Graham.Friday Reigate-Banstead,Gov.Uk

REPORT OF: HEAD OF FINANCE & PROCUREMENT AUTHOR: GRAHAM FRIDAY TELEPHONE: 01737 276556 E-MAIL: graham.friday@reigate-banstead,gov.uk TO: EXECUTIVE DATE: 17 JUNE 2004 EXECUTIVE MEMBER: COUNCILLOR J. V. LYNDON MORGAN

AGENDA ITEM NO: 9 KEY DECISION REQUIRED: YES WARD(S) AFFECTED: ALL

SUBJECT: PROVISIONAL REVENUE & CAPITAL OUTTURN 2003/04 PURPOSE OF TO ADVISE MEMBERS OF THE PROVISIONAL OUTTURN FOR THE REPORT: THE FINANCIAL YEAR 2003/04 RECOMMENDATIONS:

1. Note the Provisional Outturn position for 2003/04

2. Approve the carry-forwards shown in Table 2

3. Endorse the use of resources proposed in Option 1 (paragraph 16) and authorise the Director of Resources to make the necessary arrangements.

Executive has authority to determine the above recommendations.

Background

1. The accounting records for the year ended 31 March 2004 have been closed and work to prepare the formal Statement of Accounts is ongoing. These will be presented to the Executive on 8 July 2004 and will be subject to external audit.

2. The information in this report is therefore still subject to both minor variation and verification by the Council’s external auditor.

Factors for Consideration

3. Table1 (overleaf) summarises the provisional outturn position. Table 1: Provisional Outturn Summary

Budget Outturn Variance 2003/04 £ £ £

Capital Programme 8,488,200 5,132,400 - 3,355,800

General Fund 15,139,100 14,919,200 - 219,900

(i) Capital Programme

4. The outturn for the capital programme is £5,132,400 against a budget of £8,488,200 which gives an underspend of £3,355,800. The underspend is due to a combination of factors including slippage in the programme, the timing of project payments and factors beyond the control of the Council (eg the external works programme at the Earlswood depot being delayed due to problems acquiring land from Thames Water). All underspent projects/programmes are ongoing in 2004/05.

(ii) General Fund

5. On 20 February 2003 the Council set a net revenue budget for the year of £14,345,500. Approved budget carry-forwards from 2002/03 and transfers from the Organisational Development Fund (ODF) and the Front Line Initiative Fund (FLIF) increased this to £15,139,100. Actual expenditure for the year was £14,919,200 giving an underspend of £219,900. This represents 1.45% of the overall budget for 2003/04.

6. The projected outturn at Period 11 indicated an underspend of £81,200. Comparing the position at the end of the year with the Period 11 projection it can be seen that there has been an increase in the underspend of £138,700.

7. The main reasons for this change are:

 Support to the Community: a higher than anticipated level of subsidy income on Rent Allowances due to efficiency improvements  Investment Income: a reduction in the anticipated under-recovery due to higher than expected miscellaneous interest receipts (described in a separate report eslewhere on this agenda)  Neighbourhood Services: greater than anticipated demand for chargeable services.

(iii) Budget Carry-Forwards

8. Requests for carry-forward of unspent budgets (totalling £224,900) were received from Service Managers. These were analysed by Finance staff and reviewed by the Corporate Management Team. Table 2 (overleaf) shows the unspent budgets (totalling £126,800) for which approval to carry-forward into 2004/05 is sought. Table 2: Budgets Requested to be Carried Forwards into 2004/05

Budget Description £ Members Expenses: contribution to the cost of 1,100 desktop lecterns in the Council Chamber. Small Grants: amount payable pending evidence 2,500 of matchfunding from voluntary sector organisations. Community Safety Grant: to finish CCTV lighting 8,700 system upgrade. Community Safety Partnership: monies held on 11,500 behalf of other agencies which cannot be taken into reserves. Private Leased Property Reinstatement: to allow 10,000 completion of reinstatement works. Community Initiatives: to carry out public 41,000 consultation exercises and other work in relation to the Horley and Redhill Town Centre initiatives. Community Safety: underspent CCTV 20,000 maintenance budgets to be used to part-fund additional CCTV projects in Redhill town centre. Planning Delivery Grant: unspent 2003/04 grant 32,000 to be applied to further improvements in the Planning Service (see paragraph 11 below). TOTAL 126,800

9. The total amount requested to be carried-forward (£126,800) represents 0.84% of the net budget for 2004/05.

10. If the carry-forward of these budgets is not approved then General Fund balance would increase but the work identified above would not take place. The only exception is the Community Safety Partnership budget which cannot be taken into reserves but which is included above for completeness.

11. To date the Planning Service has received approvals from the ODF of £27,000. Given the level of Planning Delivery Grant to be received in 2004/05 (some £493,000) the budgets that will benefit from these carry-forwards will be reduced by £27,000 and this amount will be returned to the ODF.

(iv) Reserves and Provisions

12. The current financial strategy assumes that the Council requires a working balance within its General Fund Reserve of either 15% of the net budget requirement or £2,500,000 whichever is the lower. On 19 February 2004 the Council set a net revenue budget of £14,225,300. A General Fund Reserve based on 15% of this would amount to £2,134,000.

13. As at the 31 March the General Fund Reserve was £2,500,000. Reducing this to the level required by the financial strategy would release £366,000. On 25 September 2003 however it was agreed that £1,000,000 should be earmarked to meet a potential future liability. Given this possible extra demand on reserves a reduction may not be prudent at this time. 14. The Director of Resources addressed the issues of risk and reserves in the ‘Statement of the Section 151 Officer’ appended to the 2004/05 Budget Report which was presented to the Executive on 29 January 2004. This statement set out the principal risks and uncertainties faced by the Council and identified the need to maintain the General Fund Reserve at £2,500,000 in order to help mitigate the risk of the contingent liability being realised.

Options

15. Two main options have been identified for maintaining reserves and utilising the 2003/04 budget underspend.

Option 1

16. Retain a General Fund Reserve of £2,500,000 for the reasons set out in paragraphs 13 and 14. This would result in unallocated resources of £93,100 (assuming approval of the carry-forwards identified in Table 2). Having considered the best way to utilise this one-off sum the Corporate Management Team has proposed that £90,000 of this amount be earmarked to facilitate the development of 3 Local Action Plan Pilot Areas (ie 3 budgets of £30,000 each). This would be achieved by ring-fencing these resources within the FLIF. The remainder would be applied to the ODF.

Option 2

17. Reduce the General Fund Reserve to £2,134,000 (ie 15% of the net revenue budget). This would give unallocated resources of £459,100 (again assuming approval of the carry-forwards identified in Table 2). Guidance from Members would then be sought as to how these funds should be applied eg contributions to the ODF, FLIF, Pension Fund, etc.

Policy Framework

18. The Corporate Plan includes the principal objective of Managing our Assets and the key priority of Optimising our Resource Base.

Background Papers:

Executive 29 January 2004: Budget Report 2004/05