2 - Revenue and Capital Budget Monitoring Overview Reports
Renfrewshire Council · 9 February 2023
Back to Finance, Resources and Customer Services Policy Board — 9 February 2023 and its agenda
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To: Finance, Resources and Customer Services Policy Board On: 9 February 2023 Report by: Director of Finance and Resources Heading: Revenue and Capital Budget Monitoring – Council Overview as at 11 November 2022 1. Summary of Financial Position 1.1. The projected Revenue outturn at 31 March 2023 for all services is an overspend of £8.244m. 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 496,779 505,023 (8,244) -1.7% Housing Revenue Account 0 0 0 0.0% Total 496,779 505,023 (8,244) -1.7% Table 2: Capital Division Revised Annual Budget Projected Outturn Budget Variance (Adv)/Fav Budget Variance £000 £000 £000 % General Fund Services 114,991 114,891 100 0.0% Housing Revenue Account 21,200 21,200 0 0.0% Total 136,191 136,091 100 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 £8.244m (1.7% 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 £9.265m. 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. There are ongoing cost pressures within Soft Facilities Management, Roads, Waste Services and OneRen. Information on significant variances is included within Appendix 1. 3.5. The projection does not currently include any variance relating to the collection of Council Tax. Current forecasts suggest a collection level broadly in line with 2021/22; however, it is recognised that the full year impact of the cost-of-living crisis may have a further effect on income collected. 3.6. Members should also note that the forecast outturn position does not include the impact of the pay settlement for 2022/23 budget, recently agreed for non- teaching staff, but not yet agreed for Teachers or Chief Officers. Following confirmation of the level of funding being provided by the Scottish Government, the shortfall for 2022/23, above that already set aside, is currently estimated at £3m. 3.7. 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.
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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 £114.991m. 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 £21.200m. 4.4. The Capital Monitoring report at Appendix 2 indicates a break-even position in the approved capital programme for the HRA for the year. 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 ringfenced 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 131.755 114.891 Housing 29.995 21.200 Total 161.750 136.091 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.
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Approved CFR to 31 March 2023 £m Projected CFR to 31 March 2023 £m Non-Housing 364 351 Housing 122 110 Total 486 461 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 £21.200m, a reduction of £8.795m resulting from the net effect of reduced budget of £0.400m for signed contracts being lower than estimated and £8.395m for expenditure reprofiled from 2022/23 into 2023/24. 6.2. Capital expenditure to 11 November 2022 amounted to £7.222m and this represents 34% of available resources, compared to 50% for the same period in 2021/22. 6.3. 1% of expected capital income has been received to date, compared to 59% for the equivalent period in 2021/22. This difference relates to the timing of receipt of Scottish Government grant funding for Council House New Build. 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 £114.991m, a decrease of £16.764m resulting from the net effect of: budget increases of £9m, mainly as result of new grant awards for Paisley Museum, Active Communities and Strathclyde Passenger Transport; budget brought forward from 2021/22 to 2022/23 of £11m; and projects re-profiled from 2022/23 to 2023/24 of (£37m). The projects re-profiled into 2023/24 largely relate to Paisley Museum, Paisley Town Hall and Paisley Town Centre Infrastructure, City Deal and the new Paisley Grammar Campus. 7.2. Capital expenditure to 11 November 2022 totals £37.664m and represents 33% of the available resources, compared to 34% for the equivalent period in 2021/22.
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7.3. Capital income totalling £13.343m has been received to 11 November 2022. This represents 30% of the total anticipated income, compared to 45% 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 noted in 6.4, the full impact of COVID-19 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. 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 £8.244m 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. 3. Community/Council Planning - None directly arising from this report.
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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 / Geoff Borland
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Appendix 1 Policy Board Approved Annual Budget at Period 6 Budget Adjustments Revised Annual Budget at Period 8 Projected Outturn Previous Projected Outturn Variance Movement £000 £000 £000 £000 £000 % £000 £000 Communities and Housing Services 14,670 (152) 14,517 14,477 40 0.3% 28 12 Education and Children's Services 225,967 (202) 225,765 231,034 (5,269) (2.3%) (5,434) 165 Infrastructure, Land and Environment 30,841 (11) 30,830 32,928 (2,098) (6.8%) (1,696) (402) Finance, Resources and Customer Services 103,452 4,738 108,190 109,293 (1,103) (1.0%) (894) (209) Adult Services 93,607 0 93,607 92,586 1,021 1.1% 970 51 Planning 511 0 511 511 0 0.0% (150) 150 Economy and Regeneration 2,996 (0) 2,996 2,996 0 0.0% 34 (34) Chief Executive's Service 20,349 14 20,363 21,198 (835) (4.1%) (278) (557) GENERAL SERVICES NET EXPENDITURE 492,393 4,387 496,779 505,023 (8,244) (1.7%) (7,420) (824) Housing Revenue Account (HRA) 0 0 0 0 0 0.0% 0 0 NET EXPENDITURE 492,393 4,387 496,779 505,023 (8,244) (1.7%) (7,420) (824) RENFREWSHIRE COUNCIL REVENUE BUDGET MONITORING STATEMENT 2022/23 1 April 2022 to 11 November 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) Updated Planning fee and Building Warrant income now contributes to a forecast break‐even position for this service. The projected overspend position is largely due to the costs of support to OneRen, reflecting the significant challenges the organisation continues to face following the pandemic and its impact on commercial income, in addition to the provisional level of pay award agreed for 2022/23. 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 £1.021m, experienced within employee costs and reflecting national recruitment issues facing all Health & Social Care services. The projected year‐end overspend is £5.269m. 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 continually reviews external placements to ensure they remain appropriate considering both costs and the specific support required. Additional overspends in premises costs across all schools arise from 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 main drivers of the projected year‐end overspend are the loss of parking income, as has been the case since the beginning of the pandemic; refuse collection costs that are largely driven by inflationary costs and absence cover as a result of annual leave being carried forward from during the pandemic; and the impact of the anticipated energy increases on areas such as street and traffic lighting. All areas will continue to be closely monitored through the remainder of the year. The projected year‐end overspend is £1.103m, 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 Period 6 Budget Adjustments Revised Annual Budget P8 Total Projected Outturn Previous Projected Outturn Movement £000 £000 £000 £000 £000 % £000 £000 Employees 345,646 11,888 357,534 354,471 3,063 0.9% 225 2,838 Premises Related 37,937 (1) 37,936 43,416 (5,480) (14.4%) (4,928) (553) Transport Related 13,448 1 13,449 15,507 (2,058) (15.3%) (1,687) (371) Supplies and Services 88,340 (4,661) 83,679 84,511 (832) (1.0%) (159) (673) Third Party Payments 94,894 142 95,036 100,449 (5,413) (5.7%) (5,791) 378 Transfer Payments 87,915 (845) 87,070 87,751 (681) (0.8%) 753 (1,434) Support Services 6,833 37 6,870 6,773 97 1.4% 77 20 Depreciation and Impairment Losses 27,629 0 27,629 25,508 2,121 7.7% 2,201 (80) GROSS EXPENDITURE 702,642 6,562 709,203 718,386 (9,183) (1.3%) (9,310) 126 Income (210,249) (2,175) (212,424) (213,363) 939 0.4% 1,889 (951) NET EXPENDITURE 492,393 4,387 496,779 505,023 (8,244) (1.7%) (7,420) (825) Budget Variance (Adverse) or Favourable RENFREWSHIRE COUNCIL REVENUE BUDGET MONITORING STATEMENT 2022/23 1 April 2022 to 11 November 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 (7,606) 5,753 5,653 100 2% 147,558 147,458 100 0% TOTAL 81,011 13,359 (7,606) 5,753 5,653 100 2% 147,558 147,458 100 0% COMMUNITIES, HOUSING & PLANNING Housing(HRA) 38,415 29,995 (8,795) 21,200 21,200 0 0% 160,634 160,634 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 (8,549) 22,492 22,492 0 0% 161,926 161,926 0 0% INFRASTRUCTURE, LAND & ENVIRONMENT Environment & Infrastructure 19,745 17,683 3,948 21,631 21,631 0 0% 56,118 56,118 0 0% TOTAL 19,745 17,683 3,948 21,631 21,631 0 0% 56,118 56,118 0 0% ECONOMY & REGENERATION Economy and Development 29,508 45,871 (15,053) 30,818 30,818 0 0% 106,181 106,181 0 0% TOTAL 29,508 45,871 (15,053) 30,818 30,818 0 0% 106,181 106,181 0 0% FINANCE, RESOURCES & CUSTOMER SERVICES Corporate Projects 2,841 9,107 488 9,595 9,595 0 0% 22,241 22,241 0 0% TOTAL 2,841 9,107 488 9,595 9,595 0 0% 22,241 22,241 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 (173) 44,808 44,808 0 0% 361,646 361,646 0 0% TOTAL 127,930 45,735 1,459 47,194 47,194 0 0% 422,920 422,920 0 0% TOTAL ALL BOARDS 299,450 162,796 (25,313) 137,483 137,383 100 0.1% 916,944 916,844 100 0% MADE UP OF :‐ Non-Housing Programme 261,035 131,755 (16,764) 114,991 114,891 100 0% 755,018 754,918 100 0% Housing Programme(HRA) 38,415 29,995 (8,795) 21,200 21,200 0 0% 160,634 160,634 0 0% Housing Programme(PSHG) 0 1,046 246 1,292 1,292 0 0% 1,292 1,292 0 0% PROGRAMME TOTAL 299,450 162,796 (25,313) 137,483 137,383 100 0.1% 916,944 916,844 100 0% Budget Variance (Adverse) or Favourable Budget Variance (Adverse) or Favourable RENFREWSHIRE COUNCIL CAPITAL INVESTMENT STRATEGY ‐ NON‐HOUSING SERVICES 1st April to 11th November 2022 POLICY BOARD: FINANCE, RESOURCES & CUSTOMER SERVICES Current Year 2022‐23 Full Programme ‐ All years
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Appendix 3 2022/23 Housing Non Housing PSHG Total Services Services Programme A. RESOURCES AVAILABLE TO FUND CAPITAL PROGRAMME £'000 £'000 £'000 £'000 1. Prudential Borrowing 18,370 69,406 87,776 2a General Capital Grant 16,959 600 17,559 2b. Specific Capital Grant 2,500 2,412 4,912 3. Usable Capital Receipts 330 25,753 26,083 4. Contribution From Current Revenue (CFCR) 0 461 692 1,153 5 Total Resource Availability 21,200 114,991 1,292 137,483 B. CAPITAL PROGRAMME 6. Resources Available 21,200 114,991 1,292 137,483 7. Current Programme 21,200 100% 114,991 100% 1,292 100% 137,483 100% C. ACTUAL EXPENDITURE VS PROJECTED 8. Resource Availability 21,200 114,991 1,292 137,483 9. Cash Spent at 11 Nov 2022 7,222 34% 37,664 33% 623 48% 45,509 33% 10. Cash to be Spent by 31 March 2023 13,978 77,327 669 91,974 D. ACTUAL RECEIPTS VS PROJECTED 11. Current Programme (total receipts expected) 2,830 45,124 600 48,554 12. Actual Cash Received at 11 Nov 2022 15 1% 13,343 30% 608 101% 13,966 29% 13. Receipts to be received by 31 March 2023 2,815 31,781 -8 34,588 RENFREWSHIRE COUNCIL 2022/23 CAPITAL BUDGETS MONITORING SUMMARY REPORT TO 11 NOV 2022