Revenue Monitoring Report Council Summary 1 April 2022 to 22 July 2022
North Lanarkshire Council · 14 September 2022
Back to Finance and Resources Committee — 14 September 2022 and its agenda
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North Lanarkshire Council Report Finance and Resources Committee Does this report require to be approved? ☐ Yes ☒ No Ref EK/KS/VR/SD Date 14/09/22 Revenue Monitoring Report Council Summary 1 April 2022 to 22 July 2022 From Elaine Kemp, Head of Financial Solutions E-mail kempe@northlan.gov.uk Telephone 07939 280 601 Executive Summary This report updates the Finance and Resources Committee on the overall position for the General Fund Account, Housing Revenue Account and Adult Health and Social Care, for the financial year to 31 March 2023. The report consolidates the budget monitoring position of all Services, highlighting and explaining major variances as per the Council’s approved Financial Regulations. The Council approved its General Fund Revenue Budget on 17 February 2022. Following notification from Scottish Government of further funding made available to local authorities the budget has been revised to £875.141m. The Council is currently projecting a small surplus of £0.158m against this budget. The 2022/23 budget incorporates £10.484m of net savings with resources of £3.372m set aside to manage the impact of delayed implementation, reducing the current year target to £7.112m. It is projected that £5.222m of the approved savings (50%) will be delivered within the financial year (73% of the in year reduced target), with replacement savings identified to fully address the shortfall. Recommendations It is recommended that the Finance and Resources Committee: (1) Acknowledge the financial position of the 2022/23 revenue budget; (2) Otherwise endorse the contents of this report. The Plan for North Lanarkshire Priority All priorities Ambition statement (25) Ensure intelligent use of data and information to support fully evidence based decision making and future planning
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1. Background 1.1. The Council’s approved Financial Regulations require Executive Directors to remain within their approved budgetary provision, and to report all significant deviations - defined as the higher of £100,000 or 5% - within their budget monitoring reports. Where significant deviations are identified, Executive Directors must provide explanatory commentary, outline the action required to rectify such deviations and where relevant, must also highlight the impact this has on other budget headings. 2. Report 2.1. Summary of General Fund Financial Position 2.1.1. At its meeting of 17 February 2022, the Council approved a General Fund Revenue Budget of £887.270m. This included spend which is offset by ring fenced grants of £50.126m resulting in an opening budget position for Net Service Expenditure of £837.144m. Additional funding has since been confirmed as part of the Scottish Government budget setting, including additional directed funding to the Adult Health and Social Care, Free School Meal Expansion monies increasing the budget to £875.141m. 2.1.2. Following the budget setting in February the Council has an approved savings target £10.484m for 2022/23. However, £2.000m of one-off resources has been set aside from General Fund reserves to manage the financial impact of the delayed implementation of the Active in Creative Communities saving of £3.058m, and £1.372m has been earmarked from the IJB reserves in respect of the delayed closure of the Muirpark facility. These actions reduce the overall savings requirement in 2022/23 to £7.112m. Further detail can be found in Section 2.3 below. 2.1.3. Table 1 below summarises the projected income and expenditure position, which illustrates a small surplus of £0.158m is currently envisaged at this early stage in the financial year. Annual Budget (£m) Projected Outturn (£m) P4 Variance (£m) Expenditure Net Service Expenditure 893.683 893.535 0.158 Financing Costs (40.730) (40.730) - Other Budgetary Issues 22.188 22.188 - Total Expenditure 875.141 875.041 0.158 Income Aggregate External Finance 711.092 711.092 - Local Tax Collection 158.049 158.049 - Use of Balance 6.000 6.000 - Total Income 875.141 875.141 - Projected variance: Surplus/(Deficit) at 31 March 2023 - 0.158 0.158 Table 1
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2.2. Analysis of Significant Variations 2.2.1. Table 2 below illustrates Services’ projected outturn financial positions, which illustrates a small underspend in the Education and Families Service. Service P4 Outturn (£m) Education and Families 0.158 Underspend Enterprise and Communities - On Budget Chief Executives and Other Corporate Services - On Budget Social Work (Non-Integrated) - On Budget Executive Services Total 0.158 Underspend Financing Costs - On Budget Budget Assumptions - On Budget Total 0.158 Underspend Table 2 2.2.2. Education and Families is reporting a small projected underspend of £0.158m. This position is represented by a projected underspend in employee costs £3.659m largely due to delays in recruitment, predominantly offset by overspends in relation to ASN transport (£1.385m) and mainstream contract inflation (£0.615m), in addition to increased payments for ASN placements (£0.700m) and Family Placements (£0.800m), due to cost pressures associated with External Fostering and Kinship Care Placements. 2.2.3. Enterprise and Communities are reporting a breakeven position, with property costs projected to be over budget by £0.153m due to a delay in delivering office accommodation savings, which is largely offset by underspends in catering supplies through lower than anticipate volume of food purchases of £0.137m, and other minor budget savings. 2.2.4. Chief Executives and Other Corporate Services are also projecting a breakeven position. However, this reflects an estimated £1.000m overspend in respect of a delay in achievement of previously approved Digital NL savings, which at this stage is expected to be managed through lower than budgeted contract costs, mainly due to a delay in transferring to a cloud environment, thus reducing the forecast cloud consumption costs. 2.3. 2022/23 Budget Savings 2.3.1. As outlined in paragraph 2.1.2 above, the Council has approved net savings of £10.484m for 2022/23. After taking account of the £3.372m one-off resources set aside to manage the delayed implementation of savings, the overall savings target is £7.112m. Each Service reports on the achievement of their savings within the relevant
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Services’ monitoring report. It is projected that £5.222m (50%) of the original approved saving will be achieved (73% of the current year target). It is anticipated that the remaining in year gap of £1.890m will be fully mitigated by replacement savings during the year, and implemented in future years. 2.4. Earmarked Reserves and Change Management Fund 2.4.1. The Council’s draft annual accounts currently highlight a General Fund reserve balance of £239.229m. This balance includes £8.000m for the Contingency Reserve. There is also a total of £169.086m earmarked for specific future commitments including £30.551m in relation to COVID and £54.175m to support the future contractual obligations in respect of PPP schools, following a change in presentation in respect of such balances, as discussed and agreed with Audit Scotland. A further £29.424m has been allocated to the Change Management Fund to support future budget pressures, one-off costs of existing approved savings and to ensure the Council has a resilient and sustainable strategic financial plan. This leaves £32.718m of unallocated balances. 2.4.2. A total of £103.172m of earmarked reserves are profiled for use in 2022/23 with a further £65.915m profiled for use in future years. It is currently projected that 2022/23 earmarked reserves will be fully spent during the financial year 2022/23. A summary position in respect of the above is shown in Appendix 2. 2.4.3. The unallocated reserves will change depending on overall financial performance year on year, unexpected commitments and to account for future drawdowns from the capital fund. Therefore, reflecting the forecast in year surplus £0.158m and the capital fund drawdown of £0.396m, the unallocated General Fund balance is currently forecast to reach £33.272m by the financial year end. Appendix 3 summarises this position. 2.5. Risks and Uncertainty 2.5.1. All activities undertaken by the Council are subject to risk, and in acknowledging the Council’s approved Risk Management Strategy, Services manage these as part of their overall corporate and service planning processes. The current economic climate such as the rising forecast of pay and non-pay inflation, on-going COVID impact, the cost of living crisis and other external factors, have the potential to impact upon the Council’s ability to provide quality services within approved budget levels. 2.6. Housing Revenue Account 2.6.1. The Housing Revenue Account is currently projecting a breakeven position for the financial year and anticipate that £1.849m of savings (100%) will be delivered by the year end. 2.7. Adult Health and Social Care 2.7.1. Council Adult Health and Social Care provision to the Integration Joint Board (IJB) is projecting an underspend of £4.834m. This position is primarily due to a projected underspend in employee cost of £3.018m as a result of slippage in recruitment of posts relating to “Winter Planning and Enhanced Support”, a projected under spend in payments to other bodies of £1.241m as a result of staff shortages within the care at home sector SDS commissioning framework and a projected underspend in administration costs of £0.920m due to lower than anticipated Carers costs. This is partially offset by a projected under recovery in income of £0.368m mostly due to committed income from NHSL in relation to the Integrated Equipment and Adaptations services being lower than budgeted historic levels coupled with lower than anticipated receipts from charges Community Alarms and Integrated Day Services.
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3. Measures of success 3.1. The Council continues to operate within approved budgeted resources. 4. Supporting documents Appendix 1 Summary by Division Appendix 2 Anticipated Commitments – Earmarked Reserves Appendix 3 Availability of One-Off Funds – Change Management Fund Elaine Kemp Head of Financial Solutions 5. Impacts ( http://connect/report-template-guidance ) 5.1 Public Sector Equality Duty and Fairer Scotland Duty Does the report contain information that has an impact as a result of the Public Sector Equality Duty and/or Fairer Scotland Duty? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? If Yes, has an assessment been carried out and published on the council’s website? https://www.northlanarkshire.gov.uk/your-community/equalities/equality-and-fairer- scotland-duty-impact-assessments Yes ☐ No ☐ 5.2 Financial impact Does the report contain any financial impacts? Yes ☐ No ☒ If Yes, have all relevant financial impacts have been discussed and agreed with Financial Solutions? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.3 HR policy impact Does the report contain any HR policy or procedure impacts? Yes ☐ No ☒ If Yes, have all relevant HR impacts have been discussed and agreed with People and Organisational Development? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 5.4 Legal impact Does the report contain any legal impacts (such as general legal matters, statutory considerations (including employment law considerations), or new legislation)? Yes ☐ No ☒ If Yes, have all relevant legal impacts have been discussed and agreed with Legal and Democratic Solutions? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact?
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5.5 Data protection impact Does the report / project / practice contain or involve the processing of personal data? Yes ☐ No ☒ If Yes, is the processing of this personal data likely to result in a high risk to the data subject? Yes ☐ No ☐ If Yes, has a Data Protection Impact Assessment (DPIA) been carried out and e- mailed to dataprotection@northlan.gov.uk Yes ☐ No ☐ 5.6 Technology / Digital impact Does the report contain information that has an impact on either technology, digital transformation, service redesign / business change processes, data management, or connectivity / broadband / Wi-Fi? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? Where the impact identifies a requirement for technology, has an assessment been carried out (or scheduled) by the Enterprise Architecture Governance Group (EAGG)? Yes ☐ No ☐ 5.7 Environmental / Carbon impact Does the report / project / practice contain information that has an impact on any environmental or carbon matters? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.8 Communications impact Does the report contain any information that has an impact on the council’s communications activities? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact? 5.9 Risk impact Is there a risk impact? Yes ☐ No ☒ If Yes, please provide a brief summary of the key risks and potential impacts, highlighting where the risk(s) are assessed and recorded (e.g. Corporate or Service or Project Risk Registers), and how they are managed?
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LINE SERVICE ACCOUNT BUDGET ACTUAL VARIANCE ANNUAL PROJECTED NO. TO DATE TO DATE TO DATE BUDGET OUTTURN (1) (2) (3) (4) (5) (6) (7) £ £ £ £ £ £ 1 Education & Families 116,363,387 116,363,387 - 465,090,462 464,931,737 158,725 2 Early Years 8,648,190 8,648,190 - 31,788,724 31,788,724 - 3 Primary Schools 28,436,794 28,436,794 - 128,030,242 128,030,242 - 4 Secondary Schools 29,425,763 29,425,763 - 127,090,309 127,090,309 - 5 Special Schools 5,103,569 5,103,569 - 20,176,565 20,176,565 - 6 Education & Families Service Delivery 28,547,607 28,547,607 - 81,760,326 81,801,601 (41,275 ) 7 Childrens Services Social Work 9,109,475 9,109,475 - 36,734,528 36,534,528 200,000 8 Justice Services 649,363 649,363 - 73,431 73,431 - 9 Active and Creative Communities 1,397,568 1,397,568 - 25,074,035 25,074,035 - 10 Employability 2,160,605 2,160,605 - 3,913,759 3,913,759 - 11 Community Learning 1,568,294 1,568,294 - 5,236,818 5,236,818 - 12 Welfare 827,057 827,057 - 2,072,882 2,072,882 - 13 Strategy for Young People 489,102 489,102 - 3,138,843 3,138,843 - 14 Enterprise & Communities 36,068,884 34,575,628 1,493,256 146,129,308 146,129,308 - 15 Environmental Assets 7,154,070 6,968,695 185,375 47,859,081 47,859,081 - 16 Regulatory Services & Waste Solutions 10,672,899 11,100,512 (427,613 ) 37,381,082 37,381,082 - 17 Assets & Procurement 12,039,834 12,085,555 (45,721 ) 38,737,052 38,737,052 - 18 Planning & Regeneration 2,447,827 1,117,330 1,330,497 9,764,279 9,764,279 - 19 Communities - - - - - - 20 Housing Solutions 1,393,518 958,407 435,111 5,380,338 5,380,338 - 21 Directorate & Support - - - - - - 22 Business, Housing Property & Projects 2,151,102 2,197,582 (46,480 ) 7,603,018 7,603,018 - 23 Trading Accounts 209,634 147,547 62,087 (595,542 ) (595,542 ) - 24 Chief Executives & Other Corporate Services 27,127,963 27,127,963 - 93,763,354 93,763,354 - 25 Directorate & Support 221,147 221,147 - 876,892 876,892 - 26 Fiancial Solutions 10,488,528 10,488,528 - 47,932,562 47,932,562 - 27 Audit & Risk 155,450 155,450 - 581,134 581,134 - 28 Legal & Democratic Solutions 783,192 783,192 - 2,261,626 2,261,626 - 29 Business & Digital 6,287,124 6,287,124 - 12,564,934 12,564,934 - 30 People & Organisational Development 2,350,147 2,350,147 - 8,063,406 8,063,406 - 31 Strategic Communication 1,387,067 1,387,067 - 5,160,273 5,160,273 - 32 Other Corporate Services 1,102,353 1,102,353 - 3,684,556 3,684,556 - 33 Joint Boards 4,352,955 4,352,955 - 12,637,971 12,637,971 - 34 Social Work (non Integrated) 186,494,159 186,494,159 - 188,700,126 188,700,126 - 35 GENERAL FUND SERVICES 366,054,393 364,561,137 1,493,256 893,683,250 893,524,525 158,725 (158,725 ) 36 FINANCING COSTS 1,121,940 1,121,940 - (40,729,875 ) (40,729,875 ) - 37 Reversal of Capital Charge (22,476,936 ) (22,476,936 ) - (73,050,041 ) (73,050,041 ) - 38 Loan Charges 10,175,436 10,175,436 - 33,070,166 33,070,166 - 39 Intrest on Revenue Balances (230,769 ) (230,769 ) - (750,000 ) (750,000 ) - 40 OTHER BUDGETARY ISSUES 6,827,105 6,827,105 - 22,188,090 22,188,090 - 41 Assumptions not yet Realised 6,827,105 6,827,105 - 22,188,090 22,188,090 - 42 TOTAL EXPENDITURE 374,003,438 372,510,182 1,493,256 875,141,465 874,982,740 158,725 43 SOURCES OF FUNDING 269,274,297 269,274,297 - 875,141,465 875,141,465 - 44 Aggregate External Finance 218,797,538 218,797,538 - 711,092,000 711,092,000 - 45 Council Tax 48,630,605 48,630,605 - 158,049,465 158,049,465 - 46 Use of balances 1,846,154 1,846,154 6,000,000 6,000,000 47 SURPLUS / (DEFICIT) (104,729,141 ) (103,235,885 ) (1,493,256 ) - (158,725 ) 158,725 48 HOUSING REVENUE ACCOUNT SURPLUS / (DEFICIT) (14,118,217 ) (14,249,952 ) 131,735 - - - 49 ADULT HEALTH AND SOCIAL CARE SURPLUS / (DEFICIT) (21,186,923 ) (22,674,405 ) 1,487,482 - (4,834,316 ) 4,834,316 Appendix 1 NORTH LANARKSHIRE COUNCIL SUMMARY BY DIVISION FOR PERIOD ENDING 22 July 2022 (PERIOD 4) PROVISIONAL VARIANCES
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Appendix 2 Total Total Reserve Balances 2022/23 Revised Earmarked Reserve 22/23 Projected Spend Anticipated Year End Balance Anticipated Future Year Use No Longer Required Profiled for Future Years Anticipated Future Year Use No Longer Required No Longer Required £000 £000 £000 £000 £000 £000 £000 £000 £000 £000 Change Management Fund 29,424 29,424 1,624 27,800 - - 27,800 27,800 - - Earmarked & One Off Resources Schools Future Contractual Obligations 54,175 - - - 54,175 - 54,175 54,175 - - COVID-19 Directed Funding 6,392 6,392 6,392 - - - - - - - COVID-19 General Funding 21,159 19,397 19,397 - 1,762 - 1,762 1,762 - - Covid Recovery (From Core) 3,000 3,000 3,000 - - - - - - - Early Learning and Childcare 14,249 7,490 7,490 - 6,759 - 6,759 6,759 - - Strategice Workforce Planning 13,000 13,000 13,000 - - - - - - - Temporary Accomodation 9,288 9,288 9,288 - - - - - - - 2022/23 Budget One-off Investment 6,000 6,000 6,000 - - - - - - - DSM Balances 5,332 5,332 5,332 - - - - - - - Winter Reserve 1,500 1,500 1,500 - - - - - - - Youth Guarantee Funding 2,367 2,367 2,367 - - - - - - - Pupil Equity Fund 5,122 5,122 5,122 - - - - - - - Energy Costs and Other Non Pay Inflation 7,220 7,220 7,220 - - - - - - - Digitisation 2,499 2,319 2,319 - 180 - 180 180 - - Enterprise Contract 1,686 1,000 1,000 - 686 - 686 686 - - Business Gateway & Business Recovery 1,700 801 801 - 899 - 899 899 - - Active and Creative Communitites 2,000 2,000 2,000 - - - - - - - Rapid Rehousing (Non-COVID) 1,159 500 500 - 659 - 659 659 - - Other Earmarked Funds 11,239 10,444 10,444 - 795 - 794 794 - - Earmarked & One Off Resources Total 169,087 103,172 103,172 - 65,915 - 65,914 65,914 - - Total Reserves 198,511 132,596 104,796 27,800 65,915 - 93,714 93,714 - - Contingency Reserve 8,000 Unallocated Balance 32,718 General Fund Surplus at 31 March 2019 239,229 NORTH LANARKSHIRE COUNCIL ANTICIPATED COMMITMENTS AGAINST EARMARKED RESERVES AS AT 22 July 2022 (PERIOD 4) 2022/23 Future Years
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Appendix 3 £000 £000 Total Balance B/f per 2021/22 Unaudited Accounts 29,424 32,718 Period 4 reported underspend 158 Total Balance 2022/23 before commitments 29,424 32,876 Known Commitments :- Revised one - off costs of approved savings (1,624) Draw down from Capital Fund 396 Total Balance 2022/23 27,800 33,272 Estimated future Commitments to 2026/27 (27,800) Estimated future Capital Fund Drawdown to 2023/24 1,000 Forecast Balance 0 34,272 NORTH LANARKSHIRE COUNCIL AVAILABILITY OF GENERAL FUND BALANCES AS AT 22 July 2022 (PERIOD 4) Change Management Fund Unallocated General Fund