Agenda item

With reference to article 14 of the minute of its previous meeting, the Committee had before it a report by the City Chamberlain which detailed the projected outturn and current financial position for the Council for the financial year 2009/10, and advised on the areas of risk and management action that had been highlighted by the Directors.

Appendix A to the report provided a summary on the overall Council projected position, which showed a favourable net position, before exceptional items of £5.535 million against the budget.  This was a favourable movement of £3.090 million on the position last reported.

The report highlighted that the detail behind the favourable movement revealed improving financial projections across all Services, with savings being achieved from a range of budget headings and income generation also benefiting the position.  The cost pressures resulting from the operational budgets was now estimated to be approximately £1.9 million, representing a variance from budget of 0.5%.

The report reminded members that at the aforementioned meeting it had been highlighted that work associated with the winter conditions had been calculated as an additional cost of approximately £0.5 million, and that further provision of £0.5 million had been built into the projects to take account of unknown but anticipated and potential road and winter maintenance costs.  The report continued that since this, the actual spend had increased to approximately £0.8 million, and advised that if for any reason the expenditure had to increase beyond £1 million, then the Council contingencies would be able to absorb the costs, without affecting the overall projected outturn position.

The report advised that despite the improving position, overall, the pressure on the operational budget remained clearly visible, with underlying costs in Social Care, and reductions in income streams relating to planning and building application fees and sports centre activities.  The Service forecast outturns reflected these pressures in the current economic climate.  The report highlighted that short term and one off cost reductions could not address the underlying trends and provide sustainable solutions for the future.

The report further advised that the projected outturn figures reflected progress on achieving approved budget savings of £27 million, which were incorporated into the budget.

The report continued that it had been assumed that the corporate contingencies set aside in the budget would be fully utilised in the year, but the possibility remained that the contingencies would not be required, and therefore the potential for further improvement to the projected outturn figures remained.  This figure could amount to more than £2 million.

The report further advised that an exceptional favourable item to the value of £5.997 million had arisen as a result of the repayment of VAT on claims assessed by Her Majesty’s Revenue and Customs (HMRC) resulting from recent case law covering the areas of culture and leisure activities.  The overall financial position allowed the allocation of this sum to be put towards the general fund reserves and balances, and in doing so, it was projected to increase uncommitted balances as of 31 March, 2010 to £20.316 million, representing 4.6% of the net 2009/10 revenue budget.  The report further reminded members that a further sum of £7.6 million had already been earmarked in order to support the cost of exit costs for staff leaving.  After taking account of this and the consent to borrow facility available in 2009/10, this would mean the Council had projected uncommitted balances at the year end of £16.316 million (3.7% of the net 2009/10 revenue budget).

As a direct result of the overall impact of the favourable projections, the general fund balance would benefit to the value of £11.532 million prior to the ear marking of sums.

The report then detailed the management actions being taken across and within Services currently to address the unfavourable operational budget positions, and outlined these as follows:-

(a)       vacancy management - the filling of all vacant posts was being scrutinised and authorised by the Corporate Management Team;

(b)       overtime was being reviewed and limited;

(c)        the use of agency staff was being reviewed;

(d)       discretionary expenditure on supplies and services was being minimised;

(e)       spend controls across all purchasing decisions were being tightened;

(f)         the Director for Social Care and Wellbeing would authorise and agree with the Head of Service any admissions for older people, those with a learning disability and children;

(g)       there would be no further increase in care packages this financial year;

(h)        there would be no recommendations for external placements of children  and firm gate keeping arrangements maintained;

(i)         travel outside the city would be approved on an exceptional basis only;

(j)         2010/11 budget savings proposals would be brought forward to 2009/10 wherever possible; and

(k)        the Head of Procurement would identify further opportunities for procurement savings that could be realised in the current year.

With reference to the Council’s application to the Scottish Government, seeking consent to borrow for one off equal pay costs, the report advised that the Scottish Government had not provided any new consent to borrow, based upon the application submitted in November, 2009.  However, recognising the significant value of payments that the Council may face for settling outstanding equal pay claims, it had allowed an extension to the current consent that the Council had in place, and has done so by removing the limitations that had previously been placed upon the consent.  The consent to borrow would now run until 31 March, 2011.  The report explained that whilst this did provide a positive outcome for the Council, it was not on the scale that had been hoped for.  In the application made in 2008/09 the Council specifically highlighted certain groups of staff for which there was and had been equal pay liabilities settled.  This resulted in a restriction being placed on the amount that could be borrowed.  As a result of this latest development those restrictions in 2009/10 and going forward into 2010/11 had been removed and where the Council has settled a one off equal pay claim then this could count towards the value that could be borrowed.  The impact of this was that there was an increase in the value that could be borrowed by approximately £2 million and this in turn could be applied against costs incurred in the current year as well as in 2010/11.

The report concluded by summarising the net revenue position of the Council.

The Committee resolved:-

(i)         to note the content of the report and the implications of the projected figures on the general fund balance; and

(ii)        to instruct Directors to continue to take cost reduction opportunities during the remainder of the year in order to move the estimated position back in line with the approved budget.