2 - Revenue and Capital Budget Monitoring Overview Report
Renfrewshire Council · 17 November 2022
Back to Finance, Resources and Customer Services Policy Board — 17 November 2022 and its agenda
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To: Finance, Resources and Customer Services Policy Board On: 17 November 2022 Report by: Director of Finance and Resources Heading: Revenue and Capital Budget Monitoring – Council Overview as at 16 September 2022 1. Summary of Financial Position 1.1. The projected Revenue outturn at 31 March 2023 for all services is an overspend of £7.420m. 1.2. The projected Capital outturn at 31 March 2023 for all services is an underspend of £0.100m. 1.3. This is split between General Fund Services and the Housing Revenue Account (HRA) in the table below, with further analysis is provided in the Appendices. Table 1: Revenue Division Revised Annual Budget Projected Outturn Budget Variance (Adv)/Fav Budget Variance £000 £000 £000 % General Fund Services 492,393 499,813 (7,420) -1.5% Housing Revenue Account 0 0 0 0.0% Total 492,393 499,813 (7,420) -1.5% Table 2: Capital Division Revised Annual Budget Projected Outturn Budget Variance (Adv)/Fav Budget Variance £000 £000 £000 % General Fund Services 132,916 132,816 100 0.0% Housing Revenue Account 26,795 26,795 0 0.0% Total 159,711 159,611 100 0.0%
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2. Recommendations Members are requested to: 2.1. Note the projected Revenue outturn position detailed in Table 1 above, considering that the forecast position is based on best estimates at this point in time; and also note the substantial risks to this position as outlined in section 3 of the report; 2.2. Note the projected Capital outturn position detailed in Table 2 above. 3. Revenue Monitoring 3.1. The Revenue Budget Monitoring report at Appendix 1 identifies a projected annual overspend of £7.420m (1.5% of total budget) for all Services. Details for all services can also be found here, along with an explanation of significant projected variances. Setting aside the underspend related to adult services (managed by Renfrewshire HSCP), the overspend is projected at £8.390m. 3.2. 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. 3.3. The main reasons for the projected outturn position are indicated in the appendix showing both the subjective analysis (what the budget is spent on) and the objective analysis (what division is spending the budget). 3.4. The principal reason for the increase in forecast since Period 3 is the inclusion of an estimated energy overspend, which amounts to around £2m across General Services. Around 75% of this is incurred within Children’s Services. 3.5. Members should be aware that the very high levels of inflation being experienced for core supplies such as food, fuel and energy are expected to further increase, with CPI reaching a peak of 13% in December (Bank of England forecast) and remaining higher for a longer period than previously forecast. 3.6. The projection does not currently include any variance relating to the collection of Council Tax. Current forecasts suggest a slightly higher collection rate than 2021/22; however, the Scottish Government’s Cost of Living Awards issued at the start of the year are impacting on this metric. It is also recognised that the full impact of the cost-of-living crisis is yet to materialise and could have significant effect on income collected. 3.7. Members should also note that the forecast outturn position does not include the impact of the pay settlement for 2022/23 budget, which has recently been formally agreed for non-teaching staff (excluding Craft and Chief Officers). The Council has also received confirmation of the level of funding being provided by the Scottish Government and the shortfall for 2022/23, above that already set aside, is currently estimated at £3m.
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3.8. Directors and management teams are closely monitoring their costs and are aiming to mitigate increases where possible; however, it is fully expected that the Council will require to utilise reserve balances in order to break even at year end. 4. Capital Monitoring 4.1. The General Services Capital Investment Programme 2022/23 to 2026/27 was approved by the Council on 3 March 2022. For General Fund Services the revised capital spend for 2022/23 is £132.916m. 4.2. The Capital Monitoring report at Appendix 2 indicates a projected underspend of £0.100m in the approved capital programme for General Fund Services. 4.3. The HRA Capital Investment Programme 2022/23 to 2026/27 was approved by the Council on 3 March 2022. For the HRA the approved capital spend for 2022/23 is £26.795m. 4.4. The Capital Monitoring report at Appendix 3 indicates a break-even position in the approved capital programme for the HRA for the year (see Appendix 3). It should be noted that due to significant pressures that are emerging in construction commodities and supply chains (in particular timber, cement, bitumen and steel) it is anticipated that inflationary cost pressures will continue to emerge on capital projects and there will be a requirement to use the Council’s flexible COVID-19 reserves to manage these pressures. 5. Capital Overview 5.1. The Council must determine and keep under review the maximum amount it can afford to allocate to capital expenditure. In addition, the Council must also keep under review its Capital Financing Requirement (CFR) i.e., the level of resources that are used to fund capital expenditure over the longer term, rather than at point of spend. It is also the duty of the Council to have regard to the Prudential Code in setting its capital expenditure limit and its capital expenditure requirement. 5.2. The limit on capital expenditure that the Council has set for 2022/23 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. Approved Plan £m Forecast Expenditure £m Non-Housing 131.755 132.816 Housing 29.995 26.795 Total 161.750 159.611
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5.3. The CFR set by the Council for 2022/23 is shown in the table below and is split between Housing and Non-Housing Services. The projected outturn at 31 March 2023 is also shown. Any significant increase in the capital expenditure limit that is not funded at point of spend will result in an increase in the CFR. Approved CFR to 31 March 2023 £m Projected CFR to 31 March 2022 £m Non-Housing 364 343 Housing 122 117 Total 486 460 6. Housing Services Programme 6.1. The programme approved by the Council on 3 March 2022 totalled £29.995m. The revised programme currently stands at £26.795m, a reduction of £3.200m resulting from the net effect of reduced budget of £0.400m for signed contracts being lower than estimated and £2.800m for expenditure reprofiled from 2022/23 into 2023/24 for improvements to existing properties. 6.2. Capital expenditure to 16 September 2022 amounted to £4.813m and represents 18% of available resources, compared to 31% for the same period in 2021/22. 6.3. Zero capital income has been received to date and compares with 5% for the equivalent period in 2021/22. 6.4. The projected outturn position, after budget changes, is for the Housing Services Programme to break even. However, inflationary impacts of delays to work and estimates of costs complying with new guidelines are still ongoing and may result in this being revised at a future date. 7. Non-Housing Services Programme 7.1. The programme approved by Council on 3 March 2022 totalled £131.755m. The current programme totals £132.916m, an increase of £1.161m resulting from the net effect of budget increases of £7.753m, mainly as result of new grant awards for Paisley Museum, Active Communities and Strathclyde Passenger Transport, Net budget brought forward from 2021/22 to 2022/23 of £11.093m and projects re-profiled from 2022/23 to 2023/24 of £17.865m. The projects re-profiled into 2023/24 largely relate to Paisley Museum, Paisley Town Hall and Paisley Town Centre Infrastructure. 7.2. Capital expenditure to 16 September 2022 totals £24.961m and represents 19% of the available resources, compared to 20% for the equivalent period in 2021/22.
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7.3. Capital income totalling £6.260m has been received to 16 September 2022. This represents 16% of the total anticipated income, compared to 33% for the equivalent period in 2021/22. The higher amount in 2021/22 relates to grant received in advance for the Early Years 1,140 Hours expansion project. 7.4. The projected outturn position after the budget changes is for an underspend of £0.100m. However, as in 6.4, the full impact of COVID-19 on capital costs has not yet been determined, with increased costs through inflation and compliance expected to increase the risk of overspends within the capital programme. 7.5. It is anticipated that due to emerging pressures in capital building projects in relation to construction supplies costs (particularly steel) that additional funding may require to be allocated to a number of projects funded from COVID specific reserve balances. Future reports will provide further detail as discussion with contractors on these issues develops. 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 £1.046m for 2022/23. The programme currently stands at £1.292m, an increase in budget of £0.246m as a result of projects re-profiled from 2021/22 into 2022/23. 8.3. The programme is expected to fully spend by 31 March 2023 and will be contained within the overall resources. ___________________________________________________________________ Implications of this report 1. Financial – The projected budget outturn position for General Fund Services Revenue budget is an overspend of £7.420m 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 Capital budget is an underspend of £0.100m and break-even for the HRA Capital budget. The Capital programme will continue to be monitored closely for the rest of the financial year and, where necessary, steps will be taken to mitigate any overspend. Any changes to current projections in either Revenue or Capital budgets will be detailed in future reports to this board. 2. HR and Organisational Development - None directly arising from this report.
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3. Community/Council Planning - None directly arising from this report. 4. Legal - None directly arising from this report. 5. Information Technology - None directly arising from this report. 6. Equality and Human Rights - The recommendations contained within this report have been assessed in relation to their impact on equalities and human rights. No negative impacts on equality groups or potential for infringement of individuals’ human rights have been identified arising from the recommendations contained in the report because for example it is for noting only. If required following implementation, the actual impact of the recommendations and the mitigating actions will be reviewed and monitored, and the results of the assessment will be published on the Council’s website. 7. Health and Safety - None directly arising from this report. 8. Procurement - None directly arising from this report. 9. Risk - The potential risk that the Council will overspend its approved budgets for the year will be managed at a Council-wide level by the Chief Executive and Directors. 10. Privacy Impact - None directly arising from this report. 11. Cosla Policy Position - N/a. 12. Climate Risk - None directly arising from this report. List of Background Papers Revenue Budget and Council Tax 2022/23. Council, 3 March 2022. Non-Housing Capital Investment Programme 2022/23 to 2026/27. Council, 3 March 2022. HRA Capital Investment Programme 2022/23 to 2026/27, Council on 3 March 2022 A Prudential Framework for Capital Finance – Progress Report. Council, 16 December 2021 __________________________________________________________________ Authors: Christine McCourt / Kevin Festorazzi / Geoff Borland
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Appendix 1 Policy Board Annual Budget at Period 3 Budget Adjustments Revised Annual Budget at Period 6 Projected Outturn Previous Projected Outturn Variance Movement £000 £000 £000 £000 £000 % £000 £000 Communities and Housing Services 14,206 465 14,670 14,642 28 0.2% (138) 166 Education and Children's Services 224,996 971 225,967 231,401 (5,434) (2.4%) (4,390) (1,044) Infrastructure, Land and Environment 32,372 (1,531) 30,841 32,537 (1,696) (5.5%) (2,350) 654 Finance, Resources and Customer Services 103,090 362 103,452 104,346 (894) (0.9%) (523) (371) Adult Services 93,607 0 93,607 92,637 970 1.0% 2,065 (1,095) Planning 505 6 511 661 (150) (29.4%) (50) (100) Economy and Regeneration 2,983 13 2,996 2,962 34 1.1% 20 14 Chief Executive's Service 20,327 22 20,349 20,627 (278) (1.4%) (276) (2) GENERAL SERVICES NET EXPENDITURE 492,086 307 492,393 499,813 (7,420) (1.5%) (5,642) (1,778) Housing Revenue Account (HRA) 0 0 0 0 0 0.0% 0 0 NET EXPENDITURE 492,086 307 492,393 499,813 (7,420) (1.5%) (5,642) (1,778) RENFREWSHIRE COUNCIL REVENUE BUDGET MONITORING STATEMENT 2022/23 1 April 2022 to 16 September 2022 Budget Variance (Adverse) or Favourable POLICY BOARD : FINANCE, RESOURCES & CUSTOMER SERVICES - OVERVIEW
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Appendix 1 Policy Board Education and Children's Services Infrastructure, Land and Environment Finance, Resources and Customer Services Adult Services Planning Chief Executives Housing Revenue Account (HRA) The projected year-end overspend of £0.150m relates to a projected under-recovery in planning fee income. There is still an impact on fee income levels from the current economic and financial climate and income is projected to under-recover by c. 12% of targeted income. Projected overspend in Building Standards relates to staffing costs where vacancies are filled as they arise to maintain service provision meaning turnover targets are not being achieved. In addition, Building Standards fee income remains impacted by the current economic and financial climate with a projected under-recovery of c. 6% of targeted income. The projected year-end overspend is £0.278m, which reflects the projected costs of supporting Renfrewshire Leisure with a revised level of requisition as a result of the continued impact on service delivery of their recovery from the COVID pandemic. Overall the HRA is projecting a break-even position at the year-end. Employee costs are projected to underspend due to the ongoing recruitment of vacancies within the service. However, Repairs & Maintenance costs are likely to overspend by over £2m against budget; this is expected to be offset by reduced debt repayments at year-end. Key Reasons for Significant Projected Variance The projected year-end underspend is £0.970m, experienced within employee costs and reflecting national recruitment issues facing all Health & Social Care services. A reduction in underspend since Period 3 is due to delays in older people discharges and increased demand for services. The projected year-end overspend is £5.434m. This is mainly due to overspends within Children and Families in relation to Residential Accommodation placements, where the number of complex, expensive packages has increased significantly. The service is currently reviewing all external placements in order to identify their purpose and to explore options for mitigation of cost pressure. Additional overspends in premises costs across all schools due to the current energy cost increase. Increase in transport costs in Primary and Secondary Schools due to an increase in the mainstream School Transport Contract. The projected year-end overspend mainly relates to increased costs relating to fuel cost increases, particularly in Refuse Collection. There is also an expected overspend on the supply of household bins which is partly due to increased prices, and an under-recovery of special uplift income. In addition, due to high levels of annual leave carried forward as a result of the pandemic, additional overtime is being incurred in order to cover this from an operational perspective. On- and off-street parking income and fine recovery remain significantly lower that pre-pandemic levels and this Is expected to remain until the end of the current financial year. These overspends are offset by underspends in Social Care Transport and Waste Disposal. Reduced levels of waste being disposed of, expected to continue for the remainder of the financial year, resulting in an underspend on the Clyde Valley Waste contact. In addition, income is expected to over-recover this financial year due to income for mixed plastics, cans and glass now expected this financial year. However, this will be closely monitored through the year. The projected year-end overspend is £0.894m, arising from overspends in the repair and maintenance of street lighting columns continue due to the increased cost of materials, as well as an anticipated under-recovery in income, offset by staff vacancies; this will be monitored closely throughout the rest of the year. The projected overspend in Social Care arises from energy prices increases affecting Social Care properties.
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Appendix 1 Subjective Summary Approved Annual Budget Budget Adjustments Revised Annual Budget P3 Total Projected Outturn Previous Projected Outturn Movement £000 £000 £000 £000 £000 % £000 £000 Employees 344,872 775 345,647 345,422 225 0.1% (8,571) 8,795 Premises Related 37,860 76 37,936 42,864 (4,928) (13.0%) (229) (4,698) Transport Related 13,457 (9) 13,448 15,135 (1,687) (12.5%) (1,404) (283) Supplies and Services 88,237 103 88,340 88,499 (159) (0.2%) (917) 758 Third Party Payments 94,091 803 94,894 100,685 (5,791) (6.1%) (4,208) (1,584) Transfer Payments 87,570 345 87,915 87,162 753 0.9% 138 615 Support Services 6,833 0 6,833 6,756 77 1.1% (34) 112 Depreciation and Impairment Losses 27,914 (285) 27,629 25,428 2,201 8.0% (370) 2,571 GROSS EXPENDITURE 700,834 1,808 702,642 711,951 (9,310) (1.3%) (15,595) 6,285 Income (208,748) (1,501) (210,249) (212,138) 1,889 0.9% 9,953 (8,063) NET EXPENDITURE 492,086 307 492,393 499,813 (7,420) (1.5%) (5,642) (1,778) Budget Variance (Adverse) or Favourable RENFREWSHIRE COUNCIL REVENUE BUDGET MONITORING STATEMENT 2022/23 1 April 2022 to 16 September 2022 POLICY BOARD : FINANCE, RESOURCES & CUSTOMER SERVICES - OVERVIEW
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Appendix 2 Prior Years Approved Budget Revised Projected Expenditure Budget Adjustments Budget Outturn Total Approved Projected to 31/03/2022* 2022-23 in 2022-23 2022-23 2022-23 Budget Outurn to 31-Mar-27 to 31-Mar-27 £000 £000 £000 £000 £000 £000 £000 EDUCATION & CHILDREN'S SERVICES Education & Children's Services 81,011 13,359 2,129 15,488 15,388 100 1% 137,558 137,458 100 0% TOTAL 81,011 13,359 2,129 15,488 15,388 100 1% 137,558 137,458 100 0% COMMUNITIES, HOUSING & PLANNING Housing(HRA) 38,415 29,995 (3,200) 26,795 26,795 0 0% 158,059 158,059 0 0% Housing(PSHG) 0 1,046 246 1,292 1,292 0 0% 1,292 1,292 0 0% TOTAL 38,415 31,041 (2,954) 28,087 28,087 0 0% 159,351 159,351 0 0% INFRASTRUCTURE, LAND & ENVIRONMENT Environment & Infrastructure 19,745 17,683 3,896 21,579 21,579 0 0% 55,666 55,666 0 0% TOTAL 19,745 17,683 3,896 21,579 21,579 0 0% 55,666 55,666 0 0% ECONOMY & REGENERATION Economy and Development 29,508 45,871 (12,389) 33,482 33,482 0 0% 106,381 106,381 0 0% TOTAL 29,508 45,871 (12,389) 33,482 33,482 0 0% 106,381 106,381 0 0% FINANCE, RESOURCES & CUSTOMER SERVICES Corporate Projects 2,492 9,107 51 9,158 9,158 0 0% 20,873 20,873 0 0% TOTAL 2,492 9,107 51 9,158 9,158 0 0% 20,873 20,873 0 0% LEADERSHIP Leisure Services 57,861 754 1,632 2,386 2,386 0 0% 61,274 61,274 0 0% Chief Executives 70,069 44,981 5,842 50,823 50,823 0 0% 361,646 361,646 0 0% TOTAL 127,930 45,735 7,474 53,209 53,209 0 0% 422,920 422,920 0 0% TOTAL ALL BOARDS 299,101 162,796 (1,793) 161,003 160,903 100 0.1% 902,749 902,649 100 0% MADE UP OF :- Non-Housing Programme 260,686 131,755 1,161 132,916 132,816 100 0% 743,398 743,298 100 0% Housing Programme(HRA) 38,415 29,995 (3,200) 26,795 26,795 0 0% 158,059 158,059 0 0% Housing Programme(PSHG) 0 1,046 246 1,292 1,292 0 0% 1,292 1,292 0 0% PROGRAMME TOTAL 299,101 162,796 (1,793) 161,003 160,903 100 0.1% 902,749 902,649 100 0% Budget Variance (Adverse) or Favourable Budget Variance (Adverse) or Favourable RENFREWSHIRE COUNCIL CAPITAL INVESTMENT STRATEGY - NON-HOUSING SERVICES 1st April to 16th September 2022 POLICY BOARD: FINANCE, RESOURCES & CUSTOMER SERVICES Current Year 2022-23 Full Programme - All years
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Appendix 2 2022/23 Housing Non Housing PSHG Total Services Services Programme A. RESOURCES AVAILABLE TO FUND CAPITAL PROGRAMME £'000 £'000 £'000 £'000 1. Prudential Borrowing 26,065 88,365 114,430 2a General Capital Grant 11,630 600 12,230 2b. Specific Capital Grant 400 2,412 2,812 3. Usable Capital Receipts 330 26,048 26,378 4. Contribution From Current Revenue (CFCR) 0 4,461 692 5,153 5 Total Resource Availability 26,795 132,916 1,292 161,003 B. CAPITAL PROGRAMME 6. Resources Available 26,795 132,916 1,292 161,003 7. Current Programme 26,795 100% 132,916 100% 1,292 100% 161,003 100% C. ACTUAL EXPENDITURE VS PROJECTED 8. Resource Availability 26,795 132,916 1,292 161,003 9. Cash Spent at 16 Sept 2022 4,813 18% 24,961 19% 379 29% 30,153 19% 10. Cash to be Spent by 31 March 2023 21,982 107,955 913 130,850 D. ACTUAL RECEIPTS VS PROJECTED 11. Current Programme (total receipts expected) 730 40,090 600 41,420 12. Actual Cash Received at 16 Sept 2022 0 0% 6,260 16% 276 46% 6,536 16% 13. Receipts to be received by 31 March 2023 730 33,830 324 34,884 RENFREWSHIRE COUNCIL 2022/23 CAPITAL BUDGETS MONITORING SUMMARY REPORT TO 16 SEP 2022