Revenue Budget 2024-25 - Update No.1
Perth and Kinross Council · 18 September 2024
Back to Finance and Resources Committee — 18 September 2024 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
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PERTH & KINROSS COUNCIL FINANCE & RESOURCES COMMITTEE 13 SEPTEMBER 2024 REVENUE BUDGET 2024/25 – UPDATE NO. 1 Contact Officer: Scott Walker, Chief Finance Officer (Report No. 24/260) 1. PURPOSE 1.1 This report provides an update on progress with the 2024/25 General Fund Revenue Budget based upon the June 2024 ledger, updated for any subsequent known material movements, and the projected financial position of the Housing Revenue Account. 1.2 The total net projected over spend on the 2024/25 General Fund Management Budget is £1.608 million (£1.008 million at this time in 2023/24) (see Appendix 1). 2. RECOMMENDATIONS The Committee is requested to: A. note the contents of the report, B. note the projected outturn for General Fund Services set out in Section 5 and Appendix 1 and 2, C. note the projected outturn for Corporate Budgets set out in Section 6, D. note the funding update provided in Section 7, E. note the projected outturn for the Housing Revenue Account, which is summarised in Section 8 and Appendix 3, F. approve the adjustments to the 2024/25 Management Revenue Budget detailed in Sections 10,11 & 12 and Appendices 1, 2, 4, 5, 6, 7 and 8, G. note the financial risks set out in Section 13 and Appendix 9. 3. STRUCTURE Section 4 Background Section 5 Revenue Monitoring – Service Budgets Section 6 Revenue Monitoring – Corporate Budgets Section 7 Revenue Monitoring – Funding Section 8 Revenue Monitoring – Other Updates Section 9 Issues Arising from Financial Year 2023/24 Section 10 2024/25 Additional Funding Section 11 2024/25 Virements Section 12 2024/25 Movements in Reserves Section 13 Financial Risks Section 14 Conclusions
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4. BACKGROUND 4.1 This report updates the Committee on progress with the 2024/25 Revenue Budget. Appendix 1 to this report summarises the current projected year end (outturn) position for each Service based upon the June 2024 ledger, updated for any subsequent known material movements. 4.2 The budget reflected in Column 1 of Appendix 1 to this report is that approved by the Council in setting the final 2024/25 Revenue Budget on 28 February 2024 (Report No. 24/63 refers). In addition, adjustments approved by the Finance & Resources Committee on 24 April 2024 (Report No. 24/130) are reflected in Appendix 1 (Column 2). 5. REVENUE MONITORING – SERVICE BUDGETS 5.1 The total net projected over spend on Service budgets, which is summarised in Section 1 of Appendix 1 to this report, is £1.402 million which represents 0.4% of total net Service expenditure. 5.2 Details of variances against individual Service budgets are shown in Appendix 2 to this report with the most significant variances summarised below. 5.3 The management of Service over and under spends are considered throughout the financial year and may also form part of the Revenue Budget strategy for future years. 5.4 There remains a risk that the Council continues to experience increases in costs over the short to medium term that are higher than budgeted. Going forward, this may continue to have an impact on projected outturns and future years’ budgets. Education & Learning 5.5 The projected outturn for Education & Learning excluding Devolved School Management (DSM) and the Pupil Equity Fund (PEF) is currently anticipated to be £873,000 or 0.5% more than budget. The individual elements contributing to this position are summarised in the following table and with narrative on the significant variances below. Function Projected Outturn Movement £’000 % £’000 Education & Learning Core Under spend (5) (0.4) n/a Nursery Sector Under spend (677) (2.9) n/a Primary Sector Over spend 1,484 3.2 n/a Secondary Sector Over spend 80 2.1 n/a Special Sector Under spend (9) (0.05) n/a TOTAL Over spend 873 0.5% n/a 5.6 Within the Nursery Sector there is a projected under spend of £677,000. This is due to additional staff slippage in excess of the budgeted target as well
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as projected under spends on deferred places due to levels of uptake that are currently less than that budgeted. 5.7 In the Primary Sector there is a projected overspend of £1.484 million because the budgeted slippage target is currently not being met. As outlined in previous updates, all classes require to be appropriately staffed. 5.8 Within the Secondary Sector there is a projected overspend of £80,000 because the slippage target is currently not being met and increased loan charges. 5.9 The Devolved School Management Scheme is currently projected to be on target. However, schools are experiencing challenges in delivering approved staff slippage targets and facing inflationary pressures against budgets that have been reduced over previous years. The budgets for the Devolved School Management scheme are allocated by financial year (April – March), whereas expenditure is incurred by academic year (August – June). 5.10 At this stage of the academic year, expenditure met from the Pupil Equity Fund (PEF) is projected to be £100,000 less than the allocation from the Scottish Government of £1.874 million. Schools are being instructed to use this year’s PEF by 31 March 2025. It is anticipated that the projected under spend on teacher and support costs will be carried forward to 2025/26 to meet commitments. The budgets for the Pupil Equity Fund scheme are allocated by financial year, whereas expenditure is incurred by academic year. Children, Families & Justice 5.11 The projected outturn for Children, Families & Justice is currently anticipated to be on target against budget. The individual elements contributing to this position are summarised in the following table and with narrative on the significant variances below. Function Projected Outturn Movement £’000 % £’000 Children & Families On target 0 - n/a Justice Service On target 0 - n/a TOTAL On Target - - n/a 5.12 Despite Children & Families being on target against budget, there are projected over spends because slippage targets are not currently being met and additional residential placements. This is offset by projected under spends on foster, kinship and adoption payments. Housing & Communities 5.13 The projected outturn for Housing & Communities is currently anticipated to be £10,000 or 0.1% less than budget. The individual elements contributing to this position are summarised in the following table and with narrative on the significant variances below.
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Function Projected Outturn Movement £’000 % £’000 Service Wide Under spend (75) (0.8) n/a Housing General Fund Over spend 50 0.6 n/a Bereavement Services Over spend 15 1.9 n/a TOTAL Under spend (10) (0.1)% n/a 5.14 On a Service Wide basis, there is a projected under spend of £75,000 due to staff slippage in excess of the budgeted target. 5.15 Within the Housing General Fund there is a projected over spend of £50,000 due to void rent loss on housing support properties and increased costs relating to homelessness. Property Services 5.16 The projected outturn for Property Services is currently anticipated to be £686,000 or 1.0% more than budget. The individual elements contributing to this position are summarised in the following table and with narrative on the significant variances below. Function Projected Outturn Movement £’000 % £’000 Service Wide Over spend 426 0.6 n/a Energy Under spend (300) (3.5) n/a Maintenance Over spend 150 3.2 n/a Facilities Management Over spend 240 3.9 n/a Catering Over spend 170 2.4 n/a TOTAL Over spend 686 1.0% n/a 5.17 On a Service Wide basis, there is a projected over spend of £426,000. This is because, currently, slippage targets are not being met, delays in delivering savings from operational buildings which are partially offset by additional income. 5.18 On Energy, there is a projected under spend of £300,000 due to reduced rates and consumption. 5.19 On Maintenance, there is a projected over spend of £150,000 because of responsibility for Bells Sports Centre transferring back to the Council. 5.20 Within Facilities Management, there is a projected over spend of £240,000. This is due to a delay in implementing the approved savings following consultation and implementation of the saving from the beginning of the academic year, i.e. August 2024. 5.21 In Catering there is a projected over spend of £170,000. This is due to actual meals delivered from April to June 2024 being 3% higher than budgeted position with the increase mainly in free school meals.
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Legal & Governance 5.22 Within Legal & Governance there is a projected over spend of £40,000 or 0.9%. This is because, currently, slippage targets are not being met, partially offset by projected under spends on supplies & services and additional income. Customer & Digital 5.23 The projected outturn for Customer & Digital is currently anticipated to be £187,000 or 1.6% more than budget. The main reasons for this are projected over spends on service charges from social housing providers and supplies & services including printing and interpreter services. Strategic Planning & Performance 5.24 Within Strategic Planning & Performance, there is a projected under spend of £44,000 or 0.6%, on staff costs and supplies & services and additional income. Finance & Business Support 5.25 The projected outturn for Finance & Business Support is currently anticipated to be £350,000 or 4.0% less than budget. The individual elements contributing to this position are summarised in the following table and with narrative on the significant variances below. Function Projected Outturn Movement £’000 % £’000 Finance Over spend 17 0 n/a Business Support Under spend (367) (9.0) n/a TOTAL Under spend (350) (4.0)% n/a 5.26 Across Business Support, there is a projected under spend of £367,000 on staff costs due to the accelerated delivery of approved savings. 6. REVENUE MONITORING – CORPORATE BUDGETS 6.1 Included within Section 2 of Appendix 1 is an update on the Council’s Corporate budgets. More information on variances against individual budget headings are set out below. Health & Social care 6.2 On 21 August 2024, Perth & Kinross Integration Joint Board (IJB) were advised that, consistent with many other integration joint boards, they face significant financial challenges in the current financial year. 6.3 Based on activity to 30 June 2024 (month 3), there is a projected over spend of £8.1 million. There are several areas that are causing this projected over spend as follows.
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• Prescribing • Out of Hours GP services (Angus IJB Lead Partner for all Tayside) • Care at Home (all care groups) • Unfunded Inpatient Beds • Older People Care Home Placements • Senior Medical cover • Delivery of approved savings 6.4 The IJB does have limited Reserves that can be applied, but these are insufficient to deal with the entirety of the current projected over spend. 6.5 An updated and more comprehensive financial position, based on the first four months of expenditure, will be presented to the IJB’s Audit & Performance Committee on 23 September 2024. This update will incorporate the impact of any recovery actions that are already underway including vacancy management and reducing discretionary spend. 6.6 A financial recovery plan will be presented to the IJB on 2 October 2024, and this may require the IJB to issue amendments to existing directions or consider additional directions. 6.7 The Finance & Resources Committee will receive a further update at the meeting on 21 November 2024 Council Tax Reduction Scheme 6.8 The application of the Council Tax Reduction Scheme is a statutory function for the Council. The promotion and encouragement of take up is a key responsibility for the Council, particularly when households are facing significant pressures on the cost of living. 6.9 The level of expenditure incurred by the Council is dependent upon two main drivers, firstly, the average number of weekly caseload and, secondly, the average value of weekly entitlements. 6.10 In the current financial year, the Council is supporting approximately 8,600 households across Perth and Kinross with the Council Tax Reduction Scheme with an average award of £16.91 per week. This results in a projected over spend on the Council Tax Reduction Scheme of approximately £150,000 which is reflected in Appendix 1. 7. REVENUE MONITORING – FUNDING 7.1 Further information on the Council’s funding is set out within Section 3 of Appendix 1. More information on variances against individual budget headings are set out below. Council Tax Income
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7.2 The amount of income the Council will generate from Council Tax is dependent on two main factors, firstly the collection levels and secondly, the number of Band D properties on the Valuation Roll. 7.3 Monitoring of Council Tax collection levels is carried out monthly. The following graph sets out collection performance to 31 August 2024 together with prior year comparative figures for the previous five financial years. 7.4 Between 2019/20 and 2023/24, the average collection figure to 31 August was 45.92%. The actual collection figure to 31 July 2024 was 37.17% which is consistent with the five-year average, but a 0.25% reduction on the comparable position in 2023. 7.5 Secondly, in setting the Council’s Revenue Budget, assumptions are made on increases in the number of Band D equivalent properties. The graph set out below suggests that actual growth levels are in line with budget assumptions.
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7.6 Given the 2024/25 collection figures that are set out at paragraph 7.4 above is consistent with previous years, and that the growth in the number of Band D equivalent properties is in line with expectations, it is currently anticipated that Council Tax income is on target for the current year. Non-Domestic Rates 7.7 The actual collection rate to 31July 2024 was 28.26%, compared to 22.89% for the same period in 2023/24. 8. REVENUE MONITORING – OTHER UPDATES Impact on Arm’s Length External Organisations (ALEOs) 8.1 The Council continues to work closely with its three Arm’s Length External Organisations (ALEOs) – Live Active Leisure (LAL), Perth Theatre & Concert Hall (PTCH) and Culture Perth & Kinross (CPK) who make an important contribution to the Corporate Plan through the current Culture, Physical Activity and Sport Strategies approved by Council in May 2023. 8.2 Currently, for the current financial year, all three ALEOs are projecting a deficit that is in line with their approved budgets. 8.3 The long-term sustainability of the Council’s ALEOs across future financial years will be kept under review with updates provided to future meetings of the Finance & Resources Committee. 8.4 Following a change in regulations and potential claims by trade unions relating to moving away from nationally determined pay agreements, it is
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proposed that Culture Perth and Kinross (CPK) realign their pay structure to that of the Council and Scottish Joint Committee (SJC) rates of pay to mitigate against any potential challenges by the unions. 8.5 CPK have advised that they have funds to do this in the current financial year from their own Reserves but will require additional funding to build this into their future cost model which will come back as a budget pressure from 2025/26 onwards. 8.6 The cost is approximately £121,000, calculated using data from 2023/24 staff cost model. The 2024/25 pay award is not yet known and therefore the total cost will be higher. Tayside Contracts 8.7 The operating environment for Tayside Contracts remains challenging. They continue to experience significant inflationary pressures on the price of staple foods – beyond that of the headline CPI and RPI rates quote more widely. 8.8 Beyond that, negotiations on the 2024/25 pay award are still ongoing. Should the outcome of the negotiations exceed budgeted levels, without sufficient external funding forthcoming, there is a risk that this will cause a further significant risk to the profitability of Tayside Contracts. 8.9 Tayside Contracts continue to identify mitigating actions and the three constituent Councils are looking at how they may assist. Work will continue between officers of the Council and Tayside Contracts to further refine these projections. 8.10 Both of these pressures may impact on the Council in the form of a request for additional financial support, as has been the case in previous financial years and / or the non-achievement of the budgeted income from the share of Tayside Contract’s surplus. 8.11 At this stage, the potential costs of providing additional financial support have not been factored into the Council’s projections. Any proposal to provide additional funding to Tayside Contracts will be brought back to a future meeting of the Finance & Resource Committee for approval by elected members. 8.12 In addition, given the financial challenges facing Tayside Contracts, there is a risk that the budgeted amount from the Trading Operations surplus of £550,000 will not be received in the current year. Housing Revenue Account 8.13 The Housing Revenue Account is currently projected to break even in the current financial year. The main elements are summarised below and set out in Appendix 5.
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8.14 Across the Housing Revenue Account activity there is a net projected under spend of £207,000. This is made up of additional income from Interest on Revenue Balances and staff slippage which is partially offset by projected over spends on energy and transport costs. 8.15 As a result of the variances identified above Capital from Current Revenue will increase by £207,000. 9. ISSUES ARISING FROM FINANCIAL YEAR 2023/24 9.1 In completing the 2023/24 Unaudited Annual Accounts, two issues have been identified which require adjustments to be made to the 2024/25 Management Budget. Devolved School Management / Pupil Equity Fund Balances 9.2 In setting the 2024/25 Final Revenue Budget on 28 February 2024 (Report No. 24/63 refers), the Council approved a projected Devolved School Management (DSM) carry forward of £239,000. However, the final under spend (which included agreed planned carry forwards) on the DSM scheme was £501,000 which is £262,000 more than anticipated. This level of under spend is well within the limits of the DSM scheme and it is normal practice to reflect this adjustment at this time. 9.3 Similarly, the Council approved a projected Pupil Equity Funding carry forward of £100,000. However, the final under spend was £116,000 which is £16,000 more. Schools spent 94.3% of their total Pupil Equity Funding in 2023/24. 9.4 ACTION: The Committee is requested to increase the Education & Learning budget by £278,000 to reflect the actual Devolved School Management scheme and Pupil Equity Fund balances brought forward from 2023/24. This adjustment is reflected in Appendix 1 (Column 3) to this report and has no overall impact on the level of uncommitted Reserves. Revenue Grants 9.5 Accounting arrangements under International Accounting Standards require that, subject to certain conditions, revenue grants which were received by the Council in 2023/24 but not utilised by 31 March 2024 should be accounted for in Reserves at the end of the financial year. Approval is therefore sought to draw down £7.832 million in 2024/25 from the earmarked Reserve for Revenue Grants. These revenue grants are set out in detail in Appendix 4. 9.6 Approval is now sought to adjust the following budgets • Education & Learning - £1.364 million, • Children, Families & Justice - £1.3 million, • Economy, Development & Planning - £2.670 million, • Environment & Infrastructure - £146,000, • Housing & Communities - £2.209 million,
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• Property Services - £5,000, • Health & Social Care - £138,000. 9.7 ACTION: The Committee is asked to approve the adjustments totalling £7.832 million to the above Service budgets (set out in detail in Appendix 4), funded from Reserves, to reflect revenue grants received in 2023/24 in respect of expenditure which will not be incurred until 2024/25. These additional adjustments are reflected in Appendix 1 (Column 3) to this report and have no overall impact on the budgeted level of uncommitted Reserves. 10. 2024/25 ADDITIONAL FUNDING 10.1 Since elected members were provided with the 2024/25 Revenue Budget update on 24 April 2024 (Report No 24/130 refers), notification has been received of additional resources in the current financial year from several sources as set out below. To ensure that the 2024/25 Management Budget continues to reflect the operational requirements of the Council, several adjustments are required, which are summarised below and included in Appendix 1 and Appendix 6. Scottish Government – Revenue Support Grant: • Local Government Pay Offer 2023/24 for 2024/25: £570,000 (Reserves) • ELC 1140 Funding: £440,800 (Education & Learning) • Teachers Induction Scheme: £31,020 (Education & Learning) 10.2 The Scottish Government has advised that the increase in Revenue Support Grant identified above of £1.042 million will be made through a redetermination of the Council’s Revenue Support Grant. It is therefore necessary to adjust budgets for Education & Learning, Reserves and Revenue Support Grant. 10.3 ACTION: The Council is asked to approve the adjustments set out at paragraph 10.2 which is reflected in Appendix 1 (Column 4) to this report. Other Funding 10.4 Other funding amounting to £7.226 million will be paid outside the Revenue Support Grant mechanism as Other Grant income and is, therefore, cost neutral in terms of the budget summary. Details of this funding is set out in Appendix 6. 10.5 ACTION: The Committee is asked to note the receipt of £7.226 million of additional resources, with this funding being reflected within Education & Learning; Children, Families & Justice, Economy, Development & Planning, Environment & Infrastructure and Housing & Communities, as additional grant income. The current projected outturn assumes that all these additional resources will be fully expended in 2024/25 or will be carried forward under the terms of the grant award.
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11. 2024/25 VIREMENTS Contribution to/from Capital Fund 11.1 In line with the strategy for managing the Council’s Capital Programme over the medium term, it is recommended that the eventual over or under spend on Capital Financing Costs and Interest on Revenue Balances be transferred from or to the Capital Fund. 11.2 The latest monitoring indicates a projected increase in capital financing costs (loan charges) of £1.864 million based on the latest treasury management activity and an increase of £68,000 in income from interest on revenue balances due to rising rates. This will result in a reduced Contribution to the Capital Fund of £1.796 million in the current financial year. 11.3 ACTION: The Committee is requested to approve the virement of £1.864 million to the Capital Financing Costs (Loan Charges) Budget and £68,000 to Interest on Revenue Balances with a corresponding reduction in the projected Contribution to the Capital Fund. These adjustments have been reflected in Appendix 1 (Column 5) to this report. 11.4 At 31 March 2024, the unaudited Annual Accounts included a Capital Fund balance of £31.026 million. The Capital Fund is currently projected to peak in 2024/25 at approximately £37.0226 million, before, on the basis of the approved Council Tax strategy, gradually reducing until being fully utilised in 2060/61. Service Virements 11.5 To ensure that the 2024/25 Management Revenue Budget continues to reflect current Service needs and operational requirements there are several virements that are reflected in Appendix 1 (column 5) that have been processed in line with the Scheme of Administration. 12. 2024/25 MOVEMENTS IN RESERVES 12.1 Included at Appendix 7 is an update on the Council’s General Fund Reserves. The appendix includes the following: • Earmarked and unearmarked Reserves at 31 March 2024 (per unaudited Annual Accounts). • previously approved contributions to and from earmarked Reserves in 2024/25. 2025/26 and 2026/27. • The impact of proposals within this report on earmarked Reserves. • The impact of the latest revenue monitoring on the level of unearmarked Reserves. 12.2 The earmarked Reserves are brigaded under three headings as follows:
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i. Balances held under statute / regulation – these earmarked Reserves are prescribed under legislation and the Council has limited discretion in how they are applied. ii. Balances held for specific (previously approved) purposes – the purpose of these earmarked Reserves has been previously approved by Council in either the Reserves Strategy or Annual Accounts iii. Balances held for other purposes – the creation of these earmarked Reserves has been approved by Council, but not specific proposals. 12.3 Going forward proposals involving earmarked Reserves under i. and ii. above will be advised to Committee in summary as Council either has limited discretion or previously approved their application. Proposals to apply earmarked Reserves under iii. above will include more detail for elected member consideration. Balances Held Under Statute / Regulation 12.4 The application of these earmarked Reserves was considered earlier in this report in Section 9. Balances Held for Specific (Previously Approved) Purposes 12.5 Theses earmarked Reserves have previously been approved by elected members in their consideration of the Reserves Strategy or Annual Accounts. The proposals listed below are simply about the transfers in and out of earmarked Reserves to take forward approved proposals. • Contribution to 2024/25 Revenue Budget - £149,000 • Culture - £191,000 • Council Tax Income for Missing Shares Scheme - £48,000 • School Estate - £313,000 • Ventilation Measures - £76,000 • Health & Social Care – Care at Home & Reablement - £800,000 • Health & Social Care – Focussed care and support for those people most at risk of deconditioning leading to hospital or residential care admission - £200,000 Balances Held for Other Purposes 12.6 The Transformation & Workforce Management earmarked Reserve was created to provide the funding required to take forward the Transformation and Change Programme as well as fund the financial implications of workforce changes. 12.7 Approval is sought to transfer £380,000 from the Transformation & Workforce Management earmarked Reserve to ensure completion of several previously approved projects. 12.8 ACTION: The Committee is asked to approve the transfer of £380,000 to the Transformation & Earmarked Reserve with adjustments reflected in Appendix 1 (Column 6) to the report.
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12.9 Furthermore, under the Framework for Managing Workforce Change, the authority to approve voluntary severance requests sits with the Executive Leadership Team, except for requests from Chief Officers. With that in mind, approval is sought to draw down £373,000 from the Transformation and Workforce Management earmarked Reserve to fund voluntary severance requests. These voluntary severance request will support the delivery of savings previously approved by Council and payback in less than two years. 12.10 ACTION: The Committee is asked to approve the transfer of £373,000 from the Transformation & Earmarked Reserve with adjustments reflected in Appendix 1 (Column 6) to the report. 12.11 Approval is sought to drawdown funding from the Anti-Poverty earmarked Reserve totalling £330,000. This will augment the Scottish Welfare Fund budget to ensure that the most vulnerable in our area have access to a dignified, cash response to crisis situations. This additional funding will allow the Council to meet the demand of low-income households struggling to meet the rise in cost of living and will allow vulnerable residents to maintain independent living in the community. Furthermore, this funding will allow us to continue to support all P&K residents in crisis and support those on low incomes living rurally. 12.12 ACTION: The Committee is asked to approve the transfer of £330,000 from the Anti-Poverty earmarked Reserve to the Financial Insecurity Fund. This adjustment is reflected in Appendix 1 (Column 6) to the report. 12.13 In 2023/24, Perth & Kinross Council provided funding of £250,000 for the Warm Welcome Fund Initiative. This was a re-brand of the previous years’ Cost of Living Fund. The aim of the funding was to support community groups and organisations in their delivery of the provision of warm spaces and warm home packs over the winter months to help alleviate the cost of living whilst also contributing to a reduction in social isolation. The fund supported 94 projects and the feedback from community groups and recipients was very positive. 12.14 Delivery of the fund in 2024 involved the Community Learning & Development team facilitating workshops within each ward area for groups and organisations committed to providing warm spaces. During the Education Scotland Progress Visit in April 2024 which reviewed our progress in delivering the Community Learning and Development Plan the Warm Welcome Fund was highlighted as a positive example of enabling local people to finding local solutions to inequalities. 12.15 It is proposed that for 2024/25 an allocation of £200,000 will be allocated to the Warm Welcome Fund divided per ward based on population size. Groups and organisations within these areas will be invited to negotiate their specific funding needs in order to implement their proposals. This approach promotes fairness, encourages community collaboration, and minimises the duplication of services across different areas.
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12.16 The funding criteria will be updated as follows: • Funding is exclusively for the provision of warm spaces. • Groups and organisations must commit to collaborating with broader services, such as welfare rights, to ensure that the most vulnerable attendees can maximise their incomes, thereby achieving longer-term positive outcomes in addressing poverty. This may involve providing signposting and incorporating support organisations into the warm space programmes. • Warm home packs are not included under this funding. Individuals requiring assistance to stay warm at home should be directed to welfare rights for appropriate support and advice. 12.17 ACTION: The Committee is asked to apply £200,000 from the Anti-Poverty earmarked Reserve to take forward the Warm Welcome Fund Initiative. This adjustment is reflected in Appendix 1 (Column 6) to the report. 12.18 In addition, in setting the 2024/25 Revenue Budget in February 2024, the Council Approved Expenditure to fund several specific initiatives. For a variety of reasons including consultation and capacity issues, there has been slippage in the delivery of a few of these projects that may result in the expenditure not being incurred in the current financial year. Projects totalling £70,000 are set out at Appendix 8. 12.19 Should the Committee confirm that that the projects remain a priority for the Council then the balances set out in Appendix 7 will be transferred to an earmarked Reserve to ensure that the funding is in place to ensure delivery. The final outturn for individual projects may change before the end of the financial year. Therefore, by agreeing the projects within Appendix 8, the Committee is confirming that the initiative remains a priority and that the final under spend will be earmarked within Reserves. 12.20 Should any of the projects no longer be a priority, the projected under spend would be available to support the financial management of the Council in both current and future financial years. 12.21 ACTION: The Committee is asked to confirm that the projects listed in Appendix 8 remain a priority and that the final under spends, currently projected at £70,000 are transferred to an earmarked Reserve to ensure delivery. These adjustments are reflected in Appendix 1 (Column 6) to the report. Local Government By-Elections 12.22 Following resignations over the Summer, by-elections for Ward 7 – Strathallan and Ward 11 – Perth City North will take place on Thursday 26 September 2024. The estimated cost of running these by elections is £80,000. There are economies of scale to the Council from running both events on the same day. Council officers did also investigate whether other Councils were in a position to share the costs of count centre but this did not prove practical.
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12.23 ACTION: The Committee is asked to approve the transfer of £80,000 from unearmarked Reserves to Finance & Business Support to fund the two by- elections on Thursday 26 September 2024. This adjustment is reflected in Appendix 1. 13. FINANCIAL RISKS 13.1 In preparing the Council's 2024/25 revenue monitoring, officers have considered the key strategic, operational and financial risks facing the Council over this period. Whilst the risks may be managed in the current financial year, there is the potential for there to be an impact in the future. 13.2 To alleviate the impact these risks may have if they occur, a number of general risk mitigation factors are utilised by the Council which include detailed budget monitoring carried out by Services and having general fund balances available to meet unforeseen expenditure. 13.3 Going forward, new risks will be captured within the body of the report with a summary being maintained in Appendix 8. Budgeted Slippage Targets 13.4 Across all Council Services there is an approved staff slippage target of 5% (excluding teachers). The ability to manage this target is limited in early learning and childcare and school settings due to the requirement to fill all vacancies as they arise. It is also challenging due to the national requirement to maintain the teacher number ratio. Teaching slippage targets are currently not being met across all school settings. Financial Insecurity Funding 13.5 The Council has directed significant levels of non-recurring funding towards the Scottish Welfare Fund and the Financial Insecurity Fund to support vulnerable individuals and families with the cost-of-living pressures in recent years. In addition, the Council has received external funding which it has also directed to provide additional support. 13.6 As things stand, this additional funding will not be available in 2025/26. This may result in the Council having to raise the priority rating for the Scottish Welfare Fund to “high, most compelling”, which would be a first for Perth & Kinross Council. It may result in the provision of less dignified support during times of crisis and push households in crisis to community groups that would struggle to cope with the demand. It may also cut across the ambition of Cash-First. 2024/25 Pay Awards 13.7 The non-teaching pay awards for 2024/25 have not yet settled. The Scottish Government have committed to funding the cost of these pay awards in excess of 3.2% - the Council has budgeted for 3%. There is a likely cost in the current year as well as a risk for future years that the final increases
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exceed both the current budgetary provision and external recurring funding made available by the Scottish Government. 13.8 Any shortfall could lead to further pressures on Reserves and / or cuts in service delivery. 13.9 Similarly, the teaching pay awards have not yet been settled and there is a risk that the 3% budgeted for by the Council is insufficient and external Scottish Government support will be required. Tayside Contracts 13.10 There is a risk that the Council is required to provide additional funding for Tayside Contracts to contribute towards higher inflation costs, reduced demand for school meals and a pay award that exceeds budgeted levels. Funding 13.11 The 2024/24 Revenue Budget includes two material funding assumptions. Firstly, that the funding for teachers’ superannuation contributions (employer) flows from the UK Government to the Scottish Government through to the Council. Secondly, that the Council meets the requirements to maintain the pupil teacher ratio and therefore grant is not withheld. 14. CONCLUSION 14.1 Based on the June 2024 ledger, a projected over spend of £1.608 million has been identified in the current financial year. 14.2 This level of projected over spend will result in a reduction in the level of unearmarked Reserves to £14.773 million or 3.2% (see Appendix 7). 14.3 The financial position of the Council and its partners including the Health & Social Care Partnership and the ALEOs remains challenging and regular updates will be provided to the Council and the Finance & Resources Committee as the position develops. APPROVED Name Designation Date Scott Walker Chief Finance Officer 10 September 2024
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ANNEX 1. IMPLICATIONS, ASSESSMENTS, CONSULTATION AND COMMUNICATION Strategic Implications Yes / None Community Plan / Single Outcome Agreement None Corporate Plan Yes Resource Implications Financial Yes Workforce Yes Asset Management (land, property, IST) Yes Assessments Equality Impact Assessment Yes Strategic Environmental Assessment Yes Sustainability (community, economic, environmental) Yes Legal and Governance None Risk None Consultation Internal Yes External None Communication Communications Plan None 1. Strategic Implications Corporate Plan 1.1 The Council’s Corporate Plan 2022 – 2027 lays out seven outcome focussed strategic objectives which provide clear strategic direction, inform decisions at a corporate and service level and shape resources allocation. They are as follows: • Tackling poverty • Tackling climate change and supporting sustainable places • Growing a sustainable and inclusive local economy • Enabling our children and young people to achieve their full potential • Protecting and caring for our most vulnerable people • Supporting and promoting physical and mental wellbeing • Placing communities at the heart of how we work 1.2 This report relates to all these objectives. 2. Resource Implications Financial 2.1 There are no direct financial implications arising from this report other than those reported within the body of the main report.
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Workforce 2.2 There are no direct workforce implications arising from this report other than those reported within the body of the main report. Asset Management (land, property, IT) 2.3 There are no direct asset management implications arising from this report other than those reported within the body of the main report. 3. Assessments Equality Impact Assessment 3.1 Under the Equality Act 2010, the Council is required to eliminate discrimination, advance equality of opportunity, and foster good relations between equality groups. Carrying out Equality Impact Assessments for plans and policies allows the Council to demonstrate that it is meeting these duties. 3.2 The information contained within this report has been considered under the Corporate Equalities Impact Assessment process (EqIA) and has been assessed as not relevant for the purposes of EqIA. Strategic Environmental Assessment 3.3 The Environmental Assessment (Scotland) Act 2005 places a duty on the Council to identify and assess the environmental consequences of its proposals. 3.4 The information contained within this report has been considered under the Act. However, no action is required as the Act does not apply to the matters presented in this report. Sustainability 3.5 Under the provisions of the Local Government in Scotland Act 2003 the Council must discharge its duties in a way which contributes to the achievement of sustainable development. In terms of the Climate Change Act, the Council has a general duty to demonstrate its commitment to sustainability and the community, environmental and economic impacts of its actions. 3.6 The information contained within this report has been considered under the Act. However, no action is required as the Act does not apply to the matters presented in this report. 4. Consultation Internal 4.1 The Strategic Leadership Team have been consulted in the preparation of this report.
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2. BACKGROUND PAPERS 2.1 No background papers, as defined by Section 50D of the Local Government (Scotland) Act 1973 (other than any containing confidential or exempt information) were relied on to any material extent in preparing the above report. 3. APPENDICES Appendix 1 – 2024/25 Management Budget Appendix 2 – General Fund 2024/25 Projected Outturn – Service Analysis Appendix 3 – Perth & Kinross IJB 2024/25 outturn Appendix 4 – Revenue Grants Appendix 5 – Housing Revenue Account 2024/25 Projected Outturn Appendix 6 – Other Fundings Appendix 7 – General Fund Balances Appendix 8 – Council Approved Projects 2024/25 Appendix 9 – Financial Risks