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					                                                            MANSFIELD DISTRICT COUNCIL




                  Report of Portfolio Holder for Resources
                                      To
                                  Cabinet
                                      On
                             25 February 2008
                               th




      REVENUE FINANCIAL AND MANAGEMENT REPORT FOR THE PERIOD
                          01/10/07 – 31/12/07


1.     SUMMARY

This report shows the forecasted position for 2007/08 for the Council’s General Fund
and Housing Revenue Account as at 31st December 2007; the significant variances
from the budget are explained and the impact of these on the Council’s Medium
Term Financial Strategy is assessed.

This report was included as part of the original Forward Plan for 2007/08.


2.     RECOMMENDATIONS

(i)    This report is for information only and Cabinet are asked to note the position
       and that any virements will be dealt with under the scheme of delegation.

3.     BACKGROUND

3.1    Summary Forecast Financial Position

Table 1 below summarises the variances for each service, further explanations are
provided below where there are significant variances between the forecasted outturn
position and the budget.

        Service                                    Forecast
                                                   Variance
                                                 For 31st March
                                                      2008
                                                       £
        Housing and Property Services               165,800       Favourable
        Customer Services and Partnerships          312,400       Adverse
        Planning and Community Safety                25,600       Adverse
        Operational Services                         75,700       Adverse
        Policy and Performance Management            61,150       Adverse
        Corporate Management                         25,300       Adverse
        Legal and Member Services                    24,900       Favourable
        Financial Services                          607,550       Favourable
        TOTAL GENERAL FUND                          298,100       Favourable
        HOUSING REVENUE ACCOUNT                     104,550       Favourable
                                                             MANSFIELD DISTRICT COUNCIL



3.2   Housing and Property Services

      a. Retail Development Income - £66,900 adverse variance

      The budgeted inflationary increase on the 2007/08 budget for the Four
      Seasons Shopping Centre is not now expected, although work is being
      undertaken by Property Services to address this.

      b. Industrial Development Income - £91,050 favourable variance

      Additional income has been received by the Council for rent of sites; this is
      partly the result of more units being let compared to expectations during the
      budget setting process.

      c. Housing Renewal - £100,850 favourable variance

      There are three senior officer posts vacant, which are not expected to be filled
      during the financial year. Income targets set in the budget however, are not
      expected to be achieved (by £30,000) due to staffing levels not being at full
      capacity.

      d. Property Services Salary Costs - £30,400 favourable variance

      Staff vacancy not expected to be filled this financial year.


3.3   Customer Services and Partnerships

      a. Urban Regeneration Grant – £30,000 adverse variance

      Grant funding expected during the year has not materialised.

      b. Bus Station – £10,650 adverse variance

      The new lease on the Restaurant at the Bus Station has been let lower than
      the previous lease, meaning that income is below the budgeted level.

      c. Markets Income – £117,000 adverse variance

      Income levels continue to be below budget due to lack of demand for market
      stalls. The year end forecast position has slightly improved (by £25,000)
      since the last report taken to Cabinet.

      A number of initiatives are being planned to address this ongoing issue. The
      Head of Customer Services and Partnerships is to carry out a review and
      report back.
                                                             MANSFIELD DISTRICT COUNCIL



      d. Markets Business Rates – £33,300 favourable variance

      The rateable value of the market has been reduced for the Market Place; this
      took effect from 1st April 2005 so the Council has received a refund for the
      period already charged. Budgets for future years have been amended
      accordingly.

      e. Car Parking Fees and Charges Income - £94,350 adverse variance

      Income received to date is below the budgeted level; the projected year end
      position has worsened by £30,000 since the last report taken to Cabinet.

      f. Car Parking Rent of Premises - £92,900 adverse variance

      New rent at Clumber Street Car Park is £60,000 above the rent previous
      charged. Additional service charges are also anticipated for the 2007/08
      financial year; the 2008/09 budgets have taken account of this.


3.4   Planning, Community Safety and Regulatory Services

      a. Development Control Fee Income - £43,500 adverse variance

      Actual income generated through planning applications is lower than budget,
      this is due to the fact that applications received by the Council have mainly
      been for minor works.

      The forecast position for application income for the 2007/08 financial year is
      £43,500 adverse at the end of December, but this figure could change
      throughout the year depending on the amount and type of applications
      received by the Council. This figure has slightly improved since the last report
      taken to Cabinet, but only by £7,000.

      This service area will be monitored in light of the potential impact on future
      years’ budget resources. Although it is difficult to predict precisely the receipt
      of applications this information can be used as good guide for forecasting
      purposes.

      b. Building Regulations Fee Income - £30,000 adverse variance

      There has been fewer building regulation applications received than budgeted
      for, which has resulted in lower than expected income levels.

      As above, this figure could change throughout the year depending on the
      amount and type of applications received by the Council, and will be
      monitored closely due to its potential impact on future years’ budget
      resources.

      The adverse position of Building Regulations has not changed since the last
      report taken to Cabinet.
                                                             MANSFIELD DISTRICT COUNCIL



      c. Mobile Neighbourhood Wardens Salary Costs - £19,500 adverse variance

      Jobs within the section were re-graded resulting in pay increases above that
      which had been built into the budget.

      d. Dog Control - £16,000 adverse variance

      The cost of the service provided to the Council has increased above the
      budget provision for 2007/08. There have also been more call outs than
      anticipated which is also increasing the cost of the service to the Council.

      e. Vacancies - £106,300 favourable variance

      Vacancies within the department are helping to offset the additional costs and
      reduced income.


3.5   Operational Services

      a. Hermitage Lane Repairs and Maintenance of the Building - £19,200
            adverse variance

      This includes various work to the building, including repairs to the boiler.

      b. Stores Income - £45,000 favourable variance

      Additional trade has resulted in additional income to the Council and this is
      expected to continue to the year end.

      c. Fleet - £133,800 favourable variance

      The service has witnessed additional trade throughout the year which has
      generated more income than anticipated. Staff vacancies within the section
      have also contributed towards this favourable variance.

      d. Grounds Maintenance - £40,000 adverse variance

      Staff levels have not been reduced in line with the budget requirement. The
      Head of Service has been requested to identify compensatory changes to
      cover this unbudgeted expenditure. This has been resolved for 2008/09.

      e. Refuse Transport (Domestic) - £50,000 favourable variance

      Hire rates were anticipated to increase during the 2007/08 financial year (and
      were built into base budget accordingly); these have not materialised.

      f. Refuse (Domestic) - £114,700 adverse variance

      Cost of agency staff and additional vehicles to cover refuse collection due to
      the dispute.
                                                      MANSFIELD DISTRICT COUNCIL



g. Trade Refuse Income – £23,400 favourable variance

Increases in the number of contracts compared to 2006/07, has resulted in
higher than anticipated income levels.

h. Street Care Transport and Fuel Costs - £49,000 adverse variance

This represents fuel costs incurred by the Council in relation to the increasing
price of oil.

i. Street Care Income - £50,000 favourable variance

This represents additional income to the General Fund from the Housing
Revenue Account.

j. Oak Tree Lane Leisure Centre - £110,000 favourable variance

Continuing increases in income due to increased levels of usage of the
facilities.

k. Sherwood Baths - £41,350 adverse variance

Income levels are down due to staff (instructor) vacancies. This has now
been resolved, and income levels will stabilise going forward.

l. Water Meadows Income from Activities - £100,000 adverse variance

A delay in opening the gym has meant that income has not materialised which
had been built into the budget. In addition, growth in gym usage has been
slower than expected; managers at Water Meadows have increased
marketing of the new facilities in an attempt to address this.

m. Water Meadows Staffing Costs - £15,000 favourable variance

Due to the later than anticipated opening of the new gym facilities there has
been a saving on staffing costs.

n. Water Meadows Repairs and Maintenance - £15,000 adverse variance

There have been overspends resulting from maintenance contracts which
have been used to carry out repairs and maintenance to the facilities.

o. Water Meadows Fuel Costs - £30,000 favourable variance

Savings are being made against a budget set prior to the gym opening, which
also took into account increasing costs of oil. The budget for 2008/09 has
been adjusted accordingly.
                                                           MANSFIELD DISTRICT COUNCIL



      p. Water Meadows Café - £18,000 adverse variance

      Expected efficiencies built into the 2007/08 budget have not materialised. A
      review is being undertaken to address this problem for the 2008/09 financial
      year.

      q. Water Meadows Car Parking Vouchers - £25,000 adverse variance

      Increased usage of the Water Meadows Car Park (above levels anticipated in
      the 2007/08 budget) has resulted in more income being paid over to car parks
      opposed to being kept within the facility. This is offset by additional income
      under car park income above.

      r. Vacancies

      Vacancies within the department are helping to offset the overspend.


3.6   Policy , Performance and Research

      a. Personnel Salary Costs - £10,000 favourable variance

      A change in the structure of the section has found savings.

      b. Personnel Consultancy - £39,000 adverse variance

      This adverse variance represents the costs incurred during the year for
      consultancy on the Job Evaluation process currently being undertaken by the
      Council. Resources previously put into reserves will be used to pay for this,
      so there will be no impact on the General Funds overall position.

      c. ICT Renewals - £68,000 adverse variance

      This adverse variance represents the costs incurred in upgrading and
      replacing current hardware around the Council. Resources previously put into
      reserves will be used to pay for this, so there will be no impact on the General
      Funds overall position.

      d. ICT Contracted Services - £25,350 favourable variance

      Savings have been achieved by procuring a shared contract for disaster
      recovery.

      e. ICT Software - £11,000 favourable variance

      The Oracle license has not been renewed resulting in savings.
                                                             MANSFIELD DISTRICT COUNCIL



3.7   Legal and Member Services

      a. Land Charges Income - £48,200 adverse variance

      There has been a decline in the number of search requests which is impacting
      on income levels; this decline is expected to continue under the present
      climate.

      This service area will be monitored in light of the potential impact on future
      years’ budget resources. Although it is difficult to predict precisely the receipt
      of applications this information can be used as good guide for forecasting
      purposes.

      b. Democratic Representation Allowances - £43,700 favourable variance

      A change in the Cabinet structure resulting from the elections in May 2007
      has meant that savings have been achieved.

      c. Vacancies

      Vacancies within the section are helping to offset the overspend.


3.8   Financial Services

      a. Internal Audit - £14,250 adverse variance

      The Internal Audit section is expected to overspend its budget allocation by
      £14,250. This relates to the additional post created in the latter part of the
      2006/07 financial year which wasn’t included within the budget (amounting to
      £26,600). £10,000 however was provided for in the budget towards
      consultancy and this will be used to offset some of the ‘overspend.’ A
      compensatory underspend has been identified within the Finance section to
      cover this overspend.

      b. Revenue Services Salary Costs - £50,800 adverse variance

      Three posts were omitted from the budget which has resulted in an adverse
      variance. Vacant posts are being reviewed in an attempt to limit the impact of
      this; since the last report to Cabinet, the adverse position has improved by
      £20,000.

      c. Card Charges for use of debit/credit cards by customers - £8,000 adverse
             variance

      In the past, the Council was able to pass charges for using credit/debit card at
      cashiers on to the customer, due to changes in legislation this is no longer
      allowed.
                                                           MANSFIELD DISTRICT COUNCIL



      d. Investment Income - £400,000 favourable variance

      Increased income to the Council due to money being invested at higher
      interest rates than predicted and anticipated expenditure on capital schemes
      not being required this financial year. The 2008/09 budget has taken account
      of predicted reductions in interest rates and the spending of income
      earmarked within the Capital Programme.

      e. Appropriations – £112,000 favourable variance

      The £112,000 favourable variance represents resources being put into the
      General Fund from earmarked reserves; this is to offset costs incurred from
      the Job Evaluation process and ICT renewals.

      f. Principal Set Aside - £315,000 favourable variance

      Changes to the Regulation regarding the calculation of Principal Set Aside
      (and the Minimum Revenue Provision towards the repayment of debt) mean
      that the General Fund will not have to side aside £315,000 which had been
      included in the 2007/08 budget.

      The benefit of this is a one off saving; future year’s budgets have been
      calculated on the revised basis.

      g. Vacancies

      Vacancies within the department are also contributing towards the
      underspend.

      h. Unallocated Savings - £280,000 adverse variance

      Efficiency savings and additional income around the Council which were built
      into the 2007/08 budget will not materialise. Work has been done as part of
      the Budget process for 2008/09 to address these.

3.9   Housing Revenue Account

      a. District Heating – £30,000 adverse variance

      This overspend is the result of the increased cost of using biomass ‘fuel’; the
      Council has now converted its boiler back to coal and is not expected to incur
      any additional costs over and above the £30,000.

      b. Housing Repairs – £489,300 adverse variance

      More work is being put through the Trading Account than planned for in the
      budget. As a result of this work, the number of void dwelling has reduced,
      meaning that more of the Council’s housing stock is available to be let (this
      has subsequently led to increased income to the Council in the form of rent
      income).
                                                           MANSFIELD DISTRICT COUNCIL



       c. Housing Income Property Rent - £254,500 favourable variable

       The Council has renegotiated its lease with Oaktree Lane Tescos at a higher
       level than expected in the 2007/08 budget. In addition to the additional
       income for 2007/08, there is some ‘back pay’ on the lease relating to 2006/07
       which the Council has also received in the current financial year. The budget
       for 2008/09 has been adjusted accordingly.

       d. Housing Income Rent - £500,000 favourable variance

       Additional income as increases in rents were above that anticipated in the
       budgets due to rent restructuring (which is a calculation set by the
       Government). The timing of the calculation being made available means that
       accurate figures can not be built into the budgeting process, only estimates.
       Due to the work undertaken by the (Housing Repairs) Trading Account to
       reduce the number of void properties, the Council is able to let more of it
       housing stock.

       e. Subsidy - £273,000 adverse variance

       Early indication of the subsidy payable by the Council is £273,000 above that
       which was budgeted for. The actual subsidy figure will change during the
       year as more information is provided through returns to the Government. This
       increase is as a result of additional income received by the Council through
       rent charges to tenants.

       f. Vacancies - £170,400 favourable variance

       Vacancies within the department are resulting in an overall underspend
       position.


3.10   Impact on General Fund and Housing Revenue Account Balances

General Fund Balances:

                                                            £000
              Balance as at 01/04/07                        4,522
              Forecast General Fund Surplus                  298
              2007/08
              Less Commitments :
              Shared Services                               -200
              Planned Preventative Maintenance              -600
              LEGI                                          -130
              Equal Pay                                     -300
              Revenues and Benefits Software                 -97
              Forecast Balance as at 31/03/08               3,493
                                                            MANSFIELD DISTRICT COUNCIL



The forecast balance of General Fund Reserves is grater than the level set in the
Medium Term Financial Strategy of £3million. This leaves a one off surplus of
£0.5million for 2007/08 due mainly to the receipt of additional income from
investments and the changes to Capital Regulations.

In order to maximise the benefit of this surplus, the following are proposed for
consideration:
    1. Contribution to the Capital Programme
    2. Contribution to the ICT reserve and Planned Preventative Maintenance (PPM)
       reserve
    3. Feasibility / Pump Priming Fund
    4. Invest to Save Fund
These will be assessed and recommendations made as part of the Revenue Outturn
Report after the 31st March 2008.


Housing Revenue Account balances:

                                                             £000
              Balance as at 01/04/07                         1,072
              Forecast HRA Surplus 2007/08                    105
              Forecast Balance as at 31/03/08                1,177


The level of the HRA balances is able to meet unforeseen circumstances.


3.11   Assessment of Impact on Medium Term Financial Strategy

There a number of areas which may impact on future budgets and budget strategy of
the Council.

       a. Market Income – should the decline in income continue to be over and
          above expectations, changes to the 2008/09 budgets and future years
          would be necessary. This will be monitored throughout the financial year

       b. Car parks Income – should the decline in income continue to be over and
          above expectations, changes to the 2008/09 budgets and future years
          would be necessary. This will be monitored throughout the financial year.

       c. Planning Applications – it is difficult to determine the number and value of
          planning applications submitted as this is not within the Council’s control,
          however, the situation can be monitored and the link to the financial
          reporting process will aid future forecasting.

       d. Land Charge Income - it is difficult to determine the number of land
          searches submitted as this is not within the Council’s control, however, the
          situation can be monitored and the link to the financial reporting process
          will aid future forecasting.
                                                               MANSFIELD DISTRICT COUNCIL



        e. Vacancies – a number of the savings have been as a result of vacancies
           which have offset additional expenditure; close monitoring of the vacancy
           level in specific areas is required to assess the potential savings and
           assess the impact of service provision.


4.      OPTIONS AVAILABLE

This report is for information only.


5.      BUDGET/RESOURCE IMPLICATIONS

Included within the report.


6.      RISK ASSESSMENT OF RECOMMENDATIONS AND OPTIONS


 Risk         Risk Assessment                   Risk     Risk Management
                                                Level
 Financial    A number of the Council’s         Medium   The budgetary management system
 forecasts    budgets are dependent on                   is in place whereby finance and
 are          external factors and influences            budget officers meet to discuss
 inaccurate   which cannot be accurately                 issues surrounding the budgets and
              forecast                                   this information is collated through a
                                                         senior finance group before
                                                         submission to the Revenue
                                                         Monitoring Group and quarterly to
                                                         Cabinet.

                                                         Additional non-financial information
                                                         is now also being collated and
                                                         assessed as part of the process to
                                                         identify any anomalies and provide
                                                         early warning of issues.




7.      ALIGNMENT TO COUNCIL PRIORITIES

This report is directly aligned to ensuring effective management of the Council.


8.      IMPLICATIONS RELATING TO RELEVANT LEGISLATION

No direct implications.
                                                            MANSFIELD DISTRICT COUNCIL



9.    COMMENTS OF STATUTORY OFFICERS

(a)   Head of Paid Service –
An element of the forecasted savings is as a result of vacancies within services.
These savings will not be available in future years as these are filled. An ongoing
process of prior approval of vacancies being filled is in place.

(b)   Monitoring Officer – No specific comments

(c)    Section 151 Officer –
The outturn report reveals an overall favourable position; however this is a one off
surplus which can not be used to meet on-going revenue costs.

The main reasons for the favourable position is the result of the additional
investment income received and changes to the Capital Regulations. Changes in
the Capital Regulations are one off for this year as the budget has been adjusted to
reflect the changes. Investment income received by the Council is likely to fall during
2008/09 as income earmarked for capital schemes is spent and, if interest rates
generally fall (as speculated by the Council’s Treasury Advisors and the decision by
the Bank of England to cut interest rates in February by half a percent).


10.   CONSULTATION

Consultation has taken place on the details of the budget variances with the service
managers.

The report is based on the information presented monthly to the corporate Revenue
Monitoring Group together with additional items which have been identified and of
which members need to be aware.


11.   BACKGROUND PAPERS

Revenue Monitoring Group minutes and papers


Report Author    -   Eve Szubert
Designation      -   Principal Group Accountant
Telephone        -   01623 463495
E-mail           -   eszubert@mansfield.gov.uk

				
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