CHIEF FINANCIAL OFFICER
th MARCH 2010 24
FINANCIAL PERFORMANCE MONITORING AS AT MONTH 10 2009/10
1.1 This report is the standard monthly financial performance monitoring report, which sets
out the summary revenue budget position for the Council and its individual directorates
for the first 10 months of 2009/10, ie. the period April – January 2010, together with an
outlook for the remainder of the year. The report is complemented with an assessment
of progress to date against the Council’s latest capital programme.
2. Directorates’ Budget Performance
2.1 Separate reports have been prepared for each of the Council’s core areas of
? Appendix 3a – Corporate Leadership Team
? Appendix 3b – Policy & Communications
? Appendix 3c – Business Services Directorate
? Appendix 3d – Area Panel & Ward Budgets
? Appendix 3e – Tourism & Regeneration Directorate
? Appendix 3f – Children & Young People’s Directorate
? Appendix 3g – Culture & Communities Directorate
? Appendix 3h – Adult Social Care & Housing Directorate
? Appendix 3i – Budgets Outside the Cash Limit
These incorporate summary financial statements which continue to be prepared on a
full accruals basis and focus on the forecast revenue and capital outturns for 2009/10
with an accompanying narrative to explain any areas of significant variance from
budget and to highlight any areas of potential pressure along with action plans agreed
with service managers to address them. Also included from this year is a graph which
shows the monthly progress of cumulative net revenue expenditure against the
2.2 The combined effect of the directorates’ financial performances is aggregated in a
summary financial statement at appendix 1 which mirrors the Council’s Revenue
Budget Book. This summary allows proactive month-on-month monitoring of the
Council’s forecast working balances to be undertaken to ensure appropriate and
prudent levels are maintained. Appendix 2 highlights over a 12-month rolling basis
those services which trip the designated overspending reporting threshold.
3. Progress in Achieving Efficiency Savings
3.1 The Department for Communities & Local Government (DCLG) now requires local
authorities to submit the value of efficiencies forecast on a half-yearly basis via the
National Indicator NI 179. The first submission was required by 17th October and has
been reported as being on target. The DCLG target for 2009/10 is ?6.1m. This differs
from the Council's reported revenue budget efficiency savings target of ?3.7m as the
DCLG target also includes efficiency savings on non-schools capital expenditure. A
summary of the performance as at month 10 is shown at the foot of appendix 1.
4 Forecast Working Balances
4.1 The impact of directorates’ revenue budget performance and progress in achieving
planned efficiency savings falls upon the Council’s working balances. The forecast
level as at 31/03/10 is ?5,598k. This compares with a notional level of ?7,523k which
makes the assumption that directorates live within their cash limited budgets or plan to
do so over a reasonable period. With some plans for recovery stretching beyond the
current financial year, the actual level of working balances at this year-end will
inevitably be less than ?7,523k.
4.2 The graph below demonstrates the cyclical nature of the Council’s working balances
and underlines the volatility of the financial pressures which it experiences. A key
financial target in its current medium-term financial strategy is a stable level of working
balances of ?5.75m in order to properly address levels of business risk.
Unallocated Revenue Reserves
Year ending 31st March
5. Capital Monitoring Performance
5.1 From 2009/10 all live capital schemes have been included within each of the
respective service directorates' appendices. The purpose is to highlight the direct
relationship between revenue and capital spend besides the accountabilities for the
directorates. The schemes are shown individually where total scheme budget is
greater than ?500k and grouped as "other schemes" otherwise. As in previous
financial years the emphasis regarding capital monitoring will be on scheme variance
rather than in-year progress since many schemes cross financial years, eg. the
Tramway construction. Therefore, some degree of flexibility for management of
slippage is necessary in order to balance the overall capital programme each year to
the funding allocations available.
5.2 The baseline capital programme increased from ?90.1m in 2008/09 to ?104.5m in
2009/10. However, with ?18m of slippage brought forward from last year and ?26.5m
of new schemes and rephasings such as the Tramway, the new Illuminations Depot
and MyPlace, the 2009/10 programme now stands at ?149.2m. It will be a challenge
for this all to be delivered in-year with ?70m having been spent in the first 10 months.
5.3 A potential variance of ?1.5m has been identified in respect of the Central Sea Wall
Construction capital scheme. This represents less than 1.4% of scheme budget and
work is underway to identify a solution to this problem and also funding streams that
may be required to meet this shortfall.
6. Summary Cash Flow Statement
6.1 As part of the new reporting format for this financial year a summary cash flow
statement is included at appendix 4. This provides a comparison of the actual cash
receipts and payments compared to forecast for 2009/10.
6.2 During the first 10 months of the year the council’s net cash outflow has resulted in a
reduction in temporary investments of ?17.4m compared with the forecast. While
temporary investment rates are low the treasury function will delay taking any new st July 2009 ?10m of long-term borrowing to fund planned capital expenditure. On 31
debt was repaid early to the Public Works Loan Board (PWLB) making savings in
interest payable. A further ?8m of long-term PWLB debt was repaid early during
November 2009 increasing the savings in interest payable during the year.
7. Summary Balance Sheet
7.1 In order to complete the picture of the Council’s financial performance, appendix 5
provides a snapshot of the General Fund balance sheet as at the end of month 10.
The key areas of focus are any significant movements in working capital, ie. Debtors,
Cash and Creditors, as these impact upon the Council’s performance in the critical
areas of debt recovery, treasury management and Public Sector Payments Policy.
7.2 Over the 10-month period there has been a decrease of ?17.4m in temporary
investments which is mainly due to the repayment of long term loans. There has been
a decrease in the bank overdraft of ?2.4m. This is partly due to the level of debtors
reducing by ?2.3m and creditors reducing by ?2.2m.
7.3 The capital reserves have increased by ?75.1m which has been partly offset by the
increase in fixed assets of ?69.7m relating to enhancements under the capital
programme. The capital reserves also include government grants received in advance.
8. Conclusions and Recommendations
8.1 Month 10 has seen little change in the overall revenue budget position compared with
month 9, although there are further pressures within Parking Services. Accountancy is
continuing to work closely with the main areas of pressure, i.e. Placements &
Resources, Parking Services and Adult Social Care to understand and resolve their
issues. Some non-recurrent carry over of the 2008/09 treasury management gains and
the windfall interest on some significant refunds from HRMC has mitigated these
pressures in-year, but a recurrent solution will be needed as the Council enters an
. In addition, the Central Sea Wall indefinite period of uncertainty for public finances
Construction capital scheme warrants particular attention in view of the potential
8.2 The Executive is asked to:
i) note the report; and
ii) authorise the officers to continue to investigate options for further reducing the
projected level of overspending on both revenue and capital and to report back
to the Executive.
Chief Financial Officer th4 March 2010