Enterprise and Communities - Revenue Monitoring Report
North Lanarkshire Council · 15 February 2023
Back to Housing Committee — 15 February 2023 and its agenda
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North Lanarkshire Council Report Housing Committee Does this report require to be approved? ☐ Yes ☒ No Ref GT/JMcG Date 15/02/23 Revenue Monitoring Report – Enterprise and Communities From Derek Brown, Depute Chief Executive E-mail telferg@northlan.gov.uk Telephone Greg Telfer, Business Finance Manager, 07583 010692 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. Executive Summary This report provides a summary of the financial performance of the Enterprise and Communities service for the period 1 April 2021 to 6 January 2023 (Period 10). The report illustrates the projected outturn as at 31 March 2023, with major outturn variances highlighted and explained as per the Council’s approved Financial Regulations. In summary, the Enterprise and Communities Service is currently forecasting an overspend of £3.342m. This is mainly attributable to inflationary pressures (£2.625m), which will be offset by a corporate contingency, and the reallocation of DigitalNL savings to Services (£0.783m). The Service continues to work with Business and Digital to progress plans for delivery of these savings. Note these Period 10 figures exclude the impact of the agreed 2022/23 pay award which is being reported corporately at this point in time. Recommendations It is recommended that Committee: (1) Acknowledges the financial position of the 2023/23 Enterprise and Communities revenue budget. The Plan for North Lanarkshire Priority Improve economic opportunities and outcomes Ambition statement (25) Ensure intelligent use of data and information to support fully evidence based decision making and future planning
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1.2 The most significant financial risk facing Enterprise and Communities during 2022/23 is inflationary pressures across a number of service areas including fuel, utilities, food costs, waste tonnage and contractual inflation on property and road maintenance contracts. At Period 10 it is forecast that the impact of this is £2.625m and this will continue to be monitored and reported through service budget monitoring reports alongside the ongoing impact of the curtailment of non-essential expenditure with the overall impact managed corporately. 2. Report Summary of Financial Position 2.1 The Council approved its General Fund Revenue Budget on 17 February 2022, of which £146.298m (17%) represented the approved Net Revenue Budget for Enterprise and Communities. Since then there has been additional budget added for Scottish Government funding for climate change (£0.075m) and reduction in relation to budget transfers to other services (£0.168m), the transfer of DigitalNL savings (£1.535m) as well as a reduction in the National Insurance budget to reflect chances in UK Government tax policy (£0.140m). These changes result in a revised Enterprise and Communities Net Budget of £144.530m. 2.1.1 Enterprise and Communities is forecasting an overspend of £3.342m in relation to inflationary pressures (£2.625m), and a delay in the delivery of savings linked to the DigitalNL programme (£0.783m), offset in part with other minor service underspends across the service (£0.067m). 2.1.2 Like most organisations, the Council is facing significant pressures linked to the wider economic outlook and high inflation. Across the service the current forecast is unbudgeted costs of £2.625m across energy, waste disposal, fuel, food and materials. The Council has set aside approximately £9.400m corporately to support unbudgeted inflationary pressures faced by services. 2.1.3 In addition, the Service faces a cost pressure attributable to the delay in implementation of savings linked to the DigitalNL programme (£0.783m). The service continues to work with Business and Digital to progress plans for the delivery of these savings. 2.1.4 Section 2.2 provides commentary on the financial performance of the Service per division excluding the impacts of inflation and digital savings. In addition, Appendices 1 to 6 of this report provide further explanation of the significant budget variations contributing to this outturn position. 2.1.5 The 2022/23 Enterprise and Communities budget incorporates £3.080m of savings previously approved by Council on 2 March 2021 with £0.905m of savings (29%) deliverable within the current financial year. Further information regarding particularly challenging savings is noted in paragraph 2.4 below. Analysis of Significant Variations 2.2 Excluding the impact of inflation, digital savings and National Insurance changes, the Enterprise and Communities service currently forecasts a year-end underspend of £0.067m. As at Period 10, there are largely compensating variances across the divisions as follows:
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2.2.1 Regulatory Service and Waste Solutions (£1.415m overspend) The projected overspend is largely attributable to increased agency and overtime costs in Waste as a result of delays in recruitment (£0.535m) and a net under-recovery in Special Uplifts as a result of reduced demand (£0.162m). Within Fleet there are increased leasing costs (£0.115m), increased external hire costs (£0.317m) and costs for vehicle parts (£0.117m) partially offset by vacancy savings (£0.117m). 2.2.2 Asset and Procurement Solutions (£0.058m overspend) The division projects an overspend of £0.223m within property costs due to a delay in the timing of office accommodation savings and loss of rental income (£0.580m) offset by the use of an ear-marked reserve and employee vacancies. Within the provision of school meals the service expects an under recovery in paid meal income (£0.142m) which is fully offset by vacancies across the division. 2.2.3 Planning and Regeneration (£0.897m underspend) The underspend within Planning and Regeneration is related to vacancy savings (£0.342m), additional grant income (£0.105m) and an over-recovery in planning fee income (£0.403m). 2.2.4 Environmental Assets (£0.509m Underspend) The Environmental Assets division is forecasting net vacancy savings of £1.530m partly offset by increased overtime of £0.350m. This underspend is as a result of difficulties in recruiting key posts across the division. Income is also forecast to over recover by £0.107m mainly from charges in relation to road occupation and construction consents. This is partially offset by costs in relation to electric vehicle charging for which there has been significantly increased demand and unit costs (£0.539m) and consultants fees to support project delivery (£0.253m). 2.2.5 Included within the reported outturn is the Council’s trading services. For 2022/23 the Council approved a surplus budget of £0.596m. The Council must comply with a statutory requirement to at least break-even over a rolling three year period. The combined surplus in 2019/20, 2020/21 and 2021/22 was £0.380m. As at Period 10 there are no significant variations to report with regards to trading services. 2.2.6 Payments to other bodies are detailed in Appendix 3. This expenditure category accounts for £21.302m with a minor overspend of £0.107m forecasted for 2022/23. Earmarked and One-off Reserves 2.3 Enterprise and Communities was given approval to earmark £17.503m of resources during the completion of the 2021/22 annual accounts. It is forecast that £10.336m of the reserve balance will be utilised in 2022/23. A balance of £6.915m is required for the original purpose in future years. The remaining balance of £0.252m is no longer required for Business Recovery/Growth. Appendix 4 details the individual Earmarked Reserves. 2022/23 Budget Savings and Growth 2.4.1 The Service uses a variety of information, records and processes to monitor achievement of its approved budget savings of £3.080m. As at Period 10, £0.905m (29%) of its approved savings are achievable during the year. The gap of £2.176m represents digital savings (£1.428m), which has been partially offset by use of an earmarked reserves in 2022/23 (£0.644m). A timing delay in office rationalisation
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(£0.580m) which has been fully offset in-year from temporary rates savings and other in year property cost savings and vacancy savings within Asset and Procurement Solutions. The previously approved reduction in school cleaning (£0.200m) has also been offset by use of earmarked reserves in 2022/23 and incorporated into the Council’s Medium Term Financial Planning assumptions. The other staff saving (£0.076m) is being offset by in year vacancy savings. 2.4.2 As part of the Council’s investment budgets for 2021/22 and 2022/23, Enterprise and Communities was allocated £9.228m towards a number of one-off investments. Appendix 6 highlights in detail how these are being utilised across the Service. Management Actions 2.5 The Service continues to take a range of corrective management actions to ensure it manages cost pressures. This includes curtailment of non-essential spend and monitoring of vacancies. Change Management 2.6 The Service expects to use £0.423m of the Council’s Change Management Fund mainly to support the supply of new bins and materials within Environmental Assets, as well as redundancy. Costs within the Change Management Fund are not included in the Service outturn position 3. Measures of success 3.1 The Service continues to operate within the approved budget resources 4. Supporting documentation Appendix 1 Objective Analysis Appendix 2 Subjective Analysis Appendix 3 Payments to Other Bodies Analysis Appendix 4 Status of Earmarked Reserves Appendix 5 Challenging Savings Appendix 6 One-Off Investments Derek Brown Depute Chief Executive
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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 Finance? Yes ☒ No ☐ If Yes, please provide a brief summary of the impact? The Service continues to curtail non-essential expenditure and take management action to minimise the impact of cost pressures on the Council’s overall financial position. 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 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 have 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 ☐
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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 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? All activities undertaken by the Council are subject to risk, and in acknowledging the Council’s approved Risk Management Strategy, Services managed these as part of their overall corporate and service planning processes. The current economic climate, in particular, has the potential to impact upon the Council’s ability to provide quality services within the approved budget levels. To reduce other financial risks, this report was prepared by service based Financial Solutions personnel in consultation with budget managers, in accordance with the Financial Regulations. 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.
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Appendix 1 DIVISION OF SERVICE BUDGET ACTUAL ANNUAL PROJECTED MOVEMENT FROM ANALYSIS TO DATE TO DATE BUDGET OUTTURN % PERIOD 9 (1) (2) (3) (5) (6) (8) (9) (10) £ £ £ £ % ENVIRONMENTAL ASSETS 23,747,538 23,765,204 47,357,455 48,022,576 (1.4%) (124,907) Overspend as a result of Utility Inflation/waste disposal/ Digital savings (£1.148m) and increased usage and price for Electric Vehicle Charging and consultant fees partly offset by vacancy savings and increased income for Road occupations and construction consents. REGULATORY SERVICES AND WASTE SOLUTIONS 25,097,823 25,649,228 37,123,707 39,609,856 (6.7%) (59,958) Overspend as a result of Inflation mainly for Waste Disposal costs /Fuel/ Vehicles parts and digital savings (£1.071m). Additional spend in agency costs/overtime due to recruitment delays parly offset by vacancies and also reduced demand for Special Uplift resulting in an under recovery in income. ASSETS & PROCUREMENT 31,759,645 31,236,648 38,272,520 39,289,023 (2.7%) 13,454 Overspend as a result of Utility and Food Inflation and Digital Savings (£0.958m) and timing delays in Office Rationalisation savings and lost rental income. There is also an under recovery in paid meal income which is offset fully by vacancy savings. PLANNING & REGENERATION 4,496,069 3,966,960 9,545,283 8,647,959 9.4% 363,398 Underspend mainly as a result of Vacancy savings, and increased planning fee income, as well as additional grant income. HOUSING SOLUTIONS 1,120,851 1,041,532 5,330,715 5,364,201 (0.6%) 53,549 Overspend on Digital savings and Utility inflation (£0.141m), partially offset by vacancy savings and other minor miscellaneous budget savings. HOUSING PROPERTY & PROJECTS 6,158,968 5,976,608 7,495,518 7,533,142 (0.5%) 10,000 Overspend as a result Utility inflation (£0.063m) partially offset by vacancy savings. TRADING (623,992) (615,341) (595,542) (595,542) 0.0% (1) Balanced budget NET EXPENDITURE 91,756,902 91,020,839 144,529,656 147,871,215 255,535 (4) (7) Enterprise & Communities Revenue Budget Monitoring Report - Objective Analysis 1st April 2022 - 6th January 2023 (PERIOD 10) YEAR TO DATE PROVISIONAL VARIANCE VARIANCE £ (665,121) (1,016,503) (2,486,149) 522,998 529,109 79,319 £ (17,666) (551,405) 0 736,063 (3,341,559) 897,324 (33,486) (37,624)182,360 (8,652)
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Budget 2022/23 Enterprise & Communities Appendix 6 One-off Investments Priorities £'m £'m £'m £'m Division Priority Area Council Motion Narrative 2022/23 Allocation Actual To Date Projected Outturn Future EMR Request Approved in March 2022 APS Recover NL Pitch Improvement Programme Targeted investment in the Councils Pitch estate to upgrade four existing pitches to synthetic surfaces at Harthill, Moodiesburn, Cleland and Mossend and replace existing synthetic pitches reaching the end of their economic life. This will support increased participation and letting income. 2.200 0.000 2.200 2.200 Env Assets Community safety Investment in signage and community safety improvements across North Lanarkshire to support the introduction of mandatory 20mph speed limits around schools, early learning and childcare establishments. 2.005 0.496 0.496 1.509 Env Assets Cemetery and Footpath Improvements Infrastructure improvements to existing cemeteries and investment to improve footpaths and accessibility across the Councils communities, active travel routes and country parks 1.500 1.500 1.500 Planning & Regen Recover NL - Town Centre Improvements Augmentation of Place Based Investment Programme to support community-led initiatives for town centre revitalisation 1.000 0.141 0.141 0.8594 EA / RSWS Recover NL - Environmental Improvements Continuation of RecoverNL environmental improvements including community led clean-ups, action on fly tipping and pest control activity 0.850 0.167 0.683 Env Assets Community Sustainability Projects To focus on enhancing sustainability and reducing the Councils carbon footprint a range of projects will be delivered including wildflower planting across town parks and the school estate. The investment will include exploring and delivering options for natural play within communities and investment in green energy interventions to promote carbon neutrality in country parks 0.700 0.675 0.675 0.025 Sub Total 8.255 2.979 5.694 4.594 Approved in March 2021 Env Assets Festive Lighting Provision of Xmas Lights in Towns in 2021/22 and 2022/23 at a cost of £0.150 million per year. 0.150 0.114 0.150 Env Assets Road Improvements Targeted Improvement to provide additional community benefit on schemes such as road infrastructure improvements, resurfacing and pot holes, road safety schemes, signage upgrades (i.e. 20mphs) and discrete road improvements 0.133 0.086 0.133 Housing Solutions Anti Social Task Force Provide Antisocial Behaviour Services for Private Residents in both 2021/22 and 2022/23 0.321 0.11123 0.183 0.13823 RSWS PEST Control Treat defined priority areas over the summer period to address local concerns. 0.127 0.056 0.127 RSWS Housing Grants to Owner Occupiers - Mixed TenureTo provide grants to owner occupiers in mixed tenure settings to facilitate structural upgrades. (£0.150m per year in both 2021/22 and 2022/23) 0.243 0.056 0.243 Sub Total 0.973 0.423 0.835 0.138 Total 9.228 3.403 6.530 4.732 One off Investment