Revenue Monitoring Report - Enterprise and Communities
North Lanarkshire Council · 10 May 2023
Back to Housing Committee — 10 May 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 10/05/23 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 Executive Summary This report provides a summary of the financial performance of the Enterprise and Communities service for the period 1 April 2022 to 3 March 2023 (Period 12). 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 £2.380m. This is attributable to inflationary pressures (£2.652m), 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. The Service is also forecasting an underlying underspend of £1.056m mainly as a result of increased vacancy savings and additional income. Recommendations It is recommended that Committee: (1) Acknowledges the financial position of the 2022/23 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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action required to rectify such deviations and where relevant, must also highlight the impact this has on other budget headings. 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 12 it is forecast that the impact of this is £2.652m 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 a number of budget movements with increases linked to additional funding from Scottish Government funding for climate change (£0.075m) and the Green Growth Accelerator project at Strathclyde Park (£0.026m) and reductions linked to budget transfers to other services (£0.168m), the transfer of DigitalNL savings (£1.535m), a reduction in the Employer National Insurance budget to reflect changes in UK Government tax policy (£0.140m) and a budget transfer to Loans Charges to fund spend-to-save capital expenditure on LED streetlighting (£0.160m). These changes result in a revised Enterprise and Communities Net Budget of £144.396m. 2.1.1 Enterprise and Communities is forecasting an overspend of £2.380m in relation to inflationary pressures (£2.652m), and a delay in the delivery of savings linked to the DigitalNL programme (£0.783m), partially offset by service underspends of £1.056m. 2.1.2 Like most organisations, the Council is facing significant pressures linked to the wider economic outlook and high inflation. Across this service the current forecast is for unbudgeted inflationary pressures of £2.652m linked to energy, waste disposal, fuel, food and materials. The Council has set aside approximately £9.400m corporately to support unbudgeted inflationary pressures faced by services. 2.1.2 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. 2.1.3 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. 2.1.4 The 2022/23 Enterprise and Communities budget incorporates £3.080m of savings previously approved by Council on 2 March 2021 with £0.711m of savings (23%) deliverable within the current financial year. Further information regarding particularly challenging savings is noted in paragraph 2.4 below.
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Analysis of Significant Variations 2.2 Excluding the impact of inflation, digital savings, the Enterprise and Communities service currently forecasts a year-end underspend of £1.056m As at Period 12, there are largely compensating variances across the divisions as follows: 2.2.1 Environmental Assets (£1.109m Underspend) The Environmental Assets division is forecasting net vacancy savings of £1.725m partially offset by increased overtime (£0.360m). This underspend is as a result of difficulties in recruiting key posts across the division. Income is also forecast to over recover by £0.484m mainly from charges in relation to road occupation and construction consents (£0.298m), fees and charges income relating to the Country Parks (£0.177m) which includes the use of Strathclyde Park for outdoor education, cemetery fees (£0.071m) and net parking income (£0.108m). This is partially offset by a shortfall in the recharge to capital by design staff due to vacancies (£0.444m) and external fees (£0.348m). In addition, the service has an in-year overspend of £0.600m associated with increased demand and unit costs for electric vehicle charging. A charging policy is now in place to assist in reducing the in-year electric vehicle charging charging overspend this year, and it is anticipated that this service should be in a break- even position in future years. 2.2.2 Regulatory Service and Waste Solutions (£0.639m overspend) The projected overspend is largely attributable to increased agency costs in Waste as a result of delays in recruitment (£0.485m) and a net under-recovery in Special Uplifts as a result of reduced demand (£0.150m). The adverse variance in Waste is partially reduced by underspends in Employee Costs, mainly as a result of vacancies offset by overtime costs (£0.394m). Within Fleet, increased external hire costs (£0.484m), increased leasing costs (£0.154m) are also partially offset by underspends in Employee Costs mainly as a result of vacancies (£0.207m). In addition, there are over-recoveries of building warrant (£0.496m) and landlord registration fee income (£0.140m) within Built Environment. 2.2.3 Asset and Procurement Solutions (£0.834m overspend) The projected overspend includes the timing of office accommodation savings (£0.667m). Within Adminstration costs there is an overspend of £0.471m which relates to consultancy spend across Asset Management and Design team this is fully offset within employee costs as a result of difficulties in recruiting key posts. The expected under recovery in paid meal income (£0.195m) due to the delay in price increase is partially offset by an increase in paid school meal income (£0.087m) and vacancies across Facility Support Services. 2.2.4 Planning and Regeneration (£1.154m underspend) The underspend within Planning and Regeneration is attributable to vacancy savings (£0.412m), additional grant income (£0.194m), and an over-recovery in planning fee income (£0.483m). 2.2.5 Housing Solutions (£0.403m underspend) The underspend within Housing Solutions is mainly related to net vacancy savings within First Stop Shops, Homeless Support and Business Engagement.
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2.2.6 Housing Property & Projects (£0.136m overspend) The overspend within Housing Property & Projects is due to increased spend on essential repairs and electrical testing works (£0.342m) and these are partially offset by employee cost underspends within central repairs and the Customer Contact Centre (£0.182m). 2.2.7 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 12 there are no significant variations to report with regards to trading services. 2.2.8 Payments to other bodies are detailed in Appendix 3. This expenditure category accounts for £21.868m with a forecast overspend of £0.247m forecasted for 2022/23. Due to contract inflation for Scotland Excel Procurement (£0.061m) and repairing damages of hired/leased vehicles (£0.058m) 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 £8.084m of the reserve balance will be utilised in 2022/23. A balance of £9.167m 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 12, £0.711m (23%) of its approved savings are achievable during the year. The gap of £2.370m represents digital savings (£1.428m), which have been partially offset by use of an earmarked reserve in 2022/23 (£0.784m); and timing delays in office rationalisation (£0.667m) which have been offset by an earmarked reserve 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. 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.
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Change Management 2.6 The Service expects to use £0.333m of the Council’s Change Management Fund mainly to support reinstatement at Palacerigg Country Park as well as voluntary severance costs. 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 cos 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 4 Decription of Earmarked Resource Value % Dilapidations APS - Asset Mgt 524 524 524 116 524 0 0 0 0 Energy Mgt System and Office Rationalisation APS - Asset Mgt 551 551 0 551 0 51 0 0 500 0 Additional School Cleaning and Building Cleaning APS - Building Cleaning 431 431 0 431 431 431 0 0 0 0 Free school meal funds c/f for laptops preordered and not delivered APS - Catering 109 109 0 109 109 109 0 0 0 0 Pitches APS - Com Fac 70 70 0 70 0 70 0 0 0 0 Enterprise Contract APS - Ent Contract 1,686 1,000 0 1,000 280 564 0 0 436 0 Road improvements EA - Roads 133 133 0 133 133 133 0 0 0 0 Winter Reserve EA - Roads 1,500 1,500 0 1,500 0 0 0 0 1,500 0 Country Parks (Lighitng, rangers, events) EA - Visitors 429 316 0 316 309 309 0 0 7 0 Cemeteries EA - Visitors 140 140 0 140 102 102 0 0 38 0 Service Developments - Bothy H&S / Ashdie Back exploratory works EA - Visitors 350 350 0 350 200 200 0 0 150 0 HEEPS HPP 591 300 0 300 300 300 0 0 0 0 Additional Education Recovery - Ventillation HPP 415 415 0 415 415 415 0 0 0 0 Rapid rehousing HS 1,159 500 150 650 401 650 0 0 0 0 Tenant Hardship Rent Grant fund (LACER) HS 363 363 0 363 363 363 0 0 0 0 Anti Social Behaviour Task Force HS 121 121 0 121 121 121 0 0 0 0 City Deal - Delburn Street / Manse Road P&R - city deal 105 105 0 105 46 105 0 0 0 0 Business recovery/growth P&R - Enterprise 4,993 4,094 0 4,094 635 958 0 252 2,884 0 Local Development Plan P&R - P&P 290 150 0 150 3 3 0 0 148 0 LUF Ravenscraig P&R Growth 400 400 0 400 400 400 0 0 0 0 Housing Grants to owner occupiers RSWS - BE 93 93 0 93 65 93 0 0 0 0 Fleet - Grant for Lease Vehciles RSWS - Fleet 371 253 0 253 253 253 0 0 0 0 Bellshill Depot Eco hub - Due Diligence RSWS - Fleet 200 200 0 200 0 0 0 0 200 0 Protective Services - EHO/Pest Control/Food Safety/Env Health RSWS - PS 1,213 1,213 0 1,213 629 665 0 0 548 0 Waste Tonnage RSWS - Waste 622 622 0 622 622 622 0 0 0 0 Digital Savings E&C 644 644 0 644 644 644 0 0 0 Total 17,503 14,597 150 14,747 6,577 8,084 0 252 6,411 Section Commentary regards usageTotal Earmarked Reserve £000 Initial 22/23 Allocation Adjustments in year 22/23 Approved Reserve Total Spend To Date Projected Outturn, 2022/23 Reserves Required For 2023/24 Onwards Reserves No Longer Required Enterprise & Communities Status of Earmarked Resources 1st April 2022 - 3rd March 2023 Period 12 2022/23
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