Revenue Monitoring Report Council Summary 1 April to 21 July 2023
North Lanarkshire Council · 13 September 2023
Back to Finance and Resources Committee — 13 September 2023 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 Date 13/09/23 Revenue Monitoring Report Council Summary 1 April 2023 to 21 July 2023 From Elaine Kemp, Chief Officer (Finance) E-mail kempe@northlan.gov.uk Telephone 07939 280601 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 2024. 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 23 February 2023. Following notification from Scottish Government of further funding made available to local authorities the budget has been revised to £941.227m. The Council is currently projecting a surplus of £1.002m against this budget. The 2023/24 budget incorporates £7.486m of net savings. It is projected that £7.418m of the savings (99%) will be delivered within the financial year, with replacement savings of £0.068m identified to fully address the shortfall. Recommendations It is recommended that the Finance and Resources Committee: (1) Acknowledge the financial position of the 2023/24 revenue budget; and (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 services 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, services 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 Summary of General Fund Financial Position 2.1 At its meeting of 23 February 2023, the Council approved a General Fund Revenue Budget of £978.624m which included spend offset by ring fenced grants of £50.586m and capital grant funding in lieu of pay award funding of £7.726m. Additional funding has since been confirmed as part of the Scottish Government budget setting, including additional directed funding for Pay Awards, resulting in an overall total budget of £941.227m. 2.2 Following the budget setting in February the Council has an approved savings target of £7.486m for 2023/24. Further detail can be found in Section 2.7 below. 2.3 Table 1 below summarises the projected income and expenditure position, which illustrates a projected surplus of £1.002m is currently envisaged at this early stage in the financial year. Annual Budget (£m) Projected Outturn (£m) P4 Variance (£m) P3 Variance (£m) P3 to P4 Movement (£m) Expenditure Total Expenditure 941.227 940.225 1.002 0.855 0.147 Income Aggregate External Finance 756.703 756.703 - - - Local Tax Collection 166.849 166.849 - - - Use of Balance 17.675 17.675 - - - Total Income 941.227 941.227 - - - Projected variance: Surplus/(Deficit) at 31 March 2024 - 1.002 1.002 0.855 0.147 Table 1 Analysis of Significant Variations 2.4 Table 2 below illustrates the projected outturn financial position of services:
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Service P4 Outturn (£m) P3 Outturn (£m) P3 to P4 Movement (£m) Education, Children and Families - On Budget - On Budget - Enterprise and Communities 0.855 Underspend 0.855 Underspend - Chief Executives and Other Corporate Services 0.147 Underspend - On Budget 0.147 Social Work (Non-Integrated) - On Budget - On Budget - Executive Services Total 1.002 Underspend 0.855 Underspend 0.147 Financing Costs - On Budget - On Budget - Total Projected Surplus/(Deficit) 1.002 Underspend 0.855 Underspend 0.147 Table 2 2.5 Enterprise and Communities is reporting a projected underspend of £0.855m. This is primarily as a result of employee vacancy savings across the service of £2.375m, together with savings in administration costs of £0.379m primarily linked to grant received in advance of need in relation to free school meals. This is partially offset by an under-recovery in income of £0.857m mainly due to reduced special uplift income and cemetery fees, increased transport costs of £0.279m due to increased fleet material costs and increased plant hire costs. 2.6 Chief Executives and Other Corporate Services is reporting a small projected underspend of £0.147m. This is largely due to a projected underspend of £0.423m within employee costs as a result of vacancies, partially offset with a net overall under- recovery in income of £0.107m in relation to legal insurance, licensing and registrars which are partly offset by higher than anticipated income in relation to rent allowances/rent rebates overpayments. 2.7 Education, Children and Families is reporting a breakeven position overall. However, Committee should note the service is forecasting an underspend in employee costs of £2.211m, largely due to vacancy management. This is offset by an overspend of £1.116m transport costs arising from ASN cost pressures and increased market prices together with under-recoveries in income in relation to membership fees and admissions charges within Active & Creative Communities of £0.500m, and reduced cross-boundary ASN placements within NLC educational settings of £0.296m. 2.8 It should be noted that work is underway to update the longer term forecast on loan charges and interest on revenue balances largely to reflect the impact of higher interest rates, previous one-off debt re-profiling and forecast use of balances. The outcome of this review will be incorporated into the Updated Financial Outlook which will be reported to Policy and Strategy Committee on 28 September 2023 and will also give consideration to potential one-off and recurring budget solutions over the longer term, including any potential to earmark unallocated balances to help smooth the impact on future budget gaps. Any impact on financial year 2023/24 will be included in a future report to this Committee. 2023/24 Budget Savings 2.9 As outlined in paragraph 2.2 above, the Council has approved net savings of £7.486m for 2023/24. Each Service reports on the achievement of their savings within the
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relevant service monitoring report. It is projected that £7.418m of savings (99%) will be achieved in the current year, with the in-year gap of £0.068m being fully mitigated by replacement savings. Earmarked Reserves and Change Management Fund 2.10 The Council’s audited annual accounts highlight a General Fund reserve balance of £249.872m. This balance includes £8.000m for the Contingency Fund, with a further £202.845m earmarked for specific future commitments including £28.115m 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. The remaining £39.027m of funds represent balances that were unallocated as at 31 March 2023. A total of £0.110m has subsequently been allocated in relation to 5 additional posts to facilitate the transition to iTrent recruitment, resulting in a revised earmarked reserve balance of £202.955m, and unallocated balances of £38.917m. 2.11 A total of £98.082m of earmarked reserves is profiled for use in 2023/24 with a further £104.873m profiled for use in future years. It is currently projected that £92.449m of the 2023/24 earmarked reserves will be spent during this financial year with £110.346m anticipated to be required in future years and reserves of £0.160m deemed no longer required. A summary position is shown in Appendix 2. Taking into account the projected surplus of £1.002m together with a drawdown from the Capital Fund of £2.608m and earmarked reserves no longer required noted above, it is expected that at the end of the financial year the General Fund will include unallocated balances of £42.687m as detailed in Appendix 3. Risks and Uncertainty 2.12 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, and pay and non-pay inflation continuing at historically high levels, are some of the key factors that have the potential to impact upon the Council’s ability to provide quality services within approved budget levels. Housing Revenue Account 2.13 The Housing Revenue Account is currently projecting a breakeven position for the financial year and anticipate that £0.070m of savings (100%) will be delivered by the year end. Adult Health and Social Care 2.14 Council Adult Health and Social Care provision to the Integration Joint Board (IJB) is projecting an underspend of £3.014m. This position is primarily due to a projected underspend in employee costs of £5.037m as a result of slippage in recruitment, which is partially offset by a projected overspend of £1.929m in Payments to Other Bodies and Transfer Payments primarily in relation to the Care at Home sector who provide services to individuals via the SDS commissioning framework. 3. Measures of success 3.1 The Council continues to operate within approved budgeted resources.
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4. Supporting documentation Appendix 1 Summary by Division Appendix 2 Anticipated Commitments – Earmarked Reserves Appendix 3 Availability of One-Off Funds – Change Management Fund Elaine Kemp Chief Officer (Finance)
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5. Impacts 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 been discussed and agreed with Finance? 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 been discussed and agreed with People Resources? 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 been discussed and agreed with Legal and Democratic? Yes ☐ No ☐ If Yes, please provide a brief summary of the impact? 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?
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Where the impact identifies a requirement for significant technology change, has an assessment been carried out (or is scheduled to be carried out) 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? 5.10 Armed Forces Covenant Duty Does the report require to take due regard of the Armed Forces Covenant Duty (i.e. does it relate to healthcare, housing, or education services for in-Service or ex- Service personnel, or their families, or widow(er)s)? Yes ☐ No ☒ If Yes, please provide a brief summary of the provision which has been made to ensure there has been appropriate consideration of the particular needs of the Armed Forces community to make sure that they do not face disadvantage compared to other citizens in the provision of public services. 5.11 Children’s rights and wellbeing impact Does the report contain any information regarding any council activity, service delivery, policy, or plan that has an impact on children and young people up to the age of 18, or on a specific group of these? Yes ☐ No ☒ If Yes, please provide a brief summary of the impact and the provision that has been made to ensure there has been appropriate consideration of the relevant Articles from the United Nations Convention on the Rights of the Child (UNCRC). If Yes, has a Children’s Rights and Wellbeing Impact Assessment (CRWIA) been carried out? Yes ☐ No ☐
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LINE SERVICE ACCOUNT ANNUAL PROVISIONAL NO. BUDGET OUTTURN (1) (2) (3) (4) £ £ £ 1 Education & Families 504,478,377 504,478,377 - 2 Early Years 33,450,680 33,450,680 - 3 Primary Schools 139,936,598 139,936,598 - 4 Secondary Schools 133,540,747 133,540,747 - 5 Special Schools 22,760,438 22,760,438 - 6 Education & Families Service Delivery 93,487,676 95,246,661 (1,758,985 ) 7 Childrens Services Social Work 41,021,683 39,571,683 1,450,000 8 Justice Services 97,399 (102,601 ) 200,000 9 Active and Creative Communities 27,861,906 27,743,156 118,750 10 Employability 4,957,328 4,957,328 - 11 Community Learning 5,407,040 5,416,805 (9,765 ) 12 Tackling Poverty 1,956,882 1,956,882 - 13 Enterprise & Communities 153,119,449 152,264,228 855,221 14 Assets & Procurement 41,694,381 41,365,706 328,675 15 Trading Accounts (550,542 ) (542,219 ) (8,323 ) 16 Community Operations 88,908,014 88,797,470 110,544 17 Housing Management 5,652,817 5,652,817 - 18 Housing Property Services 8,823,633 8,823,633 - 19 Place 8,591,146 8,166,821 424,325 20 Chief Executives & Other Corporate Services 93,198,265 93,051,696 146,569 21 Directorate & Support 412,144 412,144 - 22 Finance 45,118,514 45,118,514 - 23 Audit & Risk 614,959 581,813 33,146 24 Legal & Democratic 2,624,054 2,782,840 (158,786 ) 25 Business & Digital 22,301,722 22,029,513 272,209 26 People Resources 8,582,504 8,582,504 - 27 Strategic Communication and Engagement 5,104,939 5,104,939 - 28 Other Corporate Services (4,301,622 ) (4,301,622 ) - 29 Joint Boards 12,741,051 12,741,051 - 30 Social Work (non Integrated) 193,862,112 193,862,112 - 31 GENERAL FUND SERVICES 944,658,203 943,656,413 1,001,790 32 FINANCING COSTS (44,490,145 ) (44,490,145 ) - 33 Reversal of Capital Charge (77,069,073 ) (77,069,073 ) - 34 Loan Charges and Interest on Revenue Balances 32,578,928 32,578,928 - 35 OTHER BUDGETARY ISSUES 41,059,407 41,059,407 - 36 Assumptions not yet Realised 41,059,407 41,059,407 - 37 Drawdown from Reserves - - - 38 TOTAL EXPENDITURE 941,227,465 940,225,675 1,001,790 39 SOURCES OF FUNDING 941,227,465 941,227,465 - 40 Aggregate External Finance 756,703,000 756,703,000 - 41 Council Tax 166,849,465 166,849,465 - 46 Use of balances 17,675,000 17,675,000 - 47 (SURPLUS) / DEFICIT - (1,001,790 ) 1,001,790 48 HOUSING REVENUE ACCOUNT (SURPLUS) / DEFICIT - - - 49 ADULT HEALTH AND SOCIAL CARE (SURPLUS) /DEFICIT - (3,013,657 ) 3,013,657 Appendix 1 NORTH LANARKSHIRE COUNCIL SUMMARY BY DIVISION FOR PERIOD ENDING 21 July 2023 (PERIOD 4) PROVISIONAL VARIANCES
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Appendix 2 Total Total Opening Reserve Balances In-Year Adjustment Revised Reserve Balance 2023/24 Revised Earmarked Reserve 23/24 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 £000 £000 Change Management Fund 28,115 - 28,115 83 83 - - - 28,032 28,032 - - Earmarked & One Off Resources Schools Future Contractual Obligations 56,684 - 56,684 - - - - - 56,684 56,684 - - 2023/24 - 2024/25 Budget One-off Use of Balances 21,075 - 21,075 17,675 17,675 - - - 3,400 3,400 - - Strategic Workforce Planning 13,000 - 13,000 13,000 13,000 - - - - - - - Temporary Teachers 10,928 - 10,928 10,928 10,928 - - - - - - - Temporary Accommodation 9,288 - 9,288 - - - - - 9,288 9,288 - - Early Years & Childcare Expansion 7,312 - 7,312 7,312 7,312 - - - - - - - Refugee Resettlement Programmes 5,699 - 5,699 5,699 2,065 3,634 3,634 - - - - - Loans Charges - one-off mitigation 5,000 - 5,000 - - - - - 5,000 5,000 - - Non-Pay Inflation Mitigation 4,902 - 4,902 4,902 4,902 - - - - - - - Unmanaged burdens within Education, Children & Families 4,755 - 4,755 4,755 4,755 - - - - - - - Other E&C Service developments 4,184 - 4,184 3,484 2,212 1,272 1,175 97 700 700 - 97 Pupil Equity Fund 3,851 - 3,851 3,851 3,851 - - - - - - - Balances held by Schools under Devolved School Management 3,724 - 3,724 3,724 3,724 - - - - - - - Economic Recovery 3,554 - 3,554 3,554 3,554 - - - - - - - Whole Family Wellbeing 2,584 - 2,584 2,584 2,584 - - - - - - - Winter Reserve 1,500 - 1,500 1,500 1,500 - - - - - - - Business Gateway and Business Recovery 1,379 - 1,379 899 899 - - - 480 480 - - Rapid Rehousing 1,081 - 1,081 1,081 1,081 - - - - - - - Other Earmarked Funds 14,230 110 14,340 13,051 12,324 727 664 63 1,289 1,289 - 63 Earmarked & One Off Resources Total 174,730 110 174,840 97,999 92,366 5,633 5,473 160 76,841 76,841 - 160 Total Reserves 202,845 110 202,955 98,082 92,449 5,633 5,473 160 104,873 104,873 - 160 Contingency Reserve 8,000 - 8,000 Unallocated Balance 39,027 110- 38,917 General Fund Surplus at 31 March 2023 249,872 - 249,872 NORTH LANARKSHIRE COUNCIL ANTICIPATED COMMITMENTS AGAINST EARMARKED RESERVES AS AT 21 July 2023 (PERIOD 4) 2023/24 Future Years
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Appendix 3 £000 £000 Total Balance B/f per 2022/23 Annual Accounts 28,115 39,027 Approved commitments (110) 28,115 38,917 Period 4 reported variance 1,002 Earmarked Reserves no longer required 160 Total Balance 2023/24 before commitments 28,115 40,079 Known Commitments :- Revised one - off costs of approved savings (83) Draw down from Capital Fund 2,608 Total Balance 2023/24 28,032 42,687 Known Commitments :- Revised one - off costs of approved savings (7,688) Estimated future Capital Fund Drawdown to 2024/25 3,279 Forecast Balance 20,344 45,966 NORTH LANARKSHIRE COUNCIL AVAILABILITY OF GENERAL FUND BALANCES AS AT 21 July 2023 (PERIOD 4) Change Management Fund Unallocated General Fund