were a number of vacant posts

    within the section. These posts remain within the new structure but, as

    yet, remain unfilled. This corresponds favourably with the required

    savings from General Fund Housing of ?50,000

    3.5.2 Design Services ?37,000 adverse

    Vacancies within the section are being covered by more expensive

    agency labour. This forecast is for the full year effect but does include

    savings to date from the Climate Change Officer where the post has

    yet to be appointed to.

    3.5.3 Commercial Development ?21,000 adverse

    There is a shortfall in income compared with the budgeted figure. This

    section is one of the credit crunch items that is being constantly

    monitored.

    3.5.4 Warsop Town Hall ?11,000 adverse

    MDC is currently responsible for all outgoings for Warsop Town Hall

    until a new tenant can be found (previously Notts. County Council).

    Discussions are currently underway with a potential tenant, although

    the matter appears unlikely to be resolved quickly and hence the

    overspend is likely to grow above that currently forecast.

3.6 Legal and Member Services

    3.6.1 Land Charges ?65,000 adverse

    There has been a reduction in the number of searches due to the

    downturn in the housing market. In addition there is currently a legal

    challenge being investigated by the Information Commissioners Office

    as to whether certain information should be available under the

    Environmental Information request. If the legal challenge is found in

    favour of, then the Council will no longer be able to charge for land

    searches. The Council will continue to charge for searches until the

    definite ruling is made under the Environmental Information. If the legal

    challenge is successful this overspend couldbe greater.

3.7 Planning and Community Safety

    3.7.1 Building Control ?16,000 favourable

    This underspend is due to increased income from additional Building

    Control work. Unfortunately this only partially offsets the reduction in

    Development Control Income.

3.7.2 Development Control ?85,000 adverse

    This overspend is due to reduced income. Unfortunately this is only

    partially offset by the increase in Building Control Work.

3.8 Policy, Performance and Research

    3.8.1 I&CT Development ?16,000 favourable

    Inclusion of the Development manager vacancy between April and

    June 2009, this post has been advertised and is to be filled shortly. ICT

    are currently undertaking a restructure and this post forms part of this.

3.9 Housing Revenue Account (HRA)

3.9.1 Care/Elderly Mansfield Woodhouse ?16,000 favourable

    Savings continue to be made in how cleaners operate which have

    regularly contributed to our annual efficiency savings. The forecast also

    includes additional income against budget from water charges.

3.9.2 Housing-Choice Based ?93,000 favourable

    The Housing restructure created savings within the Choice Based

    Lettings section. Savings have been increased by vacancies which

    have only partially been offset by agency staff. The forecast also

    includes an additional ?44,000 of income from Ashfield District Council

    as their contribution to the Sub-Regional approach to Choice Based

    Lettings.

    3.9.3 Housing Strategy ?50,000 favourable

    Although the restructure, when fully implemented, will increase staff

    costs slightly in Housing Strategy there were a number of vacant posts

    within the section. These posts remain within the new structure but, as

    yet, remain unfilled. Included within the forecast is income of ?25k for

    Sub-Regional Strategy Officer.

    3.9.4 Housing Debt Recovery ?28,000 favourable

    Under the old structure, and hence budget, there was a member of

    staff dedicated to debt recovery work. This role has now been

    combined with the work from Right to Buy Sales, which is less onerous

    due to greatly reduced activity. This has resulted in savings within

    Debt Recovery.

    3.9.5 Wardens-Central Control ?17,000 adverse

    Agency cover for long term sickness. The post in question is vitally

    important as it reports on performance against Supporting People

    objectives and targets and thereby generates Supporting People

    income. As part of the restructure, an alternative short term solution

    has been proposed that will not involve agency labour.

    3.10 Impact on General Fund and Housing Revenue Account Balances

    General Fund Balances:

     ?000 Balance as at 01/04/2009 8,338 Forecast General Fund Surplus / (Deficit) 2009/2010 -475 Less Commitments : Shared Services -200 LEGI -130 Equal Pay -50 Management Development -100 CEDLO Equipment Renewal -40 Energy / Fuel contingency and consumption reduction -630 measures

    Revenues and Benefits Software -97 Area Based Grant (ABG) committed but not spent -952 Carry forwards approved -752 Local Authority Business Growth Initiative (LABGI) Grant -769 Balances committed towards funding the shortfall in -200

    investment income (2009/2010 to 2010/2011

    Leisure transfer option appraisal -23

    Feasibility -77

    Forecast Balance as at 31/03/2010 3,843

3.11.1 The forecast balance of General Fund Reserves is greater than the

    current level set in the Medium Term Financial Strategy of ?3million.

Housing Revenue Account balances:

     ?000

    Balance as at 01/04/2009 2,699

    Forecast HRA Surplus 2008/2009 55

    Less Commitments :

    Bellamy Road Redevelopment -190

    Forecast Balance as at 31/03/2009 2,564

3.11.2 The forecast balance for the Housing Revenue Account is higher than

    the level of ?1.75million as per the Medium Term Financial Strategy.

3.11.3 The Housing Department are currently looking to install digital aerials in

    Council Dwellings due to digital switchover in 2012; early estimates

    place the cost of this within the region of ?750,000, of which ?250,000

    will be met from budgets over a three year period (2008/2009 to

    2010/2011). If the Council decides to install digital aerials, the balance

    of ?500k will need to be met from general HRA balances, which

    therefore need to be at a level to meet this requirement.

3.12 Assessment of the Impact on the Medium Term Financial Strategy

3.12.1 There are a number of areas that are being monitored due to the

    current economic climate, which could impact on the Council‟s ability to

    keep its expenditure within the current approved budget for the

    2009/2010 and future financial years. These areas, along with the

    predicted variance against the budget, have been identified below:

3.13 Car Park Income

     Budget Forecast Variance

    2009/2Outturn (favourable) /

    010 2009/2advers

     010 e

    (?000) (?000) (?000)

    Car Park Income 2,066 1,566 500

    Jun-09

    May-09

    Apr-09

    Mar-09

    Feb-09

    Jan-09

    Dec-08 Nov-083.13.1 The following chart, which shows the levels of income received in Oct-08respect of car parking, indicates that there are large fluctuations in the Sep-08

    Aug-08amount collected month by month, with the overall trend declining over Jul-08time. The chart however, does not allow for changes in the pricing Jun-08structure over the different financial years. May-08 Apr-08

    Mar-08

    Feb-08Income received from Car Parks April 2006 to June 2009Jan-08250Dec-07

    Nov-07

    Oct-07200Sep-07

    Aug-07

    Jul-07

    Jun-07150May-07

    Apr-07

    Mar-07

    Feb-07100Jan-07

    Dec-06Income Received (?000)Nov-06

    Oct-0650Sep-06

    Aug-06

    Jul-06

    Jun-060May-06

    Apr-06Month

    (Sources Financial Services)

    3.13.2 The next chart shows car park usage between April 2006 to December

    2008 (usage figures between January 2009 and June 2009 are

    currently unavailable):

    Car Park Usage April 2006 to December 2008

    250

    200

    150

    Usage (000)

    100

    50

    0

    Apr-06May-06MonthJun-06 Jul-06Aug-06Sep-06Oct-06Nov-06Dec-06Jan-07Feb-07Mar-07Apr-07May-07Jun-07Jul-07Aug-07Sep-07Oct-07Nov-07Dec-07Jan-08Feb-08Mar-08Apr-08May-08Jun-08Jul-08Aug-08Sep-08Oct-08Nov-08Dec-08

(Sources Town Centre Operations)

3.13.3 In the last year car park usage has flattened out, although there was a

    peak over the Christmas period.

    Car Park Usage 2006/2007 to 2008/2009 2503.13.4 Comparing month on month, the chart below shows that usage of the

    Council‟s car parks is lower than the previous two financial years. 200

    150

    2006/20072007/20082008/2009100Usage (000)

    50

    0

    April

    MayMonth June(Sources Town Centre Operations)

    July

     August

    3.14 Markets Income September

    October Budget Forecast Variance

    2009/2Outturn (favourable) / November

    010 2009/2adversDecember 010 e

    January(?000) (?000) (?000)

     February

    Market Income 291 287 4 March

3.14.1 The following chart reveals that whilst there is a slow decline in the

    level of income generated through market rental (as per the trend line),

    the level of fluctuation from month to month has been minimising,

    although February 2009 reveals an exception to this.

Jun-09

    May-09

    Apr-09

    Mar-09

    Feb-09

    Jan-09

    Dec-08

    Nov-08

    Oct-08

    Sep-08

    Aug-08

    Jul-08

    Jun-08

    May-08

    Apr-08

    Mar-08

    Feb-08Income from Markets April 2006 to June 2009Jan-0840Dec-07

    Nov-0735Oct-07

    Sep-0730Aug-07

    Jul-07

    Jun-0725May-07

    Apr-0720Mar-07

    Feb-0715Jan-07

    Dec-06Income Received (?000)Nov-0610Oct-06

    Sep-065Aug-06

    Jul-06

    Jun-060May-06

    Apr-06Month

    (Sources Financial Services)

3.14.2 Market towns across England have in the main seen a fall in the use of

    markets due to more supermarkets moving into town which offer

    everything a person needs under one roof.

3.14.3 There has also been the impact of the recent refurbishment of the

    market place, which reduced the amount of stalls available for rental.

    As such, Market Traders relocated, with not all of them returning once

    the refurbishment had been completed. This now appears to have

    stabilised.

3.14.5 There is nothing currently to suggest that the current economic climate

    is impacting on income levels for the Market, other than the factors

    mentioned above. The period between January and March however, is

    generally regarded as being the most difficult period for Market Traders.

3.15 Planning Applications Income

     Budget Forecast Variance

    2009/2Outturn (favourable) /

    010 2009/2advers

     010 e

    (?000) (?000) (?000)

Planning Application 425 344 81

    Income

3.15.1 The chart below shows income received by the Council for Planning

    Applications between the period April 2006 and June 2009.

     Planning Applications April 2006 to June 2009120

    100

    80

    60Income Received (?000)Number of Applications

    40

    20

    Income Received (?000) and Number of Applications

    0

    Apr-06

    MonthJun-06 Aug-06(Sources Planning) Oct-06 Dec-06

    Feb-073.15.2 The above chart shows that the number of applications received has

    Apr-07steadily declined over the three year period, although there have been Jun-07monthly fluctuations. This trend has continued into 2009/2010. Aug-07 Oct-073.15.3 The following chart reveals that there is some correlation in respect of Dec-07the number of applications received throughout the year when Feb-08comparing the number of application in the same month. Apr-08

    Jun-08

    Aug-08

    Oct-08Planning Applications 2006/07 to 2009/10Dec-08120Feb-09

    Apr-09100Jun-0980

    2006/07602007/082008/092009/10

    40Number of Applications

    20

    0

    APRIL

    MAYMonth

     JUNE

    JULY

    AUGUST

    SEPTEMBER

    OCTOBER

    NOVEMBER

    DECEMBER

    JANUARY

    FEBRUARY

    MARCH

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