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					                         Executive Board
                        DATE: 17 September 2002


                     2001/2002 – Final Revenue Outturn


                      EXECUTIVE MEMBER : Bob Brady

           CORPORATE DIRECTOR : Kate Howie/Andy Snowden


PURPOSE OF REPORT

1    To present the final review of expenditure against the 2001/2002
     Revenue Budget and the level of balances as at 31 March 2002.

RECOMMENDATIONS

2.   That the contents of the Report are noted and considered by the Executive
     Board.

3.   That the Council agree to make the provision as set out in paragraph 17 of the
     report.

REASONS

4.   The recommendations are supported by the following reasons:-

     a) The financial position of the Council is monitored on a regular basis
        throughout the year; a detailed summary of which is reported for
        consideration by the executive on a quarterly basis as part of the Councils
        approach to proper financial management.

DECISION IMPLEMENTATION DEADLINE

5    This report was considered by Resources and Audit Scrutiny panel on the 4 Th
     September.
                                      2


BACKGROUND AND CONSULTATION

6.    The revenue budget for the year was set at £153,951,931.This included a
      contribution to spending of £1,097,000 from reserves and a budgeted
      efficiency savings target of £500,000 for the year.

7.    Provision was made for the £2m saving resulting from the partnership with
      HBS, which has been reflected in the spending priorities agreed by the
      Council.

8.    A rigorous approach to budgetary control was maintained throughout
      2001/2002. Where Services reported potential spending pressures action
      plans were put in place to contain spending, wherever possible, within
      budgeted levels.

Education

9.    An overall saving of (£160,000) has been achieved for Education.

10.   Planning and Information (£145,000). The main areas include a (£70,000)
      provision for repayment of a Nursery Grant to DfES that is no longer required
      and additional grants received for playgroups (£38,000). Savings were also
      due to a reduction in the take-up of Student Awards and Clothing Grants
      (£48,000), staff turnover within ICT Units (£33,000), and reduced costs on
      purchase of new Catering equipment (£33,000). These savings were offset by
      an income shortfall within the Education Music Service +£32,000, costs at the
      Education Development Centre +£28,000, and interest payments on School
      balances +£23,000.

11.   Inclusion (£30,000). Savings were generated by an increase in the
      number of pupils from other Councils placed in Middlesbrough special schools
      and units (£144,000). There have also been savings arising from delays in
      appointments and staff turnover in the Sensory Impaired Service (£43,000),
      Administrative Support (£22,000) and multi-disciplinary Teams (£20,000).
      These savings are offset by the cost of providing additional support to the
      Council’s own children with special needs and behavioural difficulties,
      +£101,000, and the Home to School transport service +£96,000.

12.   Strategic Management +£50,000. These costs have arisen as the result of
      employing consultants to assist with the OfSTED inspection, preparation of
      the Integrated Plan for Education and the review of the Fair Funding formula
      for delegation to schools.

13.   Trading Services (£38,000). The trading account for schools which includes
      school meals has recorded a surplus this year due to increased buy-back of
      services and savings in schools insurance premiums.

Environment

14.   An overall saving of (£364,000) has been achieved for the Environment
      Group.
                                       3


15.   Transport and Design (£301,000). The main reasons for the saving include
      the additional income generated by Building Design and Civil Engineering
      services as a result of an increase in capital and grant funded works and the
      input required from the technical services division (£187,000). Additional
      savings were generated within concessionery fares due to passenger
      numbers being lower than projected (£171,000). Savings have also occurred
      through the charging of road safety costs to capital and grant funded schemes
      (£66,000). These savings are offset by the need to increase the bad debt
      provision +£133,000 due to the increase in the outstanding debt over one year
      old.

16.   Public Protection and Planning (£63,000) Savings include additional
      income from licensing (£38,000), planning applications, (£21,000) and
      vacancies and other operational savings in both Trading Standards and the
      Advice Centre (£15,000).

17.   Street and Land Services (£30,000). Trading surpluses in year for the
      Environment Group totalled (£352,000) of which +£200,000 has been
      declared as a contribution towards the central trading surplus budget of
      £250,000. Significant surpluses were recorded for repairs and maintenance
      (£126,000), refuse collection and street cleaning (£111,000) both due to
      increased throughput within the contract which increased in the latter part of
      the year, transport (£42,000) and highways and sewers (£63,000). A provision
      of £100,000 has been set aside for meeting the costs of fridge disposals.

18.   There was also Unbudgeted expenditure of £17,000 for design consultancy
      costs relating to Greater Trinity Crescent and £13,000 residual costs
      associated with the final Hill Street sale proceeds

Housing Services

19.   An overall saving of (£131,000) was achieved for the Housing Service

20.   Housing General Fund (£97,000). Staff vacancies contributed to an overall
      saving (£45,000) within the Housing Need and Advice Team. Further savings
      (£24,000) have also resulted from the disposal of the Council’s three
      homeless hostels. Additional savings have been generated within bed and
      breakfast accommodation arising from reduced expenditure on home
      furnishing packs, removal costs and use of the Private Sector leasing
      arrangement with Endeavour Housing to minimise the use of other bed and
      breakfast accommodation (£18,000).

21.   Trading surpluses in the year for Housing totalled (£34,000). In addition
      trading surpluses recorded in 2000/01 for Housing Repairs (£103,000) and
      Housing Management (£28,000) will transfer to the General Fund's’ central
      trading surplus.

22.   The Housing Revenue Account is estimated to end with a balance of
      £252,000 for the year. Overspending has occurred for repairs and
      maintenance in relation to responsive repairs and repairs to void properties
      +£364,000 and for the cost of supervision and management +£442,000.
                                       4


      These costs have been offset by a reduction in debt charges less Housing
      Subsidy adjustments (£480,000) and improved performance in recovery of
      overpayments of rent rebates (£619,000).

Regeneration and Cultural Services

23.   The overall service has a net saving of (£31,000)

24.   Lifelong Learning & Leisure +£7,000. The main spending pressures within
      the service included the cost of running the Ormesby Sports Complex
      +£104,000, the Corporate Events budget +£31,000 where a number of
      activities did not break-even due to a lack of sponsorship, and additional
      spending pressures within the Open Spaces budget +£34,000. Additional
      spending pressures occurred within the Youth and Community Development
      service due to a loss of income on the Stainsacre budget affected by the Foot
      and Mouth crisis +£33,000. There were shortfalls of income within the
      Museum Service, including the Captain Cook Birthplace Museum of
      +£26,000. Action was taken by the service to contain the spending pressures,
      appointments to several posts were delayed and vacancies held to generate
      savings across the Service Group including Early Years (£11,000), Landscape
      and Countryside Services (£57,000), Libraries and Information
      (£24,000) and the post of Development Manager Cultural Services (£27,000).
      There were also efficiencies achieved in the Leisure Management Contract
      through a reduced call on Centre cover and overtime for receptionist services
      provided through HBS (£52,000) and a lower than expected take-up of
      placements for early year provision in the private, voluntary and independent
      sectors (£57,000).

25.   Neighbourhood Renewal Services (£38,000). The Service produced savings
      from delaying the recruitment to several posts.

Social Services

26    The Service recorded an overall overspend of + £1,399,000 for the year.

27    The budgetary pressures faced by the Service are part of a structural and
      demand led problem affecting Social Services nationally. Management actions
      to address overspending were successful in preventing the overspend
      escalating in the final quarter of the year. Many of the pressures were
      addressed as part of the 2002-2003 budget settlement and continue to be
      examined within the Council’s medium term financial planning process.

28    Children & Families +£1,258,000. The main pressure for Children and
      Families in 2001/2002 was the cost of children in residential and fostering
      placements during the year. Services for Children Looked After exceeded the
      budget by +£1,200,000, reflecting the high costs of placing children in care
      with complex behaviour and special needs. Further spending pressures of
      +£235,000 were also evident in Adoption Services; the fees being paid to
      other agencies in placing children for adoption having risen considerably
      alongside expenses related to placements. The overspend was reduced
                                        5


      through a one-off application of the Council’s Section 117 Aftercare provision
      (£199,000), following assessment of the total provision set aside.

29    Adults Services +£244,000 The main causes of the overspend in Adult
      Services are associated with:

         Domiciliary Care services - Care at Home services had spending
          pressures during the year in response to the high demand for additional
          domiciliary care as an alternative to inappropriate hospital in-patient care
          or long term residential care +£198,000. A Department of Health Grant
          to prevent delayed hospital discharge was used to prevent further cost
          escalation.

         Learning Disability Services - Expenditure relating to the purchasing of
          high cost specialist residential placements, and the resolution of
          cross-boundary service charges for day care were the principal cause of
          this overspend +£147,000

30.   These spending pressures were partially offset by the improved sales
      performance of Ayresome Industries (£30,000) and a reduced call on the
      purchasing budget for other adult care services (£78,000).

31.   Performance Management and Modernisation (£114,000). Savings have
      been achieved through a review of the repairs and maintenance programme
      in Social Services for 2001/2 and capitalisation of appropriate expenditure
      both for repairs and maintenance and IT. Other pressures previously reported
      have been met through staff turnover and vacancies within the Performance
      Management Service.

Central Services

32.   Home Office Services +£38,000 The Coroners Service recorded a budget
      overspend +£33,000. This was caused by the increased occurrence of drug
      screening and other complex cases and settlement of an IT case. Magistrates
      Services were also overspent +£18,000 due to additional employer pension
      contributions.

33.   Unfunded Pensions +£46,000. The spending pressures reflect the cost of
      several early retirements approved from the central budget.

Corporate Centre

34.   The Service Group has a net saving of (£112,000) for the year.

35.   Corporate Strategy Unit (£137,000). Savings have accrued due to staff
      vacancies (£21,000) and fee and grant income available to cover other staff
      costs (£25,000). There have also been net savings on non-pay budgets
      (£46,000) including a saving on Best Value Inspection Fees. There has been
      a reduced call on grant payments to promote regeneration due to the timing of
      the establishment of the Tees Valley Urban Regeneration Company (£36,000)
                                       6


      whilst grants to other bodies including Community Councils did not spend the
      full allocation (£15,000). Overall targets however have not been met for
      property budgets due to an under recovery of income at the Enterprise
      Centres +£60,000, and a requirement to increase the provision for bad debts
      following the annual review of aged debt for the service +£35,000. These
      pressures are partly offset by one-off income from the Cleveland Business
      Centre (£65,000).


36.   Chief Executive Office (£41,000) the saving was largely due to staff
      vacancies and other non-pay efficiencies generated within the service.

37.   Service Middlesbrough + £116,000. The cost of consultancy arising from the
      extended Service Middlesbrough negotiation process has been partially
      recovered from income generated from selling services to other Councils.
      There is a net spending pressure (£52,000) against the Service Contract due
      to the cost of urgent property repairs undertaken by Service Middlesbrough
      this year, part of which has been met from contingencies within the Service
      Middlesbrough budget. This is to be recovered in full in 2002/2003 and is
      shown as such in the 2002/2003 Budget Clinic Report.

38.   Recharges to Non-General Fund (£39,000). The Council’s compliance with
      the Best Value Accounting Code of Practice has necessitated a review of the
      charging of corporate costs to non-general fund services, Housing Revenue
      Account, Street and Land Services and the Teesside Pension Fund. The
      impact of which has led to under and over recoveries of income across the
      service area, the net effect of which is shown above. A full review of support
      service recharges is planned in 2002/2003 to realign budgets with future
      income expectations.

Central Provisions

39.   Overall savings of (£556,000) are calculated for the Council’s central
      provisions.

40.   A spending pressure of +£26,000 arose from the provision for pay awards and
      pensions. Savings of (£450,000) for capital financing costs were generated
      principally due to interest paid on long-term borrowing being lower than
      budgeted levels. The target income from trading surpluses has been
      exceeded (£81,000) due to the Housing Trading service surpluses from
      2000/2001 being credited to the general fund. A further (£200,000) was
      transferred from Environment trading services towards the provision.

41.   A shortfall of +£250,000 is shown on budgeted efficiency savings. Efficiencies
      were achieved from additional interest on cash balances resulting from a
      reduction in the level of outstanding debtors (£200,000). Middlesbrough’s
      share of the Custodian Properties charge is less than the budgeted amount as
      a result of previous year’s adjustments for Cargo Fleet Depot (£109,000).
      Designated Authority costs for the year are (£72,000) less than expected due
                                         7


      to a reduced call on available funds, this includes a share of a derelict land
      grant repayable to the former Authority.

42.   Total savings (£174,000), have been achieved across central provisions for
      Corporate Training, Corporate Initiatives, Best Value consultant’s fees and
      Feasibility Studies budgets.

43.   Items recorded under unbudgeted income and expenditure produced a net
      saving of (£315,000) including:

         Belwin Flood Relief – (£200,000) flood relief grant received.

         Debtors income – (£24,550) relating to a payment of a debt previously
          written off.

         Bad Debts Provision – (£183,195) the net impact of reducing services
          bad debt provisions due to an overall improvement in the rates of debt
          recovery for aged debt.

         NNDR Relief - +£116,000, the cost of discretionary and hardship
          relief for properties .

44.   Year end provisions have been reviewed. The final bank reconciliation
      adjustment has reduced the provision by £738,000 related to presented
      cheques. Additional provisions have been established to cover the potential
      costs of £400,000 for the Cleveland Centre car park and roof and £200,000
      for the estimated costs to the Council following the Inland Revenue tax audit.
      The balance to be used towards the Employment Tribunal provision to meet
      awards made in 2001/2002.

OPTION APPRAISAL

45.   Not applicable to this report

FINANCIAL AND WARD IMPLICATIONS

46.   A net saving of £195,000 is identified for the year. The spending pressures
      identified within the final report are in line with those identified in the previous
      budget clinics in 2001/2002. Ongoing pressures identified during the year
      have been included within the 2002/2003 budget and current Medium Term
      financial plan.

47.   Balances as at 31 March 2002 are estimated to be £6,935,000 as shown
      below :-
                                       8


                                                            £000          £000
      Opening Balance                                                       7,837

      Budgeted Contributions from Reserves                                -1,097

      Additional Service Expenditure                        -682
      Savings on Central Budgets                             877
      195
                                                            ---------     --------
      General Fund Balances as at 31/3/02                                    6,935
                                                                          --------

COUNCIL POLICY FRAMEWORK AND BUDGET

48.   This report follows the Councils policy framework and supports the production
      of the Councils Budget Strategy.

CORPORATE OBJECTIVES

49.   The budget monitoring process is one of the main controls which allow the
      Council’s resources to be effectively managed. It supports proper financial
      management and planning.

           HEAD OF SERVICE: (Paul Slocombe, Director Of Finance)
                        TEL NO: (01642) 262211

BACKGROUND PAPERS

The following background papers were used in the preparation of this report:

      Strategic Budget 2001/2002
      Cabinet report 11 Sep 2001 – 1ST Quarters Revenue Budget review
      Cabinet report 4 Dec 2001 – 2ND Quarters Revenue Budget review
      Cabinet report 23 Apr 2002 – 3Rd Quarters Revenue Budget review
      Final Service Outturn reports to budget clinic – 1St August 2002
      Final Overall Outturn report to budget clinic - 1St August 2002

___________________________________________________
Address:
Website: http://www.middlesbrough.gov.uk

				
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