Revenue Budget Monitoring - for the Year 2021-22
Argyll and Bute Council · 30 June 2022
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ARGYLL AND BUTE COUNCIL COUNCIL FINANCIAL SERVICES 30 JUNE 2022 REVENUE BUDGET MONITORING – FOR THE YEAR 2021-22 1. EXECUTIVE SUMMARY 1.1 The main purpose of this report is to advise Members of the revenue budget position of the Council as at the end of financial year 2021-22. The report also summarises the movement in the General Fund balance. 1.2 The performance against budget for financial year 2021-22 was an overall underspend, after earmarkings have been accounted for, of £1.630m (0.59%). 1.3 After accounting for automatic and proposed earmarked reserve proposals, there is a net underspend of £0.815m in relation to Council services departmental expenditure, a net overspend of £0.432m in relation to central expenditure and a net over recovery of income of £1.247m. Social Work, managed by the Health and Social Care Partnership (HSCP), were underspent by £1.738m and this amount is recognised as a creditor on the balance sheet as money owing to the HSCP by the Council which creates a nil variance on the revenue monitoring. 1.4 The General Fund Balance has moved from £78.245m at the end of financial year 2020-21 to £96.530m at the end of 2021-22. The movement represents an increase of £18.285m which largely relates to the timing of Scottish Government funding that was unspent at the end of the year such as COVID funding, unspent grants including ELC 1140 hours and Crown Estates, and Scottish Government Initiatives such as Employability and the expansion of free school meals. It is expected that other Local Authorities will have a similar increase to their General Fund Balance due to the timing of the funding. 1.5 There is a separate report that details the earmarked reserves which outlines proposals to earmark a total of £89.433m from the General Fund balance, leaving £7.097m unallocated. Of this £5.256m is required to be held as the General Fund contingency, leaving an unallocated balance of £1.841m. 1.6 There have been 7 virements of revenue budget over £0.200m in the period January to March 2022 for approval.
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ARGYLL AND BUTE COUNCIL COUNCIL FINANCIAL SERVICES 30 JUNE 2022 REVENUE BUDGET MONITORING – FOR THE YEAR 2021-22 2. INTRODUCTION 2.1 This report summarises the revenue budget position of the Council as at the end of the financial year 2021-22. The overall revenue budget monitoring statement for the Council is attached as Appendix 1 and departmental outturn summaries are attached as Appendix 2. 3. RECOMMENDATIONS 3.1 Members to consider the revenue budget monitoring position as at the end of financial year 2021-22. 3.2 Members to note that the unallocated balance within the General Fund as at 31 March 2022, after taking into account the contingency, amounts to £1.841m. 3.3 Members to approve the revenue virements over £0.200m between January and March 2022. 4. DETAIL 4.1 Final Outturn Variance (Un-audited) 4.1.1 The performance against budget for the financial year 2021-22 was an overall underspend of £1.630m (0.59%). A summary of the final outturn position is noted within the table below.
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4.2 Council Departmental Budget Outturn 4.2.1 The performance against budget shows departmental controllable expenditure being £0.815m (0.48%) under budget. Included in this outturn position is an adjustment to update the 2021-22 budget to reflect £15.054m of new earmarkings at the year-end. 4.2.2 Within the Chief Executive’s Unit (Community Planning and Finance) there was a small underspend which was largely due to a reduction in travel costs as a result of COVID-19 restrictions and new ways of working. 4.2.3 Within the remit of Executive Director Douglas Hendry (Education, Legal and Regulatory Support and Commercial Services), the main underspends were due to an over recovery of vacancy savings, reduced catering in schools due to less demand as a result of COVID-19, reduced running costs within Early Learning and Childcare and an underspend in NPDO and Hub Schools arising from insurance savings and the settlement of historic disputed cost reductions. The main overspends related to external residential placements within Education. Overall there was a net favourable position. 4.2.4 Within the remit of Executive Director Kirsty Flanagan (Roads and Infrastructure, Development and Economic Growth and Customer Support Services), the main underspends were due to the over recovery of vacancy savings, additional income within Environmental Health, one-off income in Variance (Overspend) Underspend £ £ £ % Chief Executive's Unit 5,308,081 5,326,199 18,118 0.34% Executive Director (Douglas Hendry) 115,159,967 115,382,507 222,539 0.19% Executive Director (Kirsty Flanagan) 49,122,963 49,697,141 574,178 1.16% Total Departmental Expenditure 169,591,011 170,405,846 814,835 0.48% Joint Boards 1,490,458 1,496,371 5,913 0.40% Loans Charges 9,382,472 9,382,472 (0) 0.00% Pension Costs 1,797,571 1,745,323 (52,248) (2.99%) Other 9,663,887 9,278,808 (385,078) (4.15%) Total Central Expenditure 22,334,387 21,902,974 (431,413) (1.97%) Social Work 62,870,734 62,870,734 (0) 0.00% Total Social Work Expenditure 62,870,734 62,870,734 (0) 0.00% Total Expenditure 254,796,133 255,179,554 383,422 0.15% Total Funding 278,706,348 277,459,487 1,246,861 0.45% UNDERSPEND 1,630,282 Final Outturn Variance (Un-audited) 2021/22 Department Actuals PercentageBudget
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Housing and additional planning fee income. The main overspends were due to the under recovery of building warrant fees and transportation project costs. 4.3 Central Budget Outturn 4.3.1 The performance against budget for central/non-departmental expenditure was a net overspend of £0.432m (1.97%). Included in this outturn position is an adjustment to update the 2021-22 budget to reflect the new year-end earmarkings which total £4.837m. The main reasons for the overspend is within Insurance costs which were overspent by £0.339m and pension related costs not covered from either the provision or earmarking £0.052m. 4.3.2 The overall favourable position for Departmental and Central Expenditure Budgets has provided the opportunity to propose earmarking of unspent budget for specific purposes and these are included in the ‘Earmarked Reserves – 2021-22 Year End’ report on this agenda. Unspent budget earmarkings will only be considered when the purpose is aligned to the objectives, priorities and targets of the Council, there is a business case to justify the expenditure and the general reserve contingency is met. The detail of the proposed unspent budget earmarkings and their associated business cases can be found in the Earmarked Reserves report. 4.4 Social Work Outturn 4.4.1 Social Work Services, managed by the HSCP, were underspent by £1.738m (2.76%) after repaying all outstanding amounts owing to the Council from previous years’ overspends. Under CIPFA LASAAC Guidance, this amount has been recognised as a creditor on the Council’s balance sheet making the funds available to Social Work to spend in future years. 4.4.2 The underspend of £1.738m before recognising the creditor, was as a result of unspent Scottish Government Grants of £1.056m with the balance of £0.682m coming from underspends within Older People and across Children’s services 4.5 Funding Budget Outturn 4.5.1 The performance against budget for funding was a net underspend/over- recovery of income of £1.247m. Included in this outturn position is an adjustment to update the 2021-22 budget to reflect the new automatic earmarking at the year-end, these new earmarkings total £2.389m and relate to the Strategic Housing Fund and TIF income. 4.5.2 There is a year-end favourable position in relation to Council Tax of £1.246m where recovery was assisted by circa £0.450m of Low Income Pandemic Payments (LIPP) credited directly to Council Tax accounts therefore improving collection rates.
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4.6 COVID Impact 4.6.1 There remains a large amount of COVID funding not utilised at year end and there is a total of £9.407m of COVID earmarkings at 31 March 2022. This has reduced from the £13.469m balance at the start of the year as a result of: - Spend against COVID earmarkings £5.003m - Agreed allocations from COVID funding to capital pressures resulting from the economic effect of COVID £9.433m - New general COVID funding of £7.562m - New specific COVID funding earmarkings of £2.812m 4.6.2 The Council meeting on 24 February 2022 agreed specific uses for the previously uncommitted amounts of COVID funding. These are now recognised within Appendix 5 of the Earmarked Reserves report for future monitoring purposes. 4.7 Impact on the General Fund 4.7.1 The movement in the General Fund balance is different to the underspend, as noted above, as it also reflects earmarked reserve withdrawals and contributions. The General Fund balance at 31 March 2021 was £78.245 and has increased by £18.285 to £96.530 as at 31 March 2022. The movement in the balance is summarised in the table below. £m Balance on General Fund 31 March 2021 78.245 Social Work Repayments 2.759 Revenue Budget 21-22 - Investment in Capital 2.975 Revenue Budget 21-22 - COVID allocation to reserves 7.562 Released earmarked sums to service budgets 2021-22 (18.923) Contributions to earmarked reserves 2021-22 22.280 Overall budget underspend as above 1.630 Rounding 0.003 Balance on General Fund 31 March 2022 96.530 4.7.2 The balance on the General Fund has increased significantly from last year. More information is contained within the earmarking report, however the increase mainly relates to the repayment of debt from the HSCP and the earmarking of unspent Scottish Government Grants, Scottish Government Initiatives and COVID funding. 4.7.3 The closing balance on the General Fund as at 31 March 2022 is £96.530m. Of this, £89.433m is earmarked for specific purposes and £5.256m is required to be held as the General Fund contingency, leaving an unallocated balance of £1.841m as shown in the table below.
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£m Balance on General Fund 31 March 2022 96.530 Earmarked balances at 31 March 2022 (as per Earmarked Reserves report) (89.433) Contingency balance (2.0% of net expenditure) (5.256) Unallocated balance as at 31 March 2022 1.841 4.7.4 The £1.841m unallocated balance as at 31 March 2022 represents an increase of £0.516m on the £1.325m unallocated balance as at 31 March 2021. 4.7.5 Although the unallocated balance at 31 March 2022 is £1.841m the Council at its meeting on 24 February agreed that the budgeted revenue surplus of £2.482m would be transferred into the general fund. This will bring the unallocated General Fund balance up to £4.323m in 2022-23. 4.7.6 The Council continue to have robust financial management arrangements and it is vital that these continue to be in place, particularly as the Council are facing financial challenges around the recovery and how services may need to be adapted as a result of the COVID pandemic. 4.8 VIREMENTS OVER £0.200M (REVENUE) 4.8.1 Virement is the process of transferring budget between cost centres, services or departments or between capital projects. The Council’s constitution notes that virements over £0.200m require approval by Council. This section of the report will be used to outline revenue virements in the period that require approval. Capital virements are included within the capital monitoring report. 4.8.2 For the period January to March 2022, there are 7 virements over £0.200m requiring authorisation: • £0.375m taken from the COVID funding allocation at the centre and £0.194m taken from Executive Director Douglas Hendry to fund COVID costs within Executive Director Kirsty Flanagan £0.569m • £2.559m from Social Work to Funding, representing a full repayment of outstanding debt • £0.230m into the Loans Fund from Executive Director Douglas Hendry £0.216m and Social Work £0.014m to recognise Energy Efficiency Savings • £0.355m from the Loans Fund to Executive Director Kirsty Flanagan recognising the 5% increase in piers and harbours fees to fund borrowing • £0.545m into the Repairs and Renewals fund for replacement of capital items for schools from Education revenue budget • £0.220m budget harvested within Social Work against the vacancy savings target for the period March • £0.240m adjustment within Executive Director Douglas Hendry to adjust prepared meals budgets between Education and Commercial Services.
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5. CONCLUSION 5.1 The performance against budget for financial year 2021-22 was an overall underspend of £1.630m (0.59%). The General Fund balance has increased by £18.285m which mainly relates to the repayment of debt from the HSCP and the earmarking of unspent Scottish Government Grants, Scottish Government Initiatives and COVID funding. 6. IMPLICATIONS 6.1 Policy Automatic earmarking as per the policy have been taken into consideration with the final reported outturn position. 6.2 Financial Report notes the underspend against budget during 2021-22 and the movement in the General Fund balance 6.3 Legal None 6.4 HR None 6.5 Fairer Scotland Duty None 6.5.1 Equalities None 6.5.2 Socio-Economic Duty None 6.5.3 6.6 Islands Duty Climate Change None None 6.7 Risk None 6.8 Customer Services None Kirsty Flanagan Section 95 Officer 6 June 2022 Councillor Gary Mulvaney, Policy Lead for Finance and Commercial Services APPENDICES Appendix 1 – Overall Revenue Budget Monitoring Statement 2021-22 Appendix 2 – Department 2021-22 Outturn Summaries. For further information contact Anne Blue, Interim Head of Financial Services anne.blue@argyll-bute.gov.uk
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ARGYLL AND BUTE COUNCIL - SUMMARY OF ACTUAL AND BUDGET COMPARISON 2021/22 Appendix 1 Actual 2021/22 Budget 2021/22 Income from council tax on 2nd homes Unspent Grant monies Third Party Contributions CHORD DMR School Carry Forwards Previous Council Decision Existing Legal Commitments Scottish Government Initiatives Piers and Harbours Surplus Fleet - Timing Delay COVID-19 Specific Funding Hermitage Park NEW Unspent Budget Previously agreed NEW Unspent Budget Proposals Adjusted Budget 2021/22 "Real Variance" (Over)/undersp end Comment Expenditure £ £ £ £ £ £ £ £ £ £ £ £ £ £ £ £ £ £ Chief Executive's Unit 5,308,081 7,321,234 888,592 36,393 650 843,310 226,090 5,326,199 18,118 Outwith reporting criteria Executive Director (Douglas Hendry) 115,159,967 122,796,043 3,592,825 12,720 1,599,933 188,127 1,190,560 503,346 166,000 160,025 115,382,507 222,539 The underspend is mainly due to an over-recovery of vacancy savings, reduced catering costs in schools due to reduced demand due to COVID, reduced running costs in ELC settings due to a combination of services not being operational in 21/22 and reduced grants to ELC providers, increased income from cross-boundary placements in Education and an underspend in NPDO/Hub Schools arising from insurance savings and the settlement of historic disputed cost reductions. These are partially offset by an overspend on external residential placements in Education. Executive Director (Kirsty Flanagan) 49,122,963 55,342,845 2,394,817 87,290 55,150 953,618 672,586 622,000 4,327 855,916 49,697,141 574,178 The underspend is mainly due to over-recovery of vacancy savings within the department, additional income in Environmental Health from Private Water Supply Appraisals and Fish Export Income, one-off income in Housing and additional Planning Fee income. This is partially offset with various overspends within the department, mainly the under- recovery of Building Warrant Fee income and additional Transportation project costs. Total Departmental Expenditure 169,591,011 185,460,121 0 6,876,234 49,113 87,290 1,599,933 243,927 0 2,144,178 672,586 0 1,968,656 4,327 166,000 1,242,031 170,405,846 814,835 Joint Boards 1,490,458 1,496,371 1,496,371 5,913 Outwith reporting criteria Loans Fund 9,382,472 13,624,339 392,292 3,849,575 9,382,472 (0) Outwith reporting criteria Redundancy Costs 1,797,571 1,745,323 1,745,323 (52,248) Strain on the fund costs not covered from either the provision or earmarking Other 9,663,887 9,873,990 0 0 0 0 0 0 0 0 0 0 47,182 0 483,000 65,000 9,278,808 (385,078) Overspend in insurance costs of £0.339m Total Central Expenditure 22,334,387 26,740,023 0 0 0 0 0 0 0 0 0 392,292 47,182 0 4,332,575 65,000 21,902,974 (431,413) Social Work 62,870,734 62,870,734 62,870,734 (0) As at 31 March 2022, following repayment of all outstanding debt to the Council, social work underspent by £1.738m. A large proportion of this (£1.056m) related to underspent funding streams from the Scottish Government that would be eligible for automatic carry forward in normal circumstances and the balance of £0.682m was mainly due to underspends within Older People and across Children's services. The total underspend of £1.738m has been transferred to IJB reserves for use in future years resulting in the final balanced budget position for 2021/22. Total Social Work Expenditure 62,870,734 62,870,734 0 0 0 0 0 0 0 0 0 0 0 0 0 0 62,870,734 (0) Total Expenditure 254,796,133 275,070,878 0 6,876,234 49,113 87,290 1,599,933 243,927 0 2,144,178 672,586 392,292 2,015,838 4,327 4,498,575 1,307,031 255,179,554 383,422 Funding AEF & NDR Income 216,837,441 216,584,644 252,256 216,836,900 541 Outwith reporting criteria Council Tax 56,241,673 52,859,000 2,136,353 54,995,353 1,246,320 Over-recovery of Council tax income assisted by circa £0.450m of LIPP payments credited directly to Council Tax accounts. Budgeted/withdrawn from Earmarked Reserves 18,922,888 18,922,888 18,922,888 0 Outwith reporting criteria Budgeted Contribution to General Fund Balance (13,295,654) (13,295,654) (13,295,654) 0 Outwith reporting criteria Total Funding 278,706,348 275,070,878 2,136,353 0 0 0 0 252,256 0 0 0 0 0 0 0 0 277,459,487 1,246,861 Under/(Overspend) 23,910,215 0 2,136,353 6,876,234 49,113 87,290 1,599,933 496,183 0 2,144,178 672,586 392,292 2,015,838 4,327 4,498,575 1,307,031 22,279,933 1,630,282 Adjustment for Funds Earmarked in General Fund Reserve REPORTING CRITERIA - +/- £50k OR +/- 10%
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REVENUE BUDGET MONITORING 2021-22 - DEPARTMENTAL OUTTURN SUMMARIES (including Social Work) Appendix 1 Appendix 2 Department Service Actual 2021/22 Budget 2021/22 Income from council tax on 2nd homes Unspent Grant monies Third Party Contributions CHORD DMR School Carry Forwards Previous Council Decision Existing Legal Commitments Scottish Government Initiatives Piers and Harbours Surplus Fleet - Timing Delay COVID-19 Specific Funding Hermitage Park NEW Unspent Budget Previously agreed NEW Unspent Budget Proposals Adjusted Budget 2020/21 (Over)/ Underspend Variance %age Comment Expenditure £ £ £ £ £ £ £ £ £ £ £ £ £ £ £ £ £ £ Chief Executive's Unit Chief Executive 800,674 899,950 36,393 650 30,047 17,090 815,770 15,095 1.85% Outwith reporting criteria Chief Executive's Unit Head of Financial Services 4,507,406 6,421,284 888,592 813,263 209,000 4,510,429 3,023 0.07% Outwith reporting criteria Chief Executive's Unit Total 5,308,081 7,321,234 0 888,592 36,393 0 0 650 0 0 0 0 843,310 0 0 226,090 5,326,199 18,118 0.34% Executive Director (Douglas Hendry) Executive Director (Douglas Hendry) 325,421 395,356 395,356 69,936 17.69% This underspend is due to the combination of an over- recovery of vacancy savings; an underspend on subscriptions and an underspend on a COVID PPE budget which is offset by COVID expenditure elsewhere within the Directorate. Executive Director (Douglas Hendry) Head of Commercial Services 8,713,059 9,160,484 188,127 20,220 87,000 8,865,137 152,077 1.72% There a number of over and underspends across the service. The most significant underspend is within Catering Services due to the impact of COVID on demand for school meals which resulted in a reduced spend on catering purchases. Executive Director (Douglas Hendry) Head of Education 87,581,413 94,185,902 3,568,192 12,720 1,599,933 1,170,340 373,346 87,461,371 (120,042) -0.14% The most significant overspends are due to an increased demand for Residential Placements and an under- recovery of schoolhouse rental income. These are partially offset by an underspend in Early Years resulting from savings from ELC settings which were not operational in 2021/22; an underspend in ELC third sector grants and an increase in income from cross-boundary placements. Executive Director (Douglas Hendry) Head of Legal and Regulatory Support 18,540,074 19,054,301 24,633 130,000 166,000 73,025 18,660,643 120,568 0.65% There a number of over and underspends across the service. The most significant underspend is within NPDO/Hub Schools and is due to an insurance saving and a settlement received for historic disputed deductions. This is partially offset by an overspend on the election costs. Executive Director (Douglas Hendry) Total 115,159,967 122,796,043 0 3,592,825 12,720 0 1,599,933 188,127 0 1,190,560 0 0 503,346 0 166,000 160,025 115,382,507 222,539 0.19% Executive Director (Kirsty Flanagan) Executive Director (Kirsty Flanagan) 288,458 700,777 700,777 412,319 58.84% Underspend due to over-recovery of vacancy savings within the department. Executive Director (Kirsty Flanagan) Head of Customer Support Services 7,549,782 8,059,332 64,000 72,000 406,455 7,516,877 (32,905) -0.44% Outwith Reporting Criteria Executive Director (Kirsty Flanagan) Head of Development and Economic Growth 9,680,867 13,898,239 2,280,804 87,290 55,150 953,618 550,000 50,461 9,920,916 240,049 2.42% Underspend due to additional income in Environmental Health from Private Water Supply Appraisals and Fish Export Income, one-off income in Housing and additional Planning Fee income. This is partially offset with various overspends within the department, mainly the under- recovery of Building Warrant Fee income and additional Transportation project costs. Executive Director (Kirsty Flanagan) Head of Roads and Infrastructure Services 31,603,856 32,684,497 50,013 672,586 4,327 399,000 31,558,571 (45,286) -0.14% Outwith Reporting Criteria Executive Director (Kirsty Flanagan) Total 49,122,963 55,342,845 0 2,394,817 0 87,290 0 55,150 0 953,618 672,586 0 622,000 4,327 0 855,916 49,697,141 574,178 1.16% Total Departmental Expenditure 169,591,011 185,460,121 0 6,876,234 49,113 87,290 1,599,933 243,927 0 2,144,178 672,586 0 1,968,656 4,327 166,000 1,242,031 170,405,846 814,835 0.48% Social Work Chief Officer Integration (333,064) (512,447) (512,447) (179,383) 35.01% The overspend is due to both the remaining outstanding debt repayment to Council (£703k) and the proposed transfer of underspend to general reserve (£682k) being shown at Chief Officer for reporting purposes. These budget movements are funded by underspends across the other service areas. There has also been an overspend on the central repairs budget of £67k and other small overspends across payments to other bodies. This is partially offset by the over-recovery of charges to clients (£330k) and funding received for the slippage on budget savings (£1.098m). Both the charges to clients and budget savings over-recoveries are as a result of Scottish Government funding to offset income loss and unachieved budget savings elsewhere in the service as a result of COVID-19. Social Work Head of Adult Services 48,735,655 48,708,873 48,708,873 (26,782) -0.06% Outwith Reporting Criteria Social Work Head of Children and Families and Community Justice 14,043,432 14,236,782 14,236,782 193,350 1.36% Underspend due to reduced demand for Fostering, Adoption, Children's Respite and services for Children with a Disability combined with underspends in Justice - mainly on staff costs. This is all partially offset by overspends due to demand on Residential Placements. Social Work Head of Strategic Planning and Performance 424,711 437,526 437,526 12,815 2.93% Outwith Reporting Criteria Total Social Work Expenditure 62,870,734 62,870,734 0 0 0 0 0 0 0 0 0 0 0 0 0 0 62,870,734 (0) 0.00% Total Expenditure 232,461,745 248,330,855 0 6,876,234 49,113 87,290 1,599,933 243,927 0 2,144,178 672,586 0 1,968,656 4,327 166,000 1,242,031 233,276,580 814,835 0.35% Funds carried forward to 2022/23 REPORTING CRITERIA - +/- £50k OR +/- 10%