Item 13 - General Services Revenue Budgetary Control Report to 31 October 2024
West Dunbartonshire Council · 18 December 2024
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WEST DUNBARTONSHIRE COUNCIL Report by the Chief Officer – Resources Council – 18 December 2024 ___________________________________________________________________ Subject: General Services Revenue Budgetary Control Report to 31 October 2024 (Period 7) 1. Purpose 1.1 The purpose of this report is to advise Council of the 2024/25 Revenue Budget position at 31 October 2024 and the forecast position of the General Fund Reserve as at 31 March 2025. 2. Recommendations 2.1 Council is asked to note a current projected annual underlying adverse variance on the revenue account of £2.122m (0.73% of total budget). 3. Background 3.1 The revised 2024/25 revenue budget presented to Council in October was £289.927m. Since then, the Scottish Government has provided the following additional sums: £1.395m Local Government Pay funding £0.585m an estimated commitment in respect of the Teachers Pay award £0.292m to fully fund the estimated additional costs associated with enabling funded early learning and childcare (ELC) workers in private and third sector services to be paid at lease £12 per hour. 3.2 The additional sums increases the 2024/25 revenue budget (excluding earmarked reserves) as follows: Service £m £m Revised budget as at Period 5 289.927 Additional Resources: Share of £77.5m Local Government Pay Funding All 1.395 Share of £29m Teachers Pay Award (To Be Confirmed) Education 0.585 Share of £16m of ELC uplift Education 0.292 Total Additional Resources 2.272 Revised budget as at Period 7 292.199 4. Main Issues 4.1 The summary report at Appendix 1 highlights a projected net annual underlying adverse variance (overspend) of £2.122m (0.73% of the total budget). The current projection shows a decline in the year end position from ITEM 13
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the figure reported at Period 5, with an increase in the anticipated overspend of £0.056m as detailed in the table below. Appendix 2 provides more detailed service reports by Chief Officer. In addition, services are projecting the use of £1.227m of earmarked reserves. £m £m Net adverse variance at Period 5 2.066 Movements in service variance Resources – reduction attributed mainly to an increase in the income from Statutory Additions (£0.142m) and further use of earmarked reserves within Corporate Assets (£0.094m) (0.236) Citizens, Culture & Facilities - underspend on employee costs being higher than originally anticipated. Relates also to an increase in income from internal recharges to other services. (0.157) Education – Relates mainly to an increase in the Non- Domestic Rates as a result of in year revaluations. 0.276 Roads & Neighbourhood – relates to a reduction in the anticipated income from the Crematorium service. An increase in the overspend within waste has been projected due to an increase in waste tonnage. It is anticipated that the tonnage will reduce within co-mingled waste, however, this will continue to be monitored going forward. 0.206 Other service movement less than £0.050m (0.033) Total movement in service variances 0.056 Net adverse variance at Period 7 2.122 4.2 In June a strategy was agreed to replenish general reserves from: additional funding from the Revenue Support Grant in relation to the council tax freeze the release of matched ESF funding additional revised benefit from reduction in employer pension contributions. The saving from the employer pension contribution rate as explained at paragraph 4.5, would be smoothed over 4 years thus easing the budget pressure by £5.332m in years 2024/25-2027/28. 4.3 Information on any projected annual variances in excess of £0.050m after the use of earmarked reserves, are highlighted and noted within Appendix 3, with additional information on action being taken to minimise or mitigate overspends where possible. 4.4 A list of agreed efficiencies and management adjustments totalling £6.649m is shown within Appendix 4. Current indications show, £6.442m is on target to be achieved. However, Appendix 4 also shows that it is anticipated that £0.207m will not be achieved and will be funded by the smoothing fund for
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2024/25 only, with the expectation that the full saving will be achieved in future years. 4.5 On 20 December 2023, a report to Council presented the financial benefit to the Council as a consequence of the Strathclyde Pension Fund (SPF) Board reducing the employer pension contribution rate in the years 2024/25 and 25/26 from 19.3% to 6.5% generating an estimated saving to the Council of £21.327m. Service superannuation budgets have been reduced via a virement to a central reserve, to reflect the saving in 2024/25. The Council agreed to smooth the total saving over 4 years with £5.332m being used to balance the budget in 2024/25 and the remaining amount to be transferred to an earmarked reserve to be used in future years to help ease the budget pressure as agreed at Council on 6 March 2024. The budgeted transfer to Reserves to date is £7.375m which reflects the current in year reduction of the service budget. The underspend of £2.043m will be transferred to an earmarked reserve to be used to balance the budget in future years. 4.6 The Housing Revenue Account (HRA) is currently forecasting a deficit of £0.349m after applying all available reserves. The Housing (Scotland) Act 1987 specifies that if an HRA deficit arises in any one year, the local authority must make a contribution to make good the deficit from the General Fund. The HRA would then be expected to repay that contribution from any future surpluses generated. The Housing Senior Management Team will continue to identify efficiencies across all areas of the HRA revenue account budget in order to minimise the adverse variance. General Fund Reserves Position 4.7 Appendix 5 shows the latest position in respect of Unallocated and Earmarked Reserves and shows the projected balance as at 31 March 2025: Unearmarked Balance (£m) Earmarked Balance (£m) Total General Fund Reserves (£m) As at 31 March 2024 (draft) 4.418 9.115 13.533 In year movements 1.607 4.844 6.451 Projected in year use of reserves (2.122) (1.227) (3.349) Projected Balance as at 31 March 2025 3.903 12.732 16.635 4.8 A breakdown of the 2024/25 earmarked balances and the movements in reserves is summarised in Appendix 6. 4.9 The Council’s General Fund contingency (Prudential Target) is set at 3% of net expenditure for 2024/25 and amounts to £5.400m. After taking into consideration the forecast adverse outturn position of £2.122m at 31 October 2024, the Council is currently forecast to have £1.497m below the current Prudential Target. The services have mitigating actions to reduce their projected adverse variances. In addition, the June Finance Update advised
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how the additional benefit from the reduction in pension contributions would continue to rebuild reserves with an additional £1.621m forecast over 2025- 2026. 4.10 The staff of the Health and Social Care Partnership (HSCP) make up 35% of the overall Council staff (excluding Teachers) which represents £0.488m as a proportion of the £1.395m Local Government Pay Award funding. If Council, when agreeing 2025/26 budget on the 5 March 2025, decide to pass through all or some of this additional Revenue Support Grant funding to the HSCP, the amount passed through will increase the need to use Council reserves to offset any in-year variance. Further analysis of the impact of the 2024-25 pay award on the council’s lower paid staff is still ongoing to help fully understand the impact of this on the council’s revenue position. The projection will be updated for period 10 BCR due to be reported to Council on 26 March 2025. 5. Option Appraisal 5.1 No option appraisal was required for this report. 6. People Implications 6.1 There are no people implications. 7. Financial and Procurement Implications 7.1 The report notes the projected in-year financial position for both General Services revenue and capital budgets. 8. Risk Analysis 8.1 The main risks are as follows: (a) The present variances should be viewed in the knowledge that there are a number of variable factors which could arise between now and 31 March which could affect the year end; (b) As a consequence of current market conditions, capital receipts may either not be received or they may be less than anticipated. The budget assumption is that all capital receipts achieved in 2024/25 will be used to the principal and premium repayments within the loan charges budget. Any shortfall in capital receipts below that budgeted will affect the revenue budget position. This is being closely monitored and any issues will be reported to Council; (c) As a consequence of current market conditions, inflation is at an all-time high and interest rates continue to rise. To forecast for the full year costs budget assumptions have been required (particularly around energy and interest costs). These assumptions continue to change regularly and therefore it is likely that the projected year end budgetary position will change from that reported.
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9. Equalities Impact Assessment (EIA) 9.1 No equalities impact assessment was required in relation to this report. 10. Environmental Sustainability 10.1 No assessment of environmental sustainability was required in relation to this report. 11. Consultation 11.1 All services involved in delivering the revenue and capital budgets have been consulted in the compilation of this report. 12. Strategic Assessment 12.1 Proper budgetary control and sound financial practice are cornerstones of good governance and support Council and officers to pursue the strategic priorities of the Council’s current Strategic Plan. This report forms part of the financial governance of the Council. __________________ Laurence Slavin Chief Officer – Resources Date: 3 December 2024 __________________________________________________________________ Person to Contact: Carol Alderson. Finance Manager Council Offices, Church Street, Dumbarton E-mail: carol.alderson@west-dunbarton.gov.uk Appendices: Appendix 1 - Revenue Budgetary Control 2024/25 – Corporate Summary; Appendix 2 - Revenue Budgetary Control 2024/25 – Chief Officer Summaries; Appendix 3 - Analysis of Revenue Variances over £50,000; Appendix 4 - Monitoring of Efficiencies Appendix 5 - Reconciliation of General Fund Reserves Appendix 6 - Monitoring of Earmarked Balances Background Papers: Ledger output – Period 7; General Services Revenue Estimates 2024/25 Wards Affected All Wards