Item 2 - Revenue and Capital Budget Monitoring Overview Report
Renfrewshire Council · 12 September 2024
Back to Finance, Resources and Customer Services Policy Board — 12 September 2024 and its agenda
Text extracted from the council's PDF. Layout and reading order may differ from the original.
Page 1
___________________________________________________________________ To: Finance, Resources and Customer Services Policy Board On: 12 September 2024 ___________________________________________________________________ Report by: Director of Finance and Resources ___________________________________________________________________ Heading: Revenue and Capital Budget Monitoring – Council Overview as at 21 June 2024 ___________________________________________________________________ 1. Summary of Financial Position 1.1 At the close of reporting Period 3 on 21 June 2024, the projected revenue outturn position at 31 March 2025 for Council services is an overspend position of £3.345m (0.8%) against the revised budget for the year. Adult Services (HSCP) is projecting an overspend of £6.095m (5.7%), resulting in a combined projected overspend of £9.440m (1.8%). 1.2 The projected capital outturn at 31 March 2025 all services is a break-even position. 1.3 This is split between General Fund Services and the Housing Revenue Account (HRA) in the table below, with further analysis provided in the Appendices. Table 1 Revised Annual Budget £000 Projected Outturn £000 Budget Variance (Adv)/Fav £000 Budget Variance % Revenue General Fund Services (Council) 416,703 420,048 (3,345) (0.8%) Adult Services (HSCP) 106,460 112,555 (6,095) (5.7%) Housing Revenue Account (HRA) 0 0 0 0.0% Total 523,163 532,603 (9,440) (1.8%) Capital General Fund Services 159,776 159,776 0 0.0% Housing Revenue Account (HRA) 41,236 41,236 0 0.0%
Page 2
2. Recommendations 2.1 Members are requested to: a) Note the projected Revenue outturn overspend position of £9.440m; b) Note the projected Capital outturn break-even position; and c) Note the prudential indicators detailed in section 7 of the report. _________________________________________________________ 3. Revenue Budget Projection – overspend of £9.440m by 31 March 2025 3.1 The projected overspend of £9.440m across all services includes £6.095m for Adult Services (HSCP), leaving a forecast overspend of £3.345m for Council services. 3.2 The approved General Fund revenue budget for 2024/25 was a deficit position of £4.324m, meaning that there is an expectation that services will overspend to this level during the year, and that this would be funded from reserves. 3.3 The approved Adult Services revenue budget for 2024/25 was a deficit position of £7.516m, meaning that there is an expectation that services will overspend to this level during the year, and that this would be funded from reserves. 3.4 The tables in Appendix 1 present the projected year-end position for all services, by both subjective analysis (what the budget is spent on) and objective analysis (which division is spending the budget). Significant variances affecting the projected position are analysed further below. 3.5 The projected outturn is based on information currently available, and assumptions made by service budget holders. Any changes to these projections will be detailed in future reports to this board. 4. Objective Analysis – Significant Variances 4.1 Education & Children’s Services £2.287m overspend This projected overspend includes £0.603m within Transport Costs, owing to advised SPT contracts for both mainstream school transport and ASN transport being higher than the available budget. Overspends of £0.608m (Transfer Costs) are also projected in to Early Years, due to the increase in the sustainable rate to childcare providers, and within Children and Families, relating to Section 22 payments.
Page 3
There is also a significant projected overspend in Employee Costs (£0.903m) within Secondary and ASN school teaching staff. While this projected overspend reflects the figure that was reported to the Education & Children’s Services Policy Board this cycle, it should be noted that this forecast assumes a level of pay uplift (£4m) from August 2024 without the corresponding budget, as this has not yet been agreed. This assumption will be removed in future reports until the pay settlement and any associated funding is formally agreed, and this will result in a forecast underspend position. 4.2 Infrastructure, Land & Environment £0.736m overspend The projected overspend predominantly sits within Waste Services, where trade waste income is significantly under-recovered owing to a reduction in demand. There are further cost pressures related to increased software and work by contractor costs within Infrastructure and Assets, and Fleet Services are projecting an overspend which is mainly reflective of the inflationary impact on replacement parts for vehicles and specialist contractors. 4.3 Finance, Resources & Customer Services £0.375m overspend The anticipated overspend is mainly driven by Public Building Repairs (£0.389m) due to the continued inflationary and cost pressures that have been experienced by the service over the last few financial years. The position has improved since last year and continues to be closely monitored. Mitigating actions will be taken by management where appropriate. 4.4 Adult Services £6.095m overspend The overspend is mainly due to external care at home packages for both Older People and those with Physical or Sensory Difficulties. This results from increased acuity of patients with more complex needs discharged from hospital, meaning more intensive Care at Home packages are required to support people to remain in their own homes. Note that these projections do not take into account the cost associated with the back pay in relation to care at home staff regrade, which is still to be fully agreed. 5. Capital Budget Projection – Housing Services Programme 5.1 The HRA Capital Investment Programme 2024/25 to 2028/29 was approved by the Council on 29 February 2024. For 2024/25, the approved capital spend totalled £41.236m. There have been no changes to date. 5.2 Capital expenditure to 21 June 2024 amounted to £2.963m, representing 7% of available resources, compared to 9% for the same period in 2023/24.
Page 4
5.3 1% of expected capital income has been received to date, compared to 36% for the equivalent period in 2023/24. This difference relates to grant received in 2023/24 for energy efficiency improvements. 5.4 The projected outturn position, after budget changes, is for the Housing Services Programme to break even (see Appendix 2). However, inflationary impacts of delays to work and related cost estimates are still ongoing and may result in this forecast being revised at a future date. 6. Capital Monitoring: Non-Housing Services Programme 6.1 The General Services Capital Investment Programme 2024/25 to 2028/29 was approved by Council on 29 February 2024. For 2024/25, the approved capital spend totalled £147.179m. The current revised programme totals £159.776m (an increase of £12.597m) resulting mainly from the net effect of: budget increases of £10.864m, mainly as result of £10.5m increase in Paisley Grammar approved by Council on 9 May 2024; budget carried forward from 2023/24 to 2024/25 of £26.136m; and projects re-profiled from 2024/25 into 2025/26 of (£24.403m) primarily related to updated cashflow profiles for the White Cart Gateway project. 6.2 Capital expenditure to 21 June 2024 totals £8.421m, representing 5% of the available resources, compared to 7% for the equivalent period in 2023/24. 6.3 Capital income totalling £5.259m has been received to 21 June 2024. This represents 15% of the total anticipated income, compared to 13% for the equivalent period in 2023/24. 6.4 The projected outturn position after these budget changes is to break even (see Appendix 2). However, the full impact of inflation on capital costs on each project is not yet determined, with increased costs through inflation and compliance expected to increase the risk of overspends across the capital programme. 7. Capital Overview: Prudential Indicators 7.1 The Council is required to set prudential indicators to ensure that its capital investment plans are affordable, proportionate, prudent and sustainable. The current prudential indicators were approved, alongside the housing and non- housing capital investment programmes, by Council on 29 February 2024.
Page 5
7.2 The CIPFA Prudential Code 2021 recommends that from 2024/25 a regular update is provided to members noting the current forecasts for prudential indicators compared to those approved at the start of the financial year. These are outlined in 7.4 to 7.8 below. 7.3 The Council will be asked to approve updated Prudential Indicators in December 2024 as part of the mid-year progress report. 7.4 Capital Expenditure: The limit on capital expenditure that the Council has set for 2024/25 is shown in the table below. The limit is based on the resources available to fund the capital programmes, split between Housing and Non- Housing Services, but excludes the Public Sector Housing Grant, as this is not considered to be capital spend for the Council. The forecast expenditure is higher owing to the changes outlined at 6.1 above. Approved Plan £m Forecast Expenditure £m Non-Housing 147 160 Housing 41 41 Total 188 201 7.5 Capital Finance Requirement (CFR): The CFR originally planned by the Council for 2024/25 is shown in the table below and is split between Housing and Non-Housing Services. The projected outturn at 31 March 2025 is also shown. Any significant increase in the capital expenditure without planned funding at the point of spend will result in an increase to the CFR. Planned CFR to 31 March 2025 £m Projected CFR to 31 March 2025 £m Non-Housing 458 484 Housing 137 138 Total 595 622 The increase in the projected CFR is a result of the approved budget increase for Paisley Grammar (referred to in 6.1) and the expected timing of grant payments, largely related to City Deal, changing to early 2025/26. 7.6 Operational Boundary: This is the focus of day-to-day treasury management activity within the Council and is an estimate of the most likely, but not worst case, scenario in terms of cashflow. Risk analysis and risk management strategies are taken into account, as are plans for capital expenditure, estimates of the CFR and estimates of cashflow requirements for all purposes.
Page 6
It is possible that this boundary could be breached occasionally and this should not be regarded as significant. However, a sustained or regular trend of such would be significant and require investigation and action. Planned Operational Boundary to 31 March 2025 £m Projected Operational Boundary to 31 March 2025 £m Borrowing 501 528 Other Long-Term Liabilities 94 94 Total 595 622 7.7 Authorised Limit: This is based on the same assumptions as the Operational Boundary, with additional headroom to ensure sufficient capacity to allow for both planned and exceptional cashflow requirements, without breaching the limit. Planned Authorised Limit to 31 March 2025 £m Projected Authorised Limit to 31 March 2025 £m Borrowing 526 554 Other Long-Term Liabilities 94 94 Total 620 648 7.8 Ratio of Financing Costs to Net Revenue: A key measure of affordability is the incremental impact of investment decisions on Council Tax or housing rents. Estimates of the ratio of financing costs to net revenue stream provide an indication of how much of the Council’s revenue budget is committed to the repayment of debt. Approved Ratio of Financing Costs to Net Revenue 2024/25 % Projected Ratio of Financing Costs to Net Revenue 2024/25 % Non-Housing 3.47 3.32 Housing 28.59 28.54 Financing costs include the interest payable with respect to forecast borrowing levels, interest payable on finance leases, interest and investment income, loans fund and finance lease principal repayments and gains/losses on the repurchase or early settlement of borrowing. There is a marginal reduction in the projected ratios due to the updated interest rate outlook.
Page 7
Revenue streams relate either to the amounts received in terms of government grant and local taxpayers for Non-Housing, or to the amounts received from tenants in respect of housing rents for Housing. 8. Private Sector Housing Grant Programme 8.1. The overall budget provision for this programme is included within the revenue budget. However, in order to monitor the performance of the individual programmes, it is included within capital budget monitoring procedures. 8.2. The Council approved expenditure up to £0.644m for 2024/25. The current revised programme totals £0.526m (a decrease of £0.118m) which reflects the updated programming of some capital projects. 8.3. The programme is expected to fully spend by 31 March 2025 and will be contained within the overall resources. Implications of the Report 1. Financial The projected budget outturn position for General Fund Services Revenue budget is an overspend of £9.440m (1.8%) and break-even for the HRA Revenue budget. Income and expenditure will continue to be monitored closely for the rest of the financial year and, where necessary, steps will be taken to mitigate overspends. The projected outturn position for General Fund Services and HRA Capital budgets is a break-even position. The Capital programme will continue to be monitored closely for the rest of the financial year. Any changes to current projections in either Revenue or Capital budgets will be detailed in future reports to this board. 2. HR & Organisational Development While staffing budgets form a significant proportion of the Council’s revenue budgets, there are no direct implications arising from the recommendations in this report. 3. Community/Council Planning Community Plan Our Renfrewshire is thriving The Council’s revenue and capital spend ensures that its facilities are fit for purpose and safe for the community, to maximise accessibility. Our Renfrewshire is well Our Renfrewshire is fair
Page 8
Our Renfrewshire is safe Council Plan Reshaping our place, our economy and our future The Council’s revenue and capital spend ensures that its facilities are fit for purpose and safe for the community, to maximise accessibility. Building strong, safe and resilient communities Tackling inequality, ensuring opportunities for all Creating a sustainable Renfrewshire for all to enjoy Ongoing revenue and capital budget monitoring is a tool to enable good financial management so that the Council has resources now and in the future for continued service delivery. Working together to improve outcomes 4. Legal There are no direct implications arising from the recommendations in this report. 5. Property/Assets The capital expenditure noted in this report will result in lifecycle maintenance improvements to existing properties and replacement of ICT, infrastructure, and plant and equipment. 6. Information Technology There are no direct implications arising from the recommendations in this report. 7. Equality & Human Rights While new areas of spend may impact on particular groups, any such impact would be assessed prior to the spend being incurred, therefore there are no direct implications arising from the recommendations in this report. 8. Health & Safety There are no direct implications arising from the recommendations in this report. 9. Procurement While Procurement is an important consideration prior to the Council incurring any revenue or capital spend, there are no direct implications arising from the recommendations in this report.
Page 9
10. Risk The potential financial risk that the Council will overspend its approved revenue budgets for the year is managed at a Council-wide level by the Chief Executive and Directors. 11. Privacy Impact There are no direct implications arising from the recommendations in this report. 12. Children’s Rights - There are no direct implications arising from the recommendations in this report. 13. Climate Change The Council aims to reduce its carbon and other emissions to net zero by 2030, however there are no direct implications arising from the recommendations in this report. 14. Cosla Policy Position - N/a ___________________________________________________________________ List of Background Papers Revenue Budget and Council Tax 2024/25, Council 29 February 2024 The Capital Investment Programme 2024/25 to 2028/29, Council 29 February 2024 ___________________________________________________________________ Author: Alison Burns, Corporate Finance Manager Geoff Borland, Finance Manager
Page 10
Appendix 1 RENFREWSHIRE COUNCIL REVENUE BUDGET MONITORING STATEMENT 2024/25 1 April 2024 to 21 June 2024 POLICY BOARD: FINANCE, RESOURCES & CUSTOMER SERVICES ‐ OVERVIEW Policy Board ‐ Objective Summary Approved Annual Budget Budget Adjustments Revised Annual Budget at Period 3 Projected Outturn Budget Variance (Adverse) or Favourable £000 £000 £000 £000 £000 % Communities and Housing Services 13,507 92 13,599 13,599 0 0.0% Education and Children's Services 252,327 3,475 255,802 258,089 (2,287) (0.9%) Infrastructure, Land and Environment 32,318 (1,988) 30,330 31,147 (736) (2.4%) Finance, Resources and Customer Services 105,724 (11,196) 94,528 94,903 (375) (0.4%) Adult Services 106,490 (30) 106,460 112,555 (6,095) (5.7%) Planning 751 (167) 584 623 (39) (6.7%) Economy and Regeneration 3,172 (944) 2,228 2,162 66 3.0% Chief Executive's Service 19,859 (227) 19,632 19,606 26 0.1% GENERAL SERVICES NET EXPENDITURE 534,147 (10,985) 523,163 532,603 (9,440) (1.8%) Housing Revenue Account (HRA) 0 0 0 0 0 0.0% NET EXPENDITURE 534,147 (10,985) 523,163 532,603 (9,440) (1.8%)
Page 11
Appendix 1 RENFREWSHIRE COUNCIL REVENUE BUDGET MONITORING STATEMENT 2024/25 1 April 2024 to 21 June 2024 POLICY BOARD: FINANCE, RESOURCES & CUSTOMER SERVICES ‐ OVERVIEW Subjective Summary Approved Annual Budget Budget Adjustments Revised Annual Budget at Period 3 Total Projected Outturn Budget Variance (Adverse) or Favourable £000 £000 £000 £000 £000 % Employees 364,643 (13,876) 350,767 350,194 573 0.2% Premises Related 50,601 268 50,869 53,351 (2,482) (4.9%) Transport Related 15,223 (220) 15,003 15,989 (986) (6.6%) Supplies and Services 96,421 1,660 98,081 100,425 (2,344) (2.4%) Third Party Payments 101,350 9,562 110,912 117,887 (6,975) (6.3%) Transfer Payments 79,903 (3,723) 76,180 77,807 (1,627) (2.1%) Support Services 3,199 20 3,219 3,226 (7) (0.2%) Depreciation and Impairment Losses 27,068 0 27,068 27,080 (12) 0.0% GROSS EXPENDITURE 738,407 (6,308) 732,099 745,960 (13,861) (1.9%) Income (204,260) (4,677) (208,936) (213,276) 4,421 2.1% NET EXPENDITURE 534,147 (10,985) 523,163 532,684 (9,440) (1.8%)
Page 12
Appendix 2 Prior Years Approved Budget Revised Projected Expenditure Budget Adjustments Budget Outturn Total Approved Projected to 31/03/2024* 2024‐25 in 2024‐25 2024‐25 2024‐25 Budget Outurn to 31‐Mar‐29 to 31‐Mar‐29 £000 £000 £000 £000 £000 £000 £000 EDUCATION & CHILDREN'S SERVICES Education & Children's Services 19,341 55,893 15,557 71,450 71,450 0 0% 189,839 189,839 0 0% TOTAL 19,341 55,893 15,557 71,450 71,450 0 0% 189,839 189,839 0 0% COMMUNITIES, HOUSING & PLANNING Housing (HRA) 53,408 41,236 0 41,236 41,236 0 0% 96,916 96,916 0 0% Housing (PSHG) 0 644 (118) 526 526 0 0% 2,926 2,926 0 0% TOTAL 53,408 41,880 (118) 41,762 41,762 0 0% 99,842 99,842 0 0% INFRASTRUCTURE, LAND & ENVIRONMENT Environment & Infrastructure 85,231 11,883 6,839 18,722 18,722 0 0% 133,110 133,110 0 0% TOTAL 85,231 11,883 6,839 18,722 18,722 0 0% 133,110 133,110 0 0% ECONOMY & REGENERATION Economy and Development 83,158 21,720 1,142 22,862 22,862 0 0% 112,148 112,148 0 0% TOTAL 83,158 21,720 1,142 22,862 22,862 0 0% 112,148 112,148 0 0% FINANCE, RESOURCES & CUSTOMER SERVICES Corporate Projects 5,436 9,707 4,587 14,294 14,294 0 0% 34,160 34,160 0 0% TOTAL 5,436 9,707 4,587 14,294 14,294 0 0% 34,160 34,160 0 0% LEADERSHIP Leisure Services 24,924 1,930 1,052 2,982 2,982 0 0% 27,905 27,905 0 0% Chief Executives 158,319 46,046 (16,580) 29,466 29,466 0 0% 360,395 360,395 0 0% TOTAL 183,243 47,976 (15,528) 32,448 32,448 0 0% 388,300 388,300 0 0% TOTAL ALL BOARDS 429,817 189,059 12,479 201,538 201,538 0 0.0% 957,399 957,399 0 0% MADE UP OF: Non-Housing Programme 376,409 147,179 12,597 159,776 159,776 0 0% 857,557 857,557 0 0% Housing Programme (HRA) 53,408 41,236 0 41,236 41,236 0 0% 96,916 96,916 0 0% Housing Programme (PSHG) 0 644 (118) 526 526 0 0% 2,926 2,926 0 0% PROGRAMME TOTAL 429,817 189,059 12,479 201,538 201,538 0 0.0% 957,399 957,399 0 0% Budget Variance (Adverse) or Favourable Budget Variance (Adverse) or Favourable RENFREWSHIRE COUNCIL CAPITAL INVESTMENT STRATEGY ‐ NON‐HOUSING SERVICES 1st April to 21st June 2024 POLICY BOARD: FINANCE, RESOURCES & CUSTOMER SERVICES Current Year 2024‐25 Full Programme ‐ All years
Page 13
Appendix 2 2024/25 Housing Non Housing PSHG Total Services Services Programme A. RESOURCES AVAILABLE TO FUND CAPITAL PROGRAMME £'000 £'000 £'000 £'000 1. Prudential Borrowing 30,539 117,806 148,345 2a General Capital Grant 10,651 526 11,177 2b. Specific Capital Grant 5,898 3,394 9,292 3. Usable Capital Receipts 530 20,077 20,607 4. Contribution From Current Revenue (CFCR) 4,269 7,848 0 12,117 5 Total Resource Availability 41,236 159,776 526 201,538 B. CAPITAL PROGRAMME 6. Resources Available 41,236 159,776 526 201,538 7. Current Programme 41,236 100% 159,776 100% 526 100% 201,538 100% C. ACTUAL EXPENDITURE VS PROJECTED 8. Resource Availability 41,236 159,776 526 201,538 9. Cash Spent at 21 June 2024 2,963 7% 8,421 5% 128 24% 11,512 6% 10. Cash to be Spent by 31 March 2025 38,273 151,355 398 190,026 D. ACTUAL RECEIPTS VS PROJECTED 11. Current Programme (total receipts expected) 6,428 34,122 526 41,076 12. Actual Cash Received at 21 June 2024 66 1% 5,259 15% 104 20% 5,429 13% 13. Receipts to be received by 31 March 2025 6,362 28,863 422 35,647 RENFREWSHIRE COUNCIL 2024/25 CAPITAL BUDGETS MONITORING SUMMARY REPORT TO 21ST JUNE 2024