Agenda Item 9

21st February, 2007

To the Chair and Members of the

CABINET

FINANCIAL MANAGEMENT REPORT: REVENUE BUDGET PROJECTIONS 2006/07

Decision Taker

Cabinet

Relevant Overview & Scrutiny Panel

Overview and Scrutiny

Management Committee

Wards Affected

All

Key Decision

K0688

Purpose

1. This is the 3rd Financial Management report and presents the latest projections of income and expenditure compared to budget for the 2006/07 financial year. It contains projections of the year end position for:-

the General Fund Revenue Account (paragraphs 8 to 18); General Fund Reserves (paragraphs 21 to 24); the Housing Revenue Account (paragraphs 25 to 28); Trading Accounts (paragraphs 29 to 30) the Income Collection (paragraphs 31 to 34).

Recommendations

2. It is recommended that Cabinet:-

note the contents of this report, including the potential significant overspend of £4m (See Appendix A);

endorse the actions proposed by C.M.T. to reduce the potential overspending on the budget at the year end (see para 19). It is anticipated that this action could result in reducing the projected £4m overspend to between £3m and £4m;

approve the credit of any additional income in relation to Business Growth Incentive Scheme which is over and above the £2m predicted in the 2nd Financial Management report, to General useable reserves, to provide greater scope for dealing with any future financial issues (para 18);

approve the transfer of Budgets between N.C.C.S. and O.D.C. in respect of the Library Service (para 35).

Summary

3. The report sets out the following key issues:-

there is the potential for a significant overspend in the order of £4.2m by the end of the 2006/07 Financial year;

projections indicate that N.C.C.S. are estimating to underspend by £0.4m, which represents 0.3% of their budget target. There is, however, a great deal of volatility in key service areas, making financial projections more difficult. The issues are set out in more detail in paragraphs 8-11;

there are significant financial issues for Corporate Services and Council-wide budgets, which total an additional £4.6m. These include:-

- 2006/07 Efficiency savings that have not been delivered; - Equal Pay compensation payments;

The report covers these issues in some detail in paragraphs 16 to 18 and the management actions that are being taken to ensure that any overspends are minimised;

there is potential for additional income on Local Authority Business Growth Incentive (L.A.B.G.I.) of £2m of income, the treatment of which is identified in paragraph 22;

the projection of the balance available on General Fund revenue reserves at the end of this financial year is £4.94m (see paragraphs 21 - 24). A significant overspend will reduce the balance of General Reserves available. This includes a provision for an overspend of £4.18m;

the Council’s trading accounts are projecting a total deficit of £670k, compared to a budgeted surplus of £425k, which is an overspend of £1.1m. The main issues are on Catering, Schools Catering and Steadfast Windows. The significant problems with the Catering trading account are as a result of the loss of the contract for the Racecourse (see paragraphs 29 - 30). These have been taken into account in the overspend projection;

the Housing Revenue Account (H.R.A.) is projected to overspend by £650k, resulting in an in year deficit of £2.6m. This is largely as a result of increased general management and recovery of A.M.R.A. grant repaid from H.R.A. balances. The in year deficit will need to be charged to the £6.6m of H.R.A. balances.

Background

4. The 2006/07 General Fund net revenue budget was set at £201.116m by Full Council on 27th February, 2006. Since then, the following funds have been transferred from approved earmarked reserves to the revenue account to fund key items.

£000Original Budget 201,116Add: Standards Fund carry forward 539Add: One-off reorganisation pension costs 950Add: O.F.S.T.E.D. Action Plan 69Add: Pupil Retention Fund 182Add: One Off Investment in 2006/07 750Less: L.A.B.G.I. income from Year 1 Appeal -521Less: L.A.B.G.I. income credit to Useable Reserves (estimate) -1,700Revised Budget Total 201,385

5. The approved budget for 2006/07 included the following key elements:-

a 2.7% increase in Council Tax for 2006/07;

an additional £25.5m expenditure to fund inflation, shift resources and investment in a number of schemes outlined in the corporate plan for future years;

a target for the Council to reduce its cost base by £15.3m.

6. Under the Council's Financial Procedure Rules, the forecast budget position and any changes to approved budgets will be put forward for consideration by management as part of a financial management report to Cabinet on a quarterly basis.

7. The projections shown in this report are the result of reviewing expenditure and income to-date and also the action plans of the service areas to produce estimates to full year end. All managers will continue to receive monthly budget statements, which form the basis for revenue budget monitoring and management of the financial position.

General Fund Revenue Budget Projections

8. Neighbourhoods, Communities and Childrens Services (N.C.C.S.)

A detailed forecasting exercise has been performed on these budgets, which total £153.4m. This has included:-

an examination of actual expenditure and income as at 31st December, 2006;

forecasting full year expenditure and income for 2006/07, using the best estimates available. This has been completed by the Services Financial Management Team, working closely with budget managers.

9. The best estimate available concludes that this crucial area of service delivery will underspend by approximately £419k. Appendix A provides a more detailed breakdown of this position.

10. There are many areas of volatile budgets, which are experiencing severe spending pressure due to unprecedented increases in demand for service. They include:-

Children's Out of Authority Placements, is currently projecting a year end overspend of £913k. Action has been ongoing to limit placements but this is not always possible due to individual circumstances;

Out of Authority – Fostering Fees, currently projecting a £733k overspend by the year end;

Adults and Older People – Independent Sector Placement, currently projecting to overspend by £579k. This area is difficult to project due to changes in mortality rates and number of placements made.

These service areas will all receive additional budget resource in 2007/08 to minimise the risk of further large overspends.

11. The main areas of underspend within N.C.C.S. are as follows:-

Staffing vacancies amount to £758k. This is after allowing for any additional costs for agency or temporary cover;

Resource Recovery has generated an underspend £1,199k, which is partly in respect of reduced disposal to landfill sites and also by other efficiencies in recycling.

Maximisation of underspends on grants of £1,073k.

Corporate Services Budgets

12. These budgets include those support areas of the Council that are delivered centrally from within Organisation Development and Culture (O.D.C.), Education Standards, Development and Policy Partnerships and Governance (P.P.G.), but also include some large service delivery teams, for example the Planning and Revenues and Benefits services. These budgets total £61.6m.

13. The best estimates of income and expenditure available at this time highlight two significant budget problem areas, totalling £963k (1.6%), that need to be managed in year. They are:-

Projected shortfalls of income in the Building Design and Asset Maintenance Team, totalling approximately £486k. This is partly due to changing work patterns that are reducing the scope for these internal services to charge to the Council’s capital programme and also to schools. There are also a number of issues associated with the way in which financial targets for these services have continued at the same

level over the medium term, when work patterns are changing. This service is being reorganised and additional budget provision of £281k is being created for 2007/08;

Human Resources & Organisational Development – budgets have been analysed and are projected to overspend by £504k, this is due to several items including - pay protection costs; retaining staff in ‘Get that Job’ and ‘Jobs Doncaster’ which were not budgeted for; pressures in the Pay and Employment Service which have led to an increase in the temporary staffing requirements; an increase in the number of Trade Union Convenors due to an increase in membership; reduced income from the Neutral Vendor contract has occurred due to delayed commencement and lower than anticipated turnover; a shortfall in recruitment advertising commission as the service has moved towards on line recruitment (‘Jobs Doncaster’) resulting in less media advertising.

14. There are some emerging underspends in Corporate Services that need to be clearly highlighted to assist in managing the Council’s financial position. The three most significant areas are:-

Planning Delivery Grant: income of £171k above budget. It has been assumed that this will not be ring-fenced for planning;

Additional Rent income as a result of a delay in the property disposals programme, which amounts to £336k. This will occur for 2006/07 only.

Additional Benefits subsidy grant of £214k

Efficiency Agenda Targets

15. In setting the Revenue Budget for 2006/07, the Council agreed to a resource shift of £25.5m, which would be met in part from cashable efficiencies of £15.3m. Progress has been made in ensuring these cash savings can be delivered and are reflected in the budget targets that are monitored above. There is, however, a balance of £3m of cashable savings which will not be delivered and, therefore, contribute to the overspend. Provision has been made in 2007/08 budget to ensure this is a one off occurrence in 2006/07. These are:-

Grants to Voluntary Organisations: The budget target for 2006/07 amounts to £2m. Cabinet have taken decisions which will deliver only £800k of this target, which leaves a budget shortfall of £1.2m;

Homes Closure: Cabinet have taken the decision not to proceed with the re-alignment of care between in house and private provision, which would have resulted in the closure of a Council run care home. This leaves a financial savings target of £108k still to deliver;

Mileage Allowances: The Council currently pays above the Inland Revenue recommended rate for mileage. A plan was in place at the time of setting the budget to reduce the mileage allowance to put Doncaster in line with other

Councils. This has not progressed and an efficiency target of £518k remains to be delivered;

O.D.C.: Although O.D.C. has reduced costs significantly by centralising support service delivery, there are outstanding cashable savings targets/income which is external to the general fund that will not be delivered of £911k.

Council-Wide Budgets

16. These are the budgets that are managed on a Council wide basis, due to either their specialist nature or that they cannot be sensibly allocated to a Strategic Director. These budgets tend to be managed by the Corporate Finance team/H.R. and include:-

any balances owed to or from the Government or Pension Fund;

budgets that are short term in nature and are supported by contributions from Reserves;

Treasury Management;

Job Evaluation/Equal Pay;

Business Growth Incentive Scheme;

Costs of Voluntary Early Retirement, incurred during the Council-wide restructure.

17. The best estimates available at this point in the financial year, highlight budget overspends, amounting to £1.715m:-

Equal Pay Compensation:

A total budget of £4.5m was set aside (for 2005/06 and 2006/07), during the budget process to meet the costs of backdated compensation to Council employees who would be entitled to take out equal pay claims against the Council.

To-date, payments have been made which total £4.3m (£900k in 2005/06). In addition to this, the Council will incur a tax liability (of close to £1m).

There are a series of payments due to groups of employees that the Council has agreed for fairness should also be included in the compensation arrangements. These payments, including the tax liability, amount to a further pay-out of nearly £800k.

When these additional payments are made, the resulting overspend will amount to £1.4m (Total Budget of £4.5m, compared to Total Expenditure of £5.9m). Management are reviewing the estimated payments, but it is felt these amounts will be incurred by the end of the financial year. A further provision of £1m has been created in 2007/08.

Costs of Voluntary Early Retirement (Council Reorganisation): A budget of £950k was set aside in the Council’s Revenue Budget to meet the 2nd year costs of V.E.R.s from both the Council restructure and the racecourse redundancies. The detail of the projections has been subject to change as individual cases have been finalised. The latest projection points to an overspend against this budget of £315k. This has been increased in the 2007/08 budget.

18. There are three areas which will improve the budget position during 2006/07. They are as follows:-

Treasury Management:

The Council operates a pro-active Treasury Management strategy, the parameters of which are approved by Council in advance of each financial year. The parameters (prudential indicators) for 2006/07 were set at Full Council on 27th February 2006. The Corporate Director of Finance monitors performance within these parameters on a regular basis and can confirm that the Council is operating within approved limits. Details are shown at Appendix D. There is no need to revise these indicators.

The second quarter financial management report projected a break even

position for this area. However, as a result of a strategic debt restructuring exercise undertaken in December in order to reduce treasury costs it is now anticipated that Treasury Management will over achieve the income target by £150k.

Business Growth Incentive Scheme:

The allocations to Doncaster of the Local Authority Business Growth Incentive Scheme (L.A.B.G.I.) totalled £1,347k for the first year of the scheme (2005/06) and were reported as part of the 2005/06 revenue outturn and the first financial management report of 2006/07. For this financial year, there is an income budget of £300k for L.A.B.G.I. income, which recognises that the 2005/06 pay-out was enhanced by the new inclusion of the Airport on the business rates register.

Scheme details for the second year of the scheme (2006) were announced by the Government at the end of September 2006. Based on those details and the rating information then available the view of finance officers was that the Council should receive at least £2m in this financial year and this was reported to Cabinet on 29th November, 2006, in the second financial management report. Cabinet recommended that £1.5m of L.A.B.G.I. income (over and above the £300k budget target) should be used to create an Invest to Save reserve with the balance taken to general useable reserves, to provide greater scope for dealing with any future financial issues. The Invest to Save scheme will not be created until the final grant income is announced at the end of February 2007, and then only if there is sufficient reserve.

Taken at face value the scheme details for this financial year appear more generous than for year 1. However, the Government has pointed out in the

details released that ‘given the uncertainties involved in predicting L.A.B.G.I. end of year rateable value caution should be exercised by local authorities in making any L.A.B.G.I. grant predictions’. The experience from the first year of the scheme’s operation is that forecasting of income is particularly difficult. The view of finance officers is that the Council should receive at least £4m this financial year and the likeliest scenario is that the Council will receive between £4m and £6.5m.

It is expected that for this financial year grant payments will be announced in February 2007 and no certainty can be provided until then. This report takes the prudent view at this stage that income from this source in 2006/07 will be no more than £4m and this has been assumed in the projection of reserves at Appendix C.

Grant Income

There are a number of major sources of grant income, which will have significant balances at the end of the Financial Year. A proportion of the these balances can be used to support main-stream council expenditure to a maximum of £1m.

Managing Current Budget Pressures

19. The potential of a significant overspend in this financial year and its serious consequences in reducing the Revenue Reserves has been very clearly communicated to the leadership team and to Council staff. Action taken to-date has been successful in reducing the projected overspend by nearly £3m. Everything that can be done, within reason, is being done, to minimize the overspend. This includes:-

holding all vacancies open until April 2007, apart from those posts which are deemed essential to protecting vulnerable customers. These are to be approved by the acting Managing Director or a member of C.M.T.;

freezing all non-pay expenditure except where this is contractual or will lead to a threat to life and limb;

identifying all grant funded expenditure and ceasing spending, disallowing any carry forward of funds into 2007/08 financial year, thereby maximising fee income resource.

20. The overriding priority of managers is now to take action and reduce the overspend, to minimise the impact on the Councils future financial position. It is estimated that this will reduce the overspend of £4m to between £3m and £4m.

General Fund Reserves

21. A full breakdown is shown at Appendix C and details of the movement in earmarked reserves and the projected year end position for 2006/07 and

2007/08 following utilisation of those reserves. A summary of the projections for 2006/07 and 2007/08 is shown below:-

£mTotal Resources Brought Forward 32.977Less Earmarked Reserves -26.930

6.0472006/07 net deduction from Reserves -1.107

4.940Less 2007/08 Known Commitments -0.265

4.675

22. There was £6.047m of general useable reserves at the outset of this financial year. It is currently anticipated £1.107m will be required in 2006/07, although it should be noted that this includes utilising £3.7m from L.A.B.G.I. This is an estimate based on the projected allocation, which will not be confirmed until the end of February 2007.

23. A balance of just under £4.94m is projected for the end of this financial year and this allows for an overspend of £4.18m.

24. After taking into account the 3rd year of capital V.E.R. costs associated with the Council’s restructure in 2005, the current projection is for reserves to total £4.675m by the end of March 2008. This is after making a reasonable assumption as to the levels of LABGI in 2007/08.

Housing Revenue Account

25. Appendix A shows that the Housing Revenue Account is projected to show a deficit at the year end of £2.643m against a budgeted deficit of £1.993m, an overspend of £650k. This is due to a number of factors, which are set out below.

26. An increase in the general management charged direct to the H.R.A. of £817k, due to a number of S.L.A.’s being charged directly to the H.R.A., rather than to the A.L.M.O. In addition there has been a reduction in income of £391k as less administrative costs can be offset against capital receipts.

27. A one off increase in expenditure is expected in 2006/07 of £630k because the Audit Commission have now amended their guidance on the release of grant relating to housing assets in the 2004/05 and 2005/06 accounts from the government grants deferred account to the H.R.A.

28. The current level of H.R.A. balances amounts to £6.607m. This is significantly higher than the level of £3.4m, that was approved by Council on 27th February, 2006. If the current projected deficit of £2.643m does materialise, H.R.A. balances will reduce to £3.2m by the end of March 2007. This also includes the £750k approved by Cabinet at its meeting on 20th September, 2006, to provide much needed funding to rectify problems on the Kingsway Estate, Stainforth.

Trading Accounts

29. The table below shows the latest projected position on the Council’s Trading Accounts.

Budgeted Surplus/(Deficit)

£k

Year End Projected Surplus / (Deficit)

£k

Variance

£kCateringCleaningSchools CateringInpressSteadfastPublic BuildingsTransportMarketsHighways

1312

0732020

5282

0

(300)12

(336)75

(298)1030

187(50)

(313)0

(336)-2

(318)(10)-25(95)(50)

Total 425 (670) (1,095)

30. This shows a sizeable overspend on the trading accounts, in that they are not expected to achieve their budgeted surplus. The keys issues are:-

catering operations are projecting a deficit of £300k. This is mainly due

to the loss of the contract for catering with the Racecourse and not being able to recover costs from other functions. A review has been undertaken on this service which will lead to considerable changes for 2007/08;

there is a reduction in income for School dinners, which has caused a deficit of £336k. The main reason for this is the decrease in the number of children in Doncaster Schools and the increased cost of producing higher quality school meals. Proportionately meals take up has remained robust.

the projected deficit for Steadfast Windows of £298k is due to the fall off in Windows being ordered by the A.L.M.O. Steadfast Windows are currently in the progress of tendering for work from the A.L.M.O., a decision on which is expected in March 2007. Without this stream of work, the financial future of this operation is uncertain;

a reduced surplus on Markets due to one off items including, backdated rent at Mexborough, a new ice making machine at the fish market and reduced income at the Wool Market during its refurbishment;

Highways Trading has increased costs due to the implementation of Annualised pay.

There has been a robust challenge of the Trading Accounts for 2007/08 in order to minimise the risk of large trading losses re-occurring in 2007/08.

Income Collection

31. During the first 9 months of this financial year 82.5% of Council Tax was collected and it is currently forecast that between 95% and 97% will be received by the end of the year. Actual rates achieved will be published as part of the Council’s outturn process.

32. During the first 9 months of this financial year 85.4% of Business Rates was collected and it is currently forecast that between 96% and 98% will be received by the end of the year. Actual rates achieved will be published as part of the Council’s outturn process.

33. Council Tax arrears are estimated to be £5.1m, which is within the end of December target of £5.2m. The target for the end of the year is to reduce arrears to £4.6m.

34. An analysis of the Sundry Income debt showed a value of £12.5m outstanding as at the 31st December 2006. In terms of the age of this debt, 38% of this refers to debt raised in previous years. It can also be shown that £5.8m (47%) of this debt is owed by 10 of the largest debtors. It should be noted that all the anticipated income has been built into the latest projected overspend.

Transfer of Budgets

35. Under Financial Procedure rule B14 Cabinet must approve any virement over £500k. One such virement is the transfer of the Library Service from N.C.C.S., where it is managed by the Town Centre Manager, to O.D.C. where it will come under the Corporate Director for Customer Services. The net transfer of the budgets within the Library Service amounts to £3.2m.

Options Considered

36. This report has identified the key budget management issues which need addressing. Corporate Management Team will be working with key directors to reduce the eventual council overspend.

Reasons for Recommended Option

37. The measures and actions which are proposed by Management, will be critical to ensure the Council does not overspend.

Impact on Transformational Goals

38. Through the Corporate Plan and Budget process and the corporate investment needs and prioritisation methodology, revenue and capital budgets for 2006/07 were aligned with the Council's strategic planning framework to assist in achieving transformational goals.

Risks & Assumptions

39. The table below highlights the most significant risks that could have a negative impact on the deliverability of the proposed budget for 2006/07 and the action taken to mitigate against it.

Risks/Assumptions Probability Impact Proposed ActionRobustness ofEstimates in a dynamicSituation

Medium High To work continuously with budget holders in monitoring of income and expenditure against budget

Overspending of 2006/07 budgets

High High Radical action to reduce expenditure in the final months of the financial year to minimise the overspend

Council reserves are not sufficient to cover unknown commitments.

Medium High Radical action to reduce expenditure in the final months of the financial year to minimise the overspend

Consultation

40. C.M.T. has considered these matters on a corporate basis.

Financial Implications

41. These are set out in the body of the report.

Legal Implications

42. The authority is required to make arrangements for the proper administration of its financial affairs. This monitoring report assists in discharging that obligation. The actions recommended to manage Council resources in year are in accordance with relevant provisions and guidance as set out in the body of the report.

Conclusion 43. The financial projections contained in this report indicate that there is a

significant risk of a revenue overspend of approximately £4.18m. Radical Management action is now required to ensure an overspend by the year end is minimised. C.M.T. will be reviewing action and receiving updates on a weekly basis between now and the financial year end.

Contact Officer: Julie Wright, Corporate Director of Financial Services, Tel. 737650

Report Author: Steve Mawson, Services Finance Manager, Tel. 862606

Background Papers: Revenue Budget and Council Tax 2006/07 to Council 27th February, 2006.

APPENDIX A

Summary Projections: 2006/07 General FundN.C.C.S. Neighbourhood & Area Budgets

Area/Theme Income/Expenditure

Approved Budget for

Year£

Forecast Outturn

£

Forecast Year End Variance

£Area Budgets

Area Manager NorthGross Expenditure 4,242,970 4,291,200 (48,230Gross Income -1,351,760 -1,356,760 -5,000Net Expenditure 2,891,210 2,934,440 (43,240

Area Manager WestGross Expenditure 3,608,390 3,592,990 -15,400Gross Income -1,190,300 -1,180,300 (10,000Net Expenditure 2,418,090 2,412,690 -5,400

Area Manager EastGross Expenditure 3,762,610 3,777,310 (14,700Gross Income -1,146,030 -1,142,870 (3,160Net Expenditure 2,616,580 2,634,440 (17,860

Area Manager SouthGross Expenditure 3,295,880 3,299,280 (3,400Gross Income -783,310 -773,310 (10,000Net Expenditure 2,512,570 2,525,970 (13,400

Area Manager UrbanGross Expenditure 4,322,710 4,255,240 -67,470Gross Income -878,680 -902,630 -23,950Net Expenditure 3,444,030 3,352,610 -91,420

Town Centre ManagerGross Expenditure 1,039,090 1,054,820 (15,730Gross Income -455,810 -455,810 0Net Expenditure 583,280 599,010 (15,730

Total – all areasGross Expenditure 20,271,650 20,270,840 -810Gross Income -5,805,890 -5,811,680 -5,790Net Expenditure 14,465,760 14,459,160 -6,600

APPENDIX A

Area/Theme Income/Expenditure

Approved Budget for

Year£

Forecast Outturn

£

Forecast Year End Variance

£Borough Wide

C.Y.P.S.Gross Expenditure 50,754,220 51,468,220 (714,000Gross Income -22,181,480 -22,286,480 -105,000Net Expenditure 28,572,740 29,181,740 (609,000

H.V.C.P.Gross Expenditure 75,096,450 76,395,350 (1,298,900Gross Income -22,572,940 -22,973,940 -401,000Net Expenditure 52,523,510 53,421,410 (897,900

S.S.S.C.Gross Expenditure 75,064,390 74,104,690 -959,700Gross Income -25,635,530 -26,193,230 -557,700Net Expenditure 49,428,860 47,911,460 -1,517,400

Directorate Management

Gross Expenditure 5,853,620 5,862,120 (8,500Gross Income -3,586,450 -3,606,450 -20,000

C.D.C. CostsGross Expenditure 445,900 445,900 -0Gross Income 0 0 -0

Safeguarding & Standards

Gross Expenditure 1,490,030 1,563,030 (73,000Gross Income -518,400 -518,400 -0

Adult Protection & Community Manager

Gross Expenditure 23,179,270 22,655,470 -523,800Gross Income -19,501,520 -19,401,520 (100,000

Youth Offending Services Manager

Gross Expenditure 3,046,940 3,006,940 -40,000Gross Income -1,996,880 -1,996,880 0

Total all borough wide services & D.M.T.

Gross Expenditure 234,930,820 235,501,720 (570,900Gross Income -95,993,200 -96,976,900 -983,700Net Expenditure 138,937,620 138,524,820 -412,800

Total N.C.C.S. Net Expenditure 153,403,380 152,983,980 -419,400

APPENDIX A

Corporate Services Budgets Approved Budget for the Year

£

Forecast Outturn

£

Forecast Year End Variance

£

Development:- Gross Expenditure- Gross Income- Net Expenditure

20,233,240-8,201,87012,031,370

19,269,030-8,053,87011,215,160

-964,210(148,000)-816,210

Education Standards inc. Schools:- Gross Expenditure- Gross Income- Net Expenditure

243,576,010-214,718,950

28,857,060

243,396,270-214,744,660

28,651,610

-179,740-25,710

-205,450

Organisational Development & Culture:- Gross Expenditure- Gross Income- Net Expenditure

106,074,290-91,160,10014,914,190

108,396,430-91,477,68016,918,750

(2,322,140)-317,580

(2,004,560)

Policy, Partnerships & Governance:- Gross Expenditure- Gross Income- Net Expenditure

8,710,020-3,119,6405,590,380

8,772,860-3,185,5105,587,350

(62,840)-65,870

-3,030

Specialist Change:- Gross Expenditure- Gross Income- Net Expenditure

598,730-32,000566,730

581,540-32,000549,540

-17,190-0

-17,190

Total:- Gross Expenditure- Gross Income- Net Expenditure

379,192,290-317,232,560

61,959,730

380,416,130317,493,720

62,922,410

(1,223,840)-261,160(962,680)

APPENDIX A

Council Wide Budgets Approved Budget for the Year

£

Forecast Outturn

£

Forecast Year End Variance

£- Amending Report(Formula Grant)- Contribution from Insurance Fund- Trading Surplus- Unsupported Borrowing- General Financing- Levying Bodies- P.S.A. Reward Grant- Job Evaluation/Equal Pay- Business Growth Incentive

Scheme 2005- Business Growth Incentive

Scheme 2006- Business Growth Incentive

Scheme 2006 – Q2 credit to Useable Reserves

- Budget Savings not Met- Reorganisation Costs- Grant Income which can be used to offset services cost

269,000-750,000-425,000

2,324,470-35,705,31022,429,400-1,015,0002,500,000

-521,240

-300,000

-1,700,000-2,034,870

950,0000

269,000-750,000670,000

2,324,470-35,855,31022,379,400-1,015,0003,893,470

-521,240

-300,000

-1,700,0000

1,265,400-1,000,000

-0-0

(1,095,000)-0

-150,000-50,000

-0(1,393,470)

-0

-0

-0 (2,034,870)

(315,400)-1,000,000

Total Council Wide -13,978,550 -10,339,810 (3,638,740)Total General Fund Services 201,384,560 205,566,580 (4,182,020)

Housing Revenue Account

Housing Revenue Account:-- Gross Expenditure- Gross Income- Net Expenditure

51,376,500-49,382,970

1,993,530

52,336,860-49,693,750

2,643,110

(960,360)-310,780(649,580)

APPENDIX B

Analysis of General Fund Key Variances on budgets (over £100k)

Description Total

£k

Recurring Overspend/Underspend

£k

One-offOverspend/Underspend

£kPlanning Delivery Grant -171 -171Staff savings in Strategic Asset Mgt -134 -134Commission on sales of assets -128 -128Additional Rental Income (property) -336 -336St Leger Homes Recharge 174 174Unspent economic development budget -185 -185Building Control Inspection Fees -188 -188Staff savings in Education Standards -113 -113In House Childrens Residential Homes 110 110Maximisation of Sure Start Grant -1,073 -1,073Children's Out of Authority residential placements 913 913Music Service efficiency target – cannot be implemented until new school year – will achieve 50% in 2006/07

118 118

Out of Authority fostering placements 733 733Staffing Vacancies in C.Y.P.S./H.C.V.P./S.S.S.C. -758 -758Childrens Transport 140 140Learning and Behaviour Support Services -182 -182Uncommitted grants on Access & Systems Capacity and Delayed Discharges

-540 -418 -122

Independent residential care – greater number of clients in first 3 quarters of year than expected.

579 579

In house Residential Care -341 -341Learning Disability Supported Living costs 430 430Additional contract costs for Extra Care beds 215 50 165Independent Sector Home Care 153 153Learning Disability Growth Funds -100 -100Preventative Technology Grant -123 -123Wardens service – shortfall in income / efficiency saving not met

395 395

Car Parking repairs and maintenance – not all budget required -185 -185Asylum Seekers Grant – additional backdated grant -263 -263F.L.A.G. – payments for additional collections 435 435Resource Recovery – Recycling & Disposal -1,199 -1,199Public Conveniences – unmet efficiency 137 137Repairs and Maintenance on social care buildings – demand is more than the funding available.

300 300

Various N.C.C.S. Savings -200 -200Building Design & Asset Maintenance– income shortfall 486 486Fruit in Schools 297 297Efficiency Saving – Car Mileage not yet achieved 518 518Neutral Vendor – shortfall in Income 111 111H.R. & O.D. overspend on staffing costs 393 393Procurement Efficiencies not yet delivered 200 200Benefits Subsidy Grant -214 -214N.N.D.R. Refunds re prior years -141 -141Charge from S.L.H.D. for taking cash income at housing offices

131 131

O.D.C. Savings/Income for support services 911 911V.E.R./Redundancy for Corporate Assurance 147 147Monitoring Officer 105 105Income claimed from funding relating to prior years -101 -101Efficiency Savings Not delivered (Homes / DSG / Grants) 1,516 1,516

APPENDIX CREVENUE RESERVES

£m

Total of Reserves 32.977Less: Earmarked ReservesSchools, Individual School Reserves -11.971OFSTED Action Plan -0.098Section 106 -9.984B.I.F./Capital -2.008I.T. Fund -0.853Procurement Budget for Schools P.F.I. -0.263Pupil Retention fund -0.182Charities & Donations -0.100Advance Funding of Community and Voluntary Led Section LedProjects -0.500Standards Fund -0.539Employers' Contribution from Pensions Authority -0.432Leaves: Uncommitted Reserves 6.047

2006/07 known commitments

2nd Year V.E.R. costs incurred in 2005/06 -0.900Transfer of Advance Funding of Community Projects 0.5002nd Year Racecourse V.E.R. costs -0.050One Off Investment in 2006/07 (Cabinet 12/07/06) -0.750Late Notification of L.A.B.G.I. income – 2005 scheme 0.521L.A.B.G.I. income – 2006 scheme (Cabinet 29/11/06) 1.700*Additional L.A.B.G.I. income assumption Q3 2.000*South Yorkshire Trading Standards -0.070S.Y. Laboratory – Rebate to S.Y. Districts 0.122Projected Overspend 2006/07 -4.180Balance Projected at 31st March, 2007 4.940

2007/08 known commitments

3rd Year V.E.R. costs incurred in 2005/06 -1.2153rd Year Racecourse V.E.R. costs -0.050Additional L.A.B.G.I. income assumption – 2007 scheme(over and above £2m included in 2007/08 budget) 1.000Balance Projected at 31st March, 2008 4.675

*These are estimated figures to be confirmed with L.A.B.G.I. announcement due at end of February 2007.

APPENDIX C

SCHEDULE SUMMARY

Movement in Earmarked Reserves

Balance Projected Projected as at Balance Balance 31.03.06 as at as at 31.03.07 31.03.08 £'000 £'000 £'000

Individual Schools Budget:-

Gross Surplus 12,583 12,583 12,583Gross Overdrawn (612) (612) (612)

Education Standards Fund 539 171 150Procurement Budget for Schools P.F.I. 263 0 0O.F.S.T.E.D. Action Plan 98 29 0Pupil Retention Fund 182 0 0Council I.T. Fund 854 0 0Advance Funding of Community &Voluntary Sector Led RegenerationProjects 500 0 0Capital Reserve 0 0 0Objective 1 Match Funding 55 30 0Borough Investment Fund 1,952 1,690 987Pensions Reserve 432 0 0Section 106 Income 9,984 9,810 9,619Charitable Donations 100 100 100

Total 26,930 23,801 22,827

Movement in Provisions

Balance Projected Projected as at Balance Balance 31.03.06 as at as at 31.03.07 31.03.08 £'000 £'000 £'000

Insurance 4,874 4,124 4,124Section 117 Mental Health Act 2,223 600 600Overstated Income 731 731 500Equal Pay Claims 1,080 0 0

Total 8,908 5,455 5,224

APPENDIX D

TREASURY MANAGEMENT PARAMETERS(Prudential Indicators)

Indicator £m

Authorised Limit of Debt 505Operational Boundary of Debt 330

Actual Total Debt as at 31.12.06 321

Maturity Structure of Borrowing

Indicator__________________________Upper Limit Lower Limit Actual

% % %

Under 12 months 30 0 312 months and within 24 months 30 0 024 months and within 5 years 50 0 95 years and within 10 years 75 0 1610 years and above 90 10 72

Upper Limit Lower Limit Actual % % %

Variable Rate Borrowing 30 0 3Fixed Rate Borrowing 100 10 97