(1)apps.bedford.gov.uk/ExecDecisions/Files/D418526453546412.pdf · Following landmark Supreme Court Judgements in March 2014, there is likely to be a considerable pressure to the

(1) Revenue Budget Trends Key Decision July 2014

For Publication

Bedford Borough Council – Report to the Mayor 31 July 2014 Report by the Finance Portfolio Holder and Assistant Chief Executive & Chief Finance Officer SUBJECT: 2014/2015 REVENUE BUDGET TRENDS 1. Executive Summary

To consider the latest trends in respect of the 2014/2015 revenue budget and the emerging budget issues as at 31May 2014.

2. Recommendations

The Mayor is requested to consider the report and, if satisfied, to: (a) Acknowledge the forecast 2014/2015 revenue outturn position against the approved revenue budget shown in

Appendix A, the projected major variances with reasons for these variances and the action being taken to address the underlying issues;

(b) Accept the £289,423 Severe Weather Recovery Scheme Grant from the Department for Transport and the addition

of £106,210 to the Capital Investment Programme, and £183,213 to the 2014/2015 Revenue Budget, as set out in paragraph 6.1(a);

(c) Accept the £511,618 funding made available for pothole repairs by the Department for Transport a set out in

paragraph 6.1(a) and its inclusion in the Capital Investment Programme;

(d) Accept the £195,548 Bus Operators Grant from the Department for Transport as discussed in paragraph 6.1(b) and its inclusion in the revenue budget;


(e) Accept the £164,885 Special Educational Needs and Disability (SEND) grant from the Department for Education (DfE) for the implementation of the new SEND agenda as set out in paragraph 6.1(c);

(f) Accept the £35,088 New Burdens Grant from the Department of Work and Pensions for changes to welfare reform

for 2014/2015 as discussed in paragraph 6.1(d); (g) Accept new burdens funding from the Department of Work and Pensions relating to the implementation of the Real

Time Information (RTI) project at £15.13 per referral as set out in paragraph 6.1(e). 3. Reason for Recommendations To advise the Executive of the latest trends in respect of the 2014/2015 revenue budgets and emerging budget issues that impact

on the Council’s Medium Term Financial Strategy. To approve the virements to income and expenditure budgets arising from new and additional grants receivable by the Council in

line with the Council’s Financial Procedure Rules. 4. Key Implications 4.1 Legal Issues

The Council is required, by law, to set a balanced revenue budget each year which for 2014/2015 was approved by Full Council on 5 February 2014. The purpose of this report, in accordance with best financial management practice, is to advise the Executive of significant variations from that budget.

4.2 Policy Issues

The Medium Term Financial Strategy (MTFS) states that, to ensure a continuously stable financial base for the provision of Council services and functions, the Council will ensure that annual ongoing General Fund revenue expenditure can be covered by annual income sources in each and every financial year. The MTFS requires regular reports to be submitted to the Executive in respect of budget trends and the report, therefore, provides a detailed update on the latest budget position and also identifies a number of emerging budget issues that will need to be monitored during 2014/2015. The MTFS also requires that due regard is given to revenue budget forecasts and that any increase in the ongoing annual revenue budget will be subject to the expenditure being either legally unavoidable or considered affordable after taking into account:


any forecast savings targets;

implications on Council Taxpayers in future years.

The MTFS will continue to be reviewed in light of the budget monitoring undertaken to date and refreshed given the emerging medium term pressures and further specified impacts upon the Council. The MTFS will next be reported to the Executive in September 2014.

4.3 Resource Implications

The Council’s approved 2014/2015 gross General Fund Revenue Budget is £360.551 million, this is reduced by income from specific grants, subsidies, fees, charges and rents which can be subject to variation as well as fixed income sources such as commuted sums, reserves and provisions giving a net budget requirement of £145.245 million. The net budget requirement is financed as follows:

2014/2015 £million

Net Budget Requirement 145.245 Financed by: Revenue Support Grant 36.160 Local Business Rates 32.710 Other Grants * 7.845 Council Tax Yield 68.530

* Other grants include Education Services Grant (£1.836 million), New Homes Bonus (£5.251 million) and Council Tax Freeze Grant (£758,000).

Subsequent to the approval of the budget the Department for Communities & Local Government (CLG) notified the Council of the final Council Tax Freeze grant, which was £14,300 higher than the estimate included in the original budget. The revised net budget requirement which will be reported in year is, therefore, £145.259 million.

A review of expenditure trends and variable income sources indicates there are some variations compared to forecast and these are explained in the details section of the report. There will, in addition, be continued vigilance (as part of the established monitoring process) in identifying issues that will impact upon the current budget for the remainder of the financial year and the 2015/2016 budget.


4.4 Risk Implications When the Council considers each revenue service and function budget it is important that endeavours are made to identify potential risks. Inevitably, during the course of the financial year, some of these risks will occur and impact on the budget by either requiring further expenditure or by reducing the Council’s budgeted income.

There is a risk that the efficiency assumptions built into the 2014/2015 revenue budget will not be achieved with a consequent impact on delivering a balanced budget. The monitoring of efficiencies is a key feature of the monthly monitoring meetings with the Service Directorates and Portfolio Holders, to proactively monitor the approved budget. An update on progress against the efficiency assumptions is provided in this report.

4.5 Environmental Implications

There are no environmental implications arising directly from the report. 4.6 Equality Analysis

In preparing this report, due consideration has been given to the Borough Council’s statutory Equality Duty to eliminate unlawful discrimination, advance equality of opportunity and foster good relations, as set out in Section 149(1) of the Equality Act 2010. A relevance test for equality has been completed. The equality test determined that the activity has no relevance to Bedford Borough Council’s statutory equality duty to eliminate unlawful discrimination, advance equality of opportunity and foster good relation. An equality analysis is not needed.

5. Details

2014/2015 Revenue Budget Monitoring – Overview

5.1 Effective budget monitoring, which is a requirement of the Council’s Financial Procedure Rules and the Medium Term Financial Strategy (MTFS), is critical to sound financial management. This process enables the Executive to monitor compliance with the approved budget, to identify emerging issues and, where appropriate, to put plans in place to address forecast budget issues. It is inevitable that some budget pressures will be contained through appropriate management action, whereas others may need to be considered as part of the 2015/2016 budget process.


5.2 The Executive has previously agreed a framework for budget monitoring. In accordance with this framework budgetary performance and efficiencies are assessed through the use of performance flags (Red, Amber and Green – RAG Status) and Direction of Travel indicators in order to monitor the Council’s performance in meetings its budgetary targets including efficiency savings. This provides a statement of financial health and an overview of how the Council is utilising its resources in meeting the requirements outlined in the budget.

5.3 An integral part of the monitoring process has been the scheduling of regular meetings with the Service Departments and Portfolio

Holders, to proactively monitor compliance with the approved budget. This also enables the identification of further potential risks and emerging budget pressures so that appropriate action can be taken at an early stage.

Revenue Budget Monitoring

5.4 This report represents the revenue monitoring information for the period April to May 2014. This report provides a more detailed

position than that reported to Executive in June, and includes direction of travel indicators compared to the previous report. 5.5 The budget variances are reported at Appendix A and have been assigned a RAG status (Red, Amber and Green) based on the

following:

All under spends and overspends up to 2% of the net budget Green Overspends between 2% and 5% of the net budget Amber Overspends greater than 5% Red

5.6 All under spends are rated green, however, they continue to be challenged in the budget process to ensure they represent

efficiencies and not non-delivery of services. Revenue Budget Monitoring – 2014/2015 Efficiency Assumptions

5.7 The ongoing process includes the monitoring of compliance with the efficiency assumptions built into the 2014/2015 revenue

budget. The evaluation of the efficiencies has been made on this basis of a RAG rating based on the following criteria:

The proposal has been implemented and is on target to achieve the budgeted saving.

Green

The implementation of the proposal is in progress, the final saving to be achieved is estimated but not finalised

Amber

Action is required to commence the project; savings to be delivered Red


5.8 At this stage there is no indication that the approved modernisation proposals will not be achieved. Revenue Budget Monitoring –Variances

5.9 This initial monitoring and assessment of the 2014/2015 revenue budget has identified a number of issues that require action to

avoid budgetary pressures and issues that need to be kept under review. The key issues that deserve specific reference are discussed in the following paragraphs:

(a) Children’s and Adults’ Services – £117,000 underspend

The Adults Social care budgets are projecting an underspend of £114,000. The significant items within this forecast are discussed below, the remainder of the underspend results from staff vacancies within day services, older people and shared lives. Deprivation of Liberty (DoLS) Following landmark Supreme Court Judgements in March 2014, there is likely to be a considerable pressure to the Safeguarding budget estimated in the region of £800,000. The Supreme Court has clarified that there is a deprivation of liberty for the purposes of Article 5 of the European Convention on Human Rights where “The person is under continuous supervision and control and is not free to leave, and the person lacks capacity to consent to these arrangements”. The Supreme Court has also determined that a deprivation of liberty can occur in domestic settings where the State is responsible for imposing such arrangements. This will include a placement in a supported living arrangement in the community, placements through Shared Lives Schemes and foster placements for young people aged 16-18years. These judgements will require the Council to significantly increase the number of Best Interest Assessments carried out, in particular but not limited to learning disability and older people clients. Costs will be incurred as a charge per assessment carried out by both in-house and external assessors, assessments carried out by Section 12 Doctors, and the cost of Court of Protection applications. This is a national issue which is being debated through the Association for Directors of Adult Social Services (ADASS) with the Department of Health. This issue will continue to be monitored through the year, and an update on the activity and predicted overspend will be reported to the Executive in the September Revenue and Capital Trends report.


Residential and nursing care The previously expected increase in costs for residential and nursing care for 2014/2015 of approximately £512,000 is not now expected to impact until 2015/2016. This funding will be utilised to fund the Deprivation of Liberty costs discussed above. The contract for the provision of older people’s care in six residential homes ceased on 31 March 2014 and the service provision transferred back to Bedford Borough with effect from 1 April 2014. There is a forecast underspend of £369,000 on this service resulting from the Council now receiving the income from clients in those homes that fund their own care. The Childrens Services element of the directorate is projecting to be on budget at the end of the year. The significant variances are discussed below: Children’s Centres The School and Early Years Finance (England) Regulations 2014 include a new definition around the Early Years provision. The revised regulations for 2014 no longer allow the Dedicated Schools Grant (DSG) to be spent on community early years provision. This has resulted in a pressure of £115,000 in 2014/2015 as the continuation of Children’s Centres will be required to be funded from the General Fund. This change in regulations was not known at the time the budget was submitted in January 2014. Looked After Children The number of Looked after Children (LAC) has reduced, with the number on the register at 31 May 2014 being 253 (225 as at 31 May 2014). Members will recall that an investment was made in 2014/2015 budget across a range of services totalling £5.3 million to take account of the pressures being experienced as a result of the increasing numbers of LAC at that time. It would appear, at this time, the number of LAC has plateaued however only a small change in the cohort can have significant on-going financial implications. The underspend of £279,000 includes additional costs in Family Support and Intervention services due to the number of assessments and court judgements which the Authority have limited, or no control over. Implications from recent case law requires Councils to evidence that all available support has been accessible to parents prior to the court making a placement order.


(b) Chief Executive’s - £62,000 underspend (excluding Public Health)

There are a number of small variances that total £62,000, the largest of these is £28,000 underspend in Registration and Records relating to staff vacancies.

(c) Public health - £223,000 overspend

Clarification has been received from the Department of Health on the responsibility for funding prescribing costs, which results in an additional cost to the Local Authority for sexual health and tobacco services. This is to be funded from the Strategic Reserve established to fund these costs should they arise.

(d) .Environment - £93,000 underspend The projected underspend of £93,000 relates to staffing. There are a number of vacancies across several services, including Environmental Health and Leisure, which offset additional staffing costs on The Higgins.

(e) Corporate Budgets - £220,000 underspend The Capital Financing Budget is currently projecting an underspend of £220,000 on interest and the Minimum Revenue Provision (MRP) as a result of increased reserve balances and slippage in the Capital Programme at the end of the financial year than originally planned.

Virement Movements

5.10 The virement movements for the period to 31 May 2014 were reported to the Executive on 25 June 2014, with a recommendation to Full Council where appropriate. There have been no further virements to report.

Revenue Contingency

5.11 The approved budget includes the sum of £2 million as a contingency for unforeseen costs and unexpected levels of activity. This will be marginally increased as a consequence of the additional Council Tax Freeze Grant of £14,300. Revenue Budget – Summary Position

5.12 The table overleaf summarises the budgetary position with detailed information by Directorate included at Appendix A:


Budget Forecast as at 31 May 2014 Current Budget

Forecast Outturn

Forecast Variance

£000 £000 £000 Children’s & Adults’ Services 74,270 74,153 (117)Chief Executive’s 19,189 19,350 161Environment 30,002 29,909 (93)Contribution from Public Health Strategic Reserve 0 (223) (223)Operational Net Cost 123,461 123,189 (272)Contingency 2,014 2,014 0Corporate Budgets 11,818 11,818 0Capital Financing 7,966 7,746 (220)Total 145,259 144,768 (492)

*Public Health is funded from a ringfenced grant and, therefore, any under or overspend is transferred to a separate Reserve. 6. Grants Awarded 6.1 The Council has been notified of a number of grants which require approval for acceptance by the Executive under the Council’s

Scheme of Delegation.

a) Highways Grant £289,423 and £511,618

The Department for Transport (DfT) has made available to Councils a further £36.5 million for the Severe Weather Recovery Scheme. This funding is specifically to help those authorities who have suffered severe flood damage to their local roads due to the extreme wet and windy weather experienced between 29 October 2013 and 28 February 2014. The funding comprises of £106,210 capital and £183,213 of revenue funding to be spent on integrated transport measures and capital highway maintenance scheme. The Council is required in accepting this grant to publish a statement of the use of the monies on its’ website.

The Chancellor’s Budget Statement on 19 March 2014 also announced a further £200 million to be made available for 2014/2015 to help tackle potholes and surface deterioration on the local road network. The Council has been awarded a further £511,618 for this purpose.


b) Bus Operators Grant £195,548

The Council has received funding of £195,548 Bus Service Operators Grant (BSOG) from the DfT which is being distributed via local authorities from 2014/2015. Previously, this grant was paid direct to bus operators of eligible local bus services and community transport organisations to help them recover part of their fuel costs. The amount each bus company received was based on their annual fuel consumption. The aim of BSOG is to benefit passengers by helping operators keep their fares down and enabling operators to run services that might not otherwise be profitable and might be cancelled.

c) Special Educational Needs and Disability Grant £164,885

Councils have a legal obligation under the Children and Families Act 2014 to transfer all children and young people who are subject to statement of Special Educational Needs (SEN) under the Education Act 1996 or a Learning Difficulty Assessment under the Learning and Skills Act 2000 to Education Health and Care Plans over the next 3 years. In Bedford this equates to approximately 1,020 young people. The process of transferring an individual to the new system is a 14 week process and involves the coordination and attendance of 2 multiagency reviews, the gathering of multiagency advice and the writing of a comprehensive multiagency plan. This will require a considerable amount of additional work to ensure the transitions guidance published by the DfE are adhered to within the statutory timescales. The grant will be used to recruit additional fixed term staff to support this process.

d) New Burdens Welfare Reform Grant £35,088

The Council has been notified of additional funding of £18.4 million that will be allocated to local authorities (LAs) to support the administrative costs of implementing welfare reform changes in 2014/2015 by the Department for Work and Pensions. The Council has been awarded £35,088 for the following purposes:

• changes to Local Housing Allowance (LHA) (including the move to an annual up-rating cycle and changes to the shared accommodation rate)

• the Removal of the Spare Room Subsidy (RSRS) (including the unintended exemption for certain pre-1996 cases) • the benefit cap

The funding is intended to meet the identified costs arising from the implementation of the above measures in 2014/2015. In the case of RSRS, for example, it is intended primarily to meet the costs of administering additional applications for Discretionary Housing Payments (DHP). It also provides funding for ongoing communications with claimants to help them consider their options.


e) New Burdens Real Time Information (RTI) Project £15.13 per case

The Real Time Information (RTI) Bulk Data Matching project that is being taken forward by the DWP Fraud, Error & Debt Programme. RTI is HM Revenue & Customs (HMRC) new system for collecting PAYE information from employers and pension providers who are now required to provide HMRC with income details immediately after each payment they make.

DWP and HMRC have a joint Fraud and Error Strategy and are seeking to identify fraud and error across all social security benefits, including Housing Benefit. The project is planning to carry out an exercise matching HMRC RTI against data held on six social security benefits to identify cases where claimants have either failed to declare or have under declared earnings and non-state pension. This initiative is estimated to achieve £114 million Annually Managed Expenditure savings in 2014/2015, £15 million of which are attributed to Housing Benefit only cases.

This initiative will identify an estimated 300,000 overpayments and out of that figure an estimated 223,000 will relate to Housing Benefit only. Each referral will qualify for a payment of £15.13 per referral (based on 223,000 referrals); this includes £10.13 for dealing with the referral, plus an additional £5.00 to cover the cost of debt recovery action.

7. Summary of Consultations and Outcome

The following Council Units or Officers and/or other organisations have been consulted in preparing this report:

Management Group Relevant Officers

No adverse comments have been received. Report Contact Officers: Andy Watkins, Assistant Chief Executive and Chief Finance Officer

e-mail: [email protected] Julie McCabe, Head of Finance e-mail : [email protected]

File Reference: F.1(b) and F.1(d) Previous Relevant Minutes None Background Papers: None Appendices: A: Budget Monitoring by Directorate – Forecast Position as at 31 May 2014

mailto:[email protected]

mailto:[email protected]

APPENDIX A

Budgets at Assistant Director Level Original Current Forecast Variance to Overall RAG Direction Budget Budget Outturn Budget Variance Analysis of Travel

£000 £000 £000 £000 by %

Adults and Childrens ServicesAdult Commissioning & Business Support 8,976 8,976 8,965 -11 -0.1 GAdults Management 580 580 580 0 0.0 GAdult Social Care 17,516 17,516 18,083 567 3.2 ASupporting People and Homelessness 3,330 3,330 3,330 0 0.0 GChief Education Officer 6,850 6,850 6,965 115 1.7 GChildrens Services 1,379 1,280 1,330 50 3.9 AChief Social Worker and Transformation 22,531 22,531 22,363 -168 -0.7 G ☺Older People 13,208 13,208 12,538 -670 -5.1 G ☺Total Adults and Childrens Services 74,369 74,270 74,153 -117 -0.2 G ☺

Chief ExecutiveHuman Resources 1,218 1,218 1,218 0 0.0 GGovernance 3,081 3,081 3,047 -34 -1.1 G ☺Financial Services 11,992 12,091 12,071 -20 -0.2 G ☺Human Resources 347 347 347 0 0.0 GEconomic Development and Growth 195 195 187 -8 -4.1 G ☺Corporate Policy and Programme Management 1,413 1,413 1,413 0 0.0 GProperty Services 843 843 843 0 0.0 GTotal Chief Executive 19,089 19,189 19,127 -62 -0.3 G ☺

Environment & Sustainable CommunitiesEnvironment & Regulatory Services 18,063 18,063 18,001 -62 -0.3 G ☺Highways & Transport 10,723 10,723 10,723 0 0.0 GPlanning & Housing 1,216 1,216 1,185 -31 -2.5 G ☺Total Environment & Sustainable Communities 30,002 30,002 29,909 -93 -0.3 G ☺

Public HealthShared Service Public Health 1,231 1,231 1,454 223 18.1 RPublic Health -1,231 -1,231 -1,454 -223 -18.1 GTotal Public Health 0 0 0 0 0.0 G

ALL SERVICE TOTALS 123,461 123,461 123,189 -272 -0.2 G ☺

Corporate BudgetsCapital financing 7,966 7,966 7,746 -220 -2.8 G ☺Contingency 2,000 2,014 2,014 0 0.0 G ☺Other Corporate Budgets 5,824 5,824 5,824 0 0.0 GPensions (Past Service) 5,994 5,994 5,994 0 0.0 GTotal Corporate Budgets 21,785 21,799 21,579 -220 -1.0 G ☺

TOTAL 145,245 145,259 144,767 -492 -0.3 G ☺

Revenue Budget TrendsExecutive Decision July 2014 (12)

Documents

(1)apps.bedford.gov.uk/ExecDecisions/Files/D418526453546412.pdf · Following landmark Supreme Court Judgements in March 2014, there is likely to be a considerable pressure to the