Agenda item

As detailed in the recommendations.

The Head of Finance provided information on the Council Fund and the Housing Revenue Account (HRA) Outturn for 2012/13 (subject to audit) and the impact on the respective level of reserves at 31 March 2013.  The figures had been included in the Draft Statement of Accounts 2012/13 which would be reported to Audit Committee on 17 July, 2013.

             The significant in-year variances at final outturn for the Council Fund and the HRA were detailed in Appendices 2-8.  The significant changes for the Council Fund from Month 12 were detailed in Appendix 1. 

            For the Council Fund, the outturn position was an underspend of £4.229m compared to the last report at Month 12 which was an underspend of £4.313m.  Whilst this was a modest change, the Month 12 position as reported to Cabinet on 18 June 2013 had shown a significant projected movement of £1.979m to that previously reported at Month 11.  It was reported that although in some areas the positive improvement reflected the outcome of planned activities and positive budget management, it also raised the issue of interaction between service managers and finance to ensure that variances were identified at an earlier stage and highlighted the need for tighter financial controls, forecasting and timelier reporting.

Following work undertaken by Heads of Service, reasons for the variances could be classified into the following main themes:

1. Grant maximisation – utilising external funding wherever possible
2. Year end recharge issues and accounting treatment
3. Communication of the financial impacts of service commissioning and demand levels
4. Treatment of vacancy savings
5. Difficulties and uncertainties in accurately projecting income

The Corporate Management Team had identified and agreed a range of actions to strengthen budget management and reporting in light of the issues identified.

A brief overview of the year on the General Fund was provided, full details of which were in the report. 

The Finance Procedure Rules stated that any Directorate overspend would be carried forward into the following year as a first call on the budget for that year.  In view of the overall financial position, it was recommended that the Lifelong Learning overspend of £0.033m be met from overall balances and not carried forward.

Appendix 7 to the report detailed the movements to date on unearmarked reserves and the level of contingency sum available.  As a result of those movements the final level of Contingency Reserve was £3.409m.

In Month 11 it was reported that the £0.245m held in the Winter Maintenance Reserve had been utilised to fund the severe weather costs in 2012/13 and it was recommended that £0.250m be allocated from the contingency reserve in 2013/14 to provide funding in that specific reserve for future years to replace the funding utilised.

It was also recommended that the £3.159m held in the contingency reserve be held at this stage and its use considered within the context of the Medium Term Financial Plan (MTFP) and 2014/15 budget strategy as a key strategic decision. 

The final outturn on the HRA was an underspend of £1.076m (£1.047m at Month 12) which resulted in a final closing balance (subject to audit) at 31 March 2013 of £1.931m which at 6.98% of the total expenditure exceeded the recommended minimum level of 3%.

The Head of Finance tabled two additional recommendations to those included in the report, which were agreed (e and f).

RESOLVED:

(a)       That the report be noted;

(b)       That the Council  Fund contingency sum as at 31 March 2013 be noted;

(c)        That the final level of balances on the Housing Revenue Account be noted;

(d)       That it be approved that the overspend in Lifelong Learning be met from overall balances and not carried forward as required by finance procedure rules;

(e)       That the reinstatement of the Winter Maintenance Reserve to the value of £0.250m be approved and that it be met from the Contingency Reserve; and

(f)         That it be approved that the £3.159m remaining as at the end of March be held in Contingency Reserve and its use considered within the context of the Medium Term Financial Plan and 2014/15 budget strategy as a key strategic decision.