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These incorporate summary financial statements which continue to be prepared on a full While temporary investment rates are low the treasury function will delay taking any treasury management and Public Sector Payments Policy.



    of the


    to the


    th MARCH 2010 24


1. Introduction

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

    approved budget.

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.

Steve Thompson

    Chief Financial Officer th4 March 2010


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