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Decision details
Provisional Revenue and Capital Outturn 2011 12
Decision Maker: Cabinet.
Decision status: Recommendations Approved
Is Key decision?: No
Is subject to call in?: Yes
Purpose:
To consider the report of the Head of Finance and Customer Services summarising the provisional revenue and capital outturn figures for 2011/12 and provides some initial consideration of the impact of these figures on future financial planning.
Decision:
1.
That the provisional outturn figures for revenue and
capital for 2011/12 be noted.
2.
That the provisional funding of capital expenditure
in 2011/12 as set out in paragraph 1.6.3 of the report of the Head
of Finance and Customer Services and the resulting carry forward of
revenue resources, set aside to finance the capital programme in
future years, of £2.304m as set out in paragraph 1.6.5 of the
report of the Head of Finance and Customer Services, be
agreed.
3.
That the carry forward of grant funding as detailed
in paragraph 1.5.8 of the report of the Head of Finance and
Customer Services be noted.
4.
That the revenue carry forward requests as detailed
in Appendix B of the report of the Head of Finance and Customer
Services from 2011/12 into 2012/13 be approved.
5. That the impact on the balance sheet of the provisional outturn 2011/12 be noted.
6. Agree to consider proposals for the use of the resulting net under spend at its meeting in July 2012.
Reasons for the decision:
The purpose of the report of the Head of Finance and Customer Service is to facilitate good financial management. It gave Cabinet provisional figures for revenue and capital outturn to allow early consideration of any issues resulting from them, not only in the current financial year but in terms of any impact on the Medium Term Financial Strategy for 2013 onwards.
In 2011
the Council implemented a series of changes to the medium term
financial strategy and a four year plan to deliver savings that
would meet the Government reductions in funding whilst delivering
the outcomes required by the strategic plan. The Council has
successfully delivered these changes for 2011/12 and this
provisional report sets out the positive effect on the financial
resources under the control of the Council.
If the provisional outturn detailed in the report of the Head of Finance and Customer Service is further amended then final expenditure figures for revenue and capital will be reported to the June 2012 Cabinet meeting. At the same time financial planning and strategy reports for 2013/14 will be considered.
Impact on Future Financial Planning
The Council has ended 2011/12 with a net positive variance on the revenue account of £1.113m. This shows a high level of preparation for the future financial pressures the Council is expecting to face. A small number of service areas have significant adverse variances that will require additional monitoring in 2012/13. In summary the £1.113m surplus is a result of the following proposals set out in detail below:
|
£000 |
Variance on net service spending (as per Appendix A of the report of the Head of Finance and Customer Services) |
4,653 |
Less: |
|
Revenue set aside to finance capital expenditure |
-2,304 |
Grants required to be carried forward |
-550 |
Carry Forward request set out in Appendix B of the report of the Head of Finance and Customer Services |
-687 |
Variance against budget requirement |
1,113 |
The Capital Programme remains significantly on target and is fully funded.
By the end of 2012/13 general balances are expected to be £2.096m above the working minimum set by Cabinet in February 2012. In addition resources of £0.514m exist for invest-to-save proposals and £0.798m remains of the VAT reimbursement arising from the “Fleming” claims made by the Council.
The rate of collection of Council Tax and Non-Domestic Rates is at an acceptable level and an adequate provision exists to cover bad debt.
Considered together, these factors enable the Council to begin 2012/13 on a financially sound basis with the ability to consider options for the most appropriate use of the increased level of balances.
Revenue
Attached at Appendix A to the report of the Head of Finance and
Customer Services is a summary of the provisional revenue outturn
for 2011/12 compared to the revised estimate approved by Cabinet
and Council in February 2012. Also
shown is the amended revised estimate, taking into account any
changes in capital financing costs necessitated by changes in
actual capital expenditure. This is
provided to ensure a more accurate comparison with the outturn
position, as it eliminates fluctuations in capital spend. Appendix A to the
report of the Head of Finance and Customer Services shows a net
unadjusted under spend of £4.653m.
Appendix A to the report of the Head of Finance and Customer
Services also summarises the variance by portfolio and the major
reasons for the variances are detailed in the following
paragraphs.
The
Leader’s portfolio shows an under spend of
£0.877m. This is the result of
the issues detailed below:
a)
Contingency budgets exist for extra cost pressures
and new legislation, totalling £0.16m and concessionary fares
of £0.2m. The concessionary fares
contingency is a budget strategy saving in 2012/13. These resources were not required in
2011/12.
b)
The Leader’s portfolio holds the budget
strategy savings that have been achieved in advance of
requirement. These are budget strategy
savings for 2012/13 and total £0.35m.
c)
A carry forward relating to Housing & Planning
Delivery Grant of £0.137m is detailed below.
The
Community & Leisure Services portfolio is reporting a minor
over spend of £0.061m. The major
individual variances are as follows:-
a)
Homelessness temporary accommodation has overspent
by £0.17m due to a significant increase in
demand. A small growth item has been
included in the budget for 2012/13.
This service will be carefully monitored in 2012/13 and may require
further action in year.
b) A number of minor carry forward requests totalling £0.09m are detailed below.
The
Corporate Services portfolio is reporting a significant under spend
of £2.684m. This includes the
under spend of £2.304m relating to future revenue funding of
the Capital Programme. This matter is dealt with in more detail in
the Capital section below but is the result of the revenue
resources set aside over recent years to finance future years of
the Capital Programme. This resource must be carried forward for
this purpose to ensure the Capital Programme remains fully
funded. The balance of the under spend
on this portfolio is £0.38m, the
major variances include the following issues:
a)
Rent allowances are reporting an under spend of
£0.051m which is mainly due to variations in the level of
claimants transactions along with the resulting grant from the DWP
being more than predicted.
b)
Interest and investment income is reporting an
excess of income over budget of £0.063m due to the Council
achieving a better than estimated average rate of
interest.
c)
Park Wood Equilibrium Unit rents were under
recovered, as previously reported to Cabinet, by £0.1m due to
under occupancy.
d)
Council Tax administration and Council Tax benefit
costs were both under spent. The under spend on both activities
totalled £0.154m. Benefit
activity in this service area has varied in a similar way to Rent
Allowances detailed above. The collection service has benefited
from effective use of court procedures and the resulting higher
levels of legal costs awarded.
e)
This portfolio holds the budgets for the majority of
central service support sections and in total an under spend in
excess of £0.201m is reported. As
these service areas are subject to future budget strategy savings a
number of vacancies have been held long term even though, at this
stage, revisions to the structure are not approved. Examples include the IT Section, Finance Section,
Overview & Scrutiny and Corporate Support Section. All of these sections have not used permanent
recruitment to fill vacancies as this would not be in the best
interests of the Council.
The
Economic Development and Transport portfolio has an under spend of
£0.598m which includes two major carry forward requests dealt
with below. One for Development
Management Enforcement totalling £0.181m and one for
£0.225m from Business Development relating to the balance of
the Growth Point Revenue Grant. These
service areas have under spent by sums greater than the carry
forward requests. In addition the
portfolio contains the following major variances:
a)
Park and Ride is reporting an over spend of
£0.081m. The situation regarding
this service has previously been reported to Cabinet. The service manager along with the Cabinet Member,
are actively pursuing a long term solution at this time.
b) Development Management, including appeals but not enforcement, is reporting a total under spend of £0.125m due to vacancy levels and reduced use of professional services budgets. The services underwent a recent Peer Review, the results of this review are being considered for action and it is expected that the Cabinet Member will consider this resource, activity levels and the effect on service delivery early in this financial year.
c)
The Land Charges trading account has made a surplus
of £0.095m. This variance is
partly due to a government grant that was received to support
changes to the service. As this is a
trading account and the surplus may be required in future years,
this sum will be ring-fenced within balances as is the usual
practice of the Council.
The
Environment portfolio is reporting a net under spend of £0.705m.
Of this sum £0.381m is detailed elsewhere in this report as
carry forward requests or ongoing grants. In addition, the outturn figures for the on-street
parking agency agreement with KCC have returned a surplus in excess
of the agency agreement. The agreement
allows for a maximum surplus that is index linked and currently
stands at £0.074m. The surplus achieved is
£0.192m. The Parking Services
Manager has requested the carry forward of £0.117m of this
surplus and this is detailed below. The
use of the excess surplus is subject to confirmation from KCC and
this permission is also being sought by officers at this
time. A number of lesser positive
variances, combined, produce the remaining under spend.
The
Council makes best use of funding available from other agencies
through grants and contributions. Often these grants are given for
a specific activity. In some cases this activity is carried out
over a number of years or may be received in one financial year and
used in a future financial year. In such cases the budget to be
utilised must be carried forward to maintain the link between the
grant and the expenditure for which it is used. Grants of this type, within the 2011/12 budget,
that have not been utilised in year total £0.551m and are
detailed below. In all cases these grants are for committed schemes
that had been identified and agreed as part of the 2011/12
budget.
Service |
Balance of Grant £ |
Description |
Waste & Recycling |
97,850 |
Balance of WRAP grant for weekly food waste introduction |
Planning |
136,664 |
Balance of Housing & Planning Delivery Grant |
Economic Development |
224,640 |
Balance of Growth Point Revenue Grant |
Olympics |
10,000 |
Grant from KCC |
Park Wood |
19,310 |
External funding for Park Wood environmental improvements |
Sports |
4,000 |
KCC disability sports funding |
Air Quality |
48,000 |
DEFRA grant |
Food Hygiene |
6,560 |
Rating scheme grant from Food Standards Agency |
Environmental Enforcement |
2,950 |
KFRS and Clean Kent grant for school litter initiative |
Museum |
2,000 |
Funding for Iron Age collection |
|
550,974 |
|
Attached at Appendix B to the report of the Head of Finance and
Customer Services is a schedule of provisional carry forward
requests, into 2012/13, totalling £0.678m. In previous years, requests relating to
contractual commitments have been considered before other
requests. On this occasion no requests
have been received that relate to contractual commitments and all
requests detailed are for schemes to which the Council is not yet
committed. It was recommended that Cabinet consider the requests in
Appendix B to the report of the Head of Finance and Customer
Services and give approval as required
As Cabinet agreed all of the carry forwards proposed, the net under spend to be transferred to general balances is £1.113m. The result is set out under balances below.
It is
appropriate, as part of the development of the medium term
financial strategy for 2013/14 onwards, that Cabinet consider
options for the use of this resource in furthering the required
outcomes of the strategic plan. It was recommended that Cabinet
receive a report, from Corporate Leadership Team, to its July 2012
meeting on options to utilise this under spend.
Capital
Attached at Appendix C to the report of the Head of Finance and
Customer Services is a summary of capital spend against the revised
estimate. Further slippage of
£0.163m has been identified since the programme was agreed by
Council in February 2012. This figure is the net effect of slippage
to and from 2012/13 as funding for Mote Park Regeneration in
2012/13 will need to be used in 2011/12.
The over spend on the Software Upgrade programme is funded from specific grant. The Revenues and Benefits Partnership software is funded from the set up costs budget agreed by Cabinet when the partnership was initially approved. The schemes asterisked in Appendix C to the report of the Head of Finance and Customer Services are funded from s106 developer contributions.
Cabinet
were reminded of the arrangements surrounding the schemes for the
Hazlitt Theatre and the Museum East Wing. In both cases an arrangement exists to repay
resources into balances over a set period following completion of
the work.
The expenditure outlined in Appendix C to the report of the Head of Finance and Customer Services can be funded mainly from capital resources. Proposed funding is summarised in the following table:
Resources |
£000 |
|
|
Capital Receipts |
2,500 |
Capital Grants (incl. s106) |
2,592 |
Revenue |
2,489 |
TOTAL |
7,581 |
This funding proposal is developed on the basis of using the most flexible resources last. This means that grants and capital receipts have been utilised in preference to revenue support. The consequence of this decision is detailed below and recommended the carry forward of revenue resources set aside to finance capital expenditure. It was recommended that Cabinet consider and approve this provisional financing of the capital programme.
In line
with this policy, of using capital resources first, some of the
resources identified from revenue budgets to finance capital
expenditure will not be required until 2012/13 or later years. This
creates a revenue variance of £2.304m which is essential to
the financing of the future capital programme. This variance is reported under the Cabinet Member
for Corporate Services’ Portfolio above. It was recommended that this money is carried
forward for this use in 2012/13, in order for the capital programme
to remain affordable.
Balance
Sheet
The
provisional outturn figures have an impact on various elements of
the Balance Sheet and these are summarised as follows.
Asset
Sales
The
revised estimate assumed asset sales for 2011/12 of
£0.713m. The provisional outturn
figures show cash backed Capital Receipts, net of costs of
£1.115m. This is £0.402m
greater than estimated, due to additional receipts from
Golding Homes Right-to-Buy sales and the
disposal of land at Church Street. Not
all available receipts have been utilised in the financing of the
capital programme, these receipts will be required to finance
future years’ expenditure.
Collection Fund
The outturn collection rates for Council
Tax and Non-Domestic Rates were close to target at the end of the
financial year. This is a considerable
achievement given the economic circumstances and the fact that the
service was in its first year as a shared service in 2011/12. At
this time it is predicted that there will be a small surplus on the
collection fund at the year end. This
surplus will be formally shared between preceptors during
2013/14. For this Council it is
expected to be less than £0.02m.
The collection rates, compared to target, are as follows:
Collection Rates |
Target % |
Actual % |
NNDR |
97.0 |
97.4 |
Council Tax |
98.7 |
98.3 |
Investments
The
Treasury Management Strategy 2012/13 agreed by Council in February
2012 anticipated year end investments of approximately
£17m. The actual investment at 31
March 2012 totalled £13.6m. The
provisional assessment of the reduction shows the following over
estimates of likely resources:-
Reason |
£000 |
Collection Fund |
1,000 |
Council Tax Benefit Grant |
1,200 |
Other Income |
1,200 |
|
3,400 |
The overall changes to the level of
investments will have no impact on the Strategy itself and only a
short term impact on the revenue account during the course of
2012/13 of no more than £0.002m. Daily monitoring of
cash-flow has confirmed that the Prudential Indicators that Council
set for 2011/12 have been complied with.
Fixed
Assets
The
capital investment achieved in 2011/12 resulted in investment in
the Council’s property portfolio of £3.435m out of a
total spend of £7.581m. The
balance of the spend is in areas such as support for social
housing, renovation grants, etc which do not contribute to the
Authority’s asset base and have been written off, through the
revenue account, as revenue expenditure funded from capital under
statute.
Useable
capital receipts
As a
result of the level of capital investment and the level of capital
receipts received in 2011/12, the level of useable capital receipts
at 31st March 2012 is £0.057m. It was noted that the disposals of Hayle Place and 13 Tonbridge Road in April 2012
have subsequently added a further £2.8m to useable capital
receipts.
Balances
Balances are set out in Appendix D to the report of the Head of Finance and Customer Services. The overall level of balances at 31st March 2012 will be £10.146m, compared to £9.933m at 31st March 2011. However, after allowing for the commitment to carry forwards and the planned use in 2012/13, the provisional level of uncommitted balances is £4.396m. The estimate for 2012/13 as approved at Council in February 2012 reported an expected balance of £3.241m.
There
is therefore an increase in balances of £1.155m over the
revised estimate. This means balances will be above the minimum
level of working balances by £2.096m along with other
resources, provisionally allocated but not committed, of
£1.312m.
Alternative options considered:
The reporting of revenue outturn could wait until Cabinet in June 2012 when final figures are available in the Statement of Accounts prior to external audit. Providing provisional outturn to Cabinet at this time facilitates good financial management and aids consideration of issues within the current financial year and helps inform future budget strategy.
Wards Affected: (All Wards);
Details of the Committee: Budget Monitoring report 2011/12 Cabinet quarterly monitoring report 2011/12 Agresso General Ledger system reports
Contact: Email: paulriley@maidstone.gov.uk.
Report author: Paul Riley
Publication date: 18/05/2012
Date of decision: 16/05/2012
Decided: 16/05/2012 - Cabinet.
Effective from: 26/05/2012
Accompanying Documents:
- Cabinet, Council or Committee Report for Provisional Revenue and Capital Outturn 2011 12
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- Enc. 1 for Cabinet, Council or Committee Report for Provisional Revenue and Capital Outturn 2011 12
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- Enc. 2 for Cabinet, Council or Committee Report for Provisional Revenue and Capital Outturn 2011 12
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