Meeting documents

            Meeting: Cabinet (County Hall, Durham - Committee Room 2 - 19/06/2008 10:00:00 AM)

                  Item: A3 Year-end Financial Report 2007/08

         

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Report of Stuart Crowe, County Treasurer [Cabinet Portfolio Member for Corporate Resources, Councillor Michele Hodgson]

Purpose of Report

1 This report presents Members with information about the 2007/08 outturn in advance of the Statement of Accounts being submitted to the County Council on 26th June. It allows Members to examine the financial outturn of the County Council and challenge me and Chief Officers on issues raised in the document. It also includes a recommendation relating to slippage of the Capital programme.

Background

2 The process of presenting outturn reports is closely linked to the Statement of Accounts, approval for which will be sought from the County Council on 26th June. The Statement of Accounts is submitted in a format which satisfies various statutory and recommended accountancy requirements.

3 This report provides Members with an opportunity to consider carefully the overall and service financial performance of the Authority at the end of 2007/08 and provides more detailed information on which the Statement of Accounts is based. It covers both Revenue and Capital expenditure and provides a link to the original budget in a format that reflects the Budget Book.

4 This report represents the final quarter of the quarterly monitoring reports for 2007/08 which were reported to Cabinet and Scrutiny throughout the year, and reflects some of the trends highlighted in those previous reports.

5 Section 6 details the services provided by the County Council.

Approach and Protocols

6 The production of management accounts, statutory accounts and the requirement to report under various legal, technical and financial guidelines can make the process of understanding the final outturn reports and statutory accounts difficult.

7 Two issues made this year potentially more challenging than most.

8 This year the revaluation of Children and Young People’s Services assets has led to a significant increase in the depreciation charge to the service over that in the original budget. This charge is reversed out below the Net Cost of Services so that it has no effect on the council tax payer or the County Council’s overall outturn position.

9 Recent changes to CIPFA’s Statement of Recommended Practice (SORP) require that losses in value that assets have suffered during the year are charged to services’ revenue expenditure. These changes are significant and were not included in the original budget, but again, they are reversed out below the Net Cost of Services as part of the capital charges and have no effect.

10 I have attempted to simplify the presentation of these figures by removing the impact on Services of changes in accounting treatment relating to Capital charges, required by 2007 SORP. This adjustment has no impact on cash and the ‘bottom line’ and has no impact on the overall budget or Council Tax payers.

11 Consequently this report will deal with the variances prior to these technical accounting changes. The final Statement of Accounts that will be presented to the County Council will show a differing analysis of net cost of services but the underlying contribution to reserves will be unchanged.

12 Three revenue summaries are shown for comparison purposes in section 2:

13 Variances throughout the report follow this convention -

-	negative variance means an overspend or less income
+	positive variance means an under spend or more income

14 This report refers to “target” and “non-target” expenditure. Target spend is that which is directly controlled by the Service Director. Non-target spend is expenditure recharged to that Service by support services and variances in these areas are explained in those support service reports.

15 The Report is divided into 6 Sections:

	Page
Section 1: Executive Summary	4
Section 2: Revenue Summaries	6
Section 3: Revenue Expenditure	9
Service Information -
Adults and Community Services (ACS) Chief Executive’s Office (CEO) Children & Young People’s Service (CYPS) Corporate Services County Treasurer and Other Services Environment Service Direct Non-Service Costs	9 14 16 25 27 28 31 32
Section 4: Capital Expenditure	33
Capital Outturn and Financing Information
Service Information -
Adults and Community Services Chief Executive’s Office Children & Young People’s Service Corporate Services County Treasurer and Other Services Environment	35 36 37 39 40 41
Section 5: Prudential Code Section 6: County Council Services	42 47
Appendix 1	50

Section 1: Executive Summary

Revenue Expenditure

1 Service expenditure for 2007/08 was £5.2m less than budget. This was due to:

· Adult and Community Services (ACS) - (£2.1m under spent after adjusting for recharges with Children and Young People’s Service (CYPS) of £1.5m), due to reduced residential care costs, vacant posts and delays in investing allocated growth.
· Chief Executives Office (CEO) - £1.0m under spend due to vacant posts in Customer Services and Economic Development.
· CYPS - £0.3m under spent after removing balances on trading accounts and carrying forward an ‘Invest to Save’ project balance.
· Corporate Services - £1.1m overspent due to reduced workload for Design Services and therefore less opportunity to recover costs and increased repairs and maintenance costs on premises.
· Environment £2.4m under spent due to reduced energy costs, lower insurance charges and staff vacancies.

2 Contingencies were under spent, in the main due to equal pay claims not being settled as anticipated during 2007/08, by £16.9m relating to County Council Staff and a further £4.1m relating to school based staff.

3 Investment Income was £4.3m better than budgeted due to slower spend on capital, the non settlement of equal pay claims in year and increased interest rates, together with the surplus from DurhamNet.

4 Direct Insurance costs were lower than anticipated by £1.1m.

5 During 2007/08 this level of under spend was anticipated by Members and schemes have been put in place to utilise £2.5m of this under spend and specific reserves have been established to allow these schemes to be completed during 2007/08. These are as follows:

· Scrutiny Proposals - £1.1m
· Refurbishment of Care Homes - £0.6m
· Conversion of the Cafeteria to office space - £0.3m
· Support to the Police Authority - £0.5m
6 Resources for equal pay claims have been set aside for use in 2008/09, reserves of the County Council have increased by £20.1m, of which £9.3m is accounted for the increase in the General Reserve.

7 Capital spending is £7.7m lower than the original capital programme at £77.1m. During the year there have been revisions to the original budget of £14.1m (including slippage from 2007/08), and slippage into 2008/09 of £23.8m. This is detailed in Section 4.

8 Interest on the County Council’s short-term investments is £4.3m higher than original budget. The under spends in the County Council’s revenue and capital budget, the non-settlement of equal pay claims, and rising interest rates, have contributed to this increase. Section 5 summarises Treasury Management activities and reports on the Prudential Code.
9 The outturn for 2007/08 saw expenditure of £274.4m, which was £32.7m below budget. This underspend was required to establish a number of specific reserves notably for Equal Pay. There has been an increase of £9.3m in the general reserve. Capital expenditure was £77.1m, £7.7m lower than original budget.
10 Members are asked to note this report, and agree to slippage in the capital programme as outlined in Section 4.

Contact: Stuart Crowe Tel: 0191 383 3550

Appendix 1: Implications

Finance
Local Government Reorganisation
(Does the decision impact upon a future Unitary Council?)

Details the increase in reserves

Finance
The report provides information about the County Council’s outturn for revenue and capital for 2007/08.

Staffing
None

Equality and Diversity
None

Accommodation
None

Crime and disorder
None

Sustainability
None

Human rights
None

Localities and Rurality
None

Young people
None

Consultation
None

Health
None


TO VIEW THE FULL REPORT PLEASE REFER TO THE PDF ATTACHMENT OR ALTERNATIVELY REFER TO HARD COPIES LOCATED IN CORPORATE SERVICES OR THE COUNTY RECORD OFFICE


Attachments

 Budget Outturn.pdf