Minutes:
The Director of Finance and Resources submitted for the Committee’s consideration the undernoted report:
“Relevant Background Information
The Strategic Policy and Resources Committee agreed on 18 June 2010 that:
· The Council would produce financial reporting packs for the Strategic Policy and Resources Committee and each Standing Committee on a quarterly basis
· The Budget and Transformation Panel would also receive monthly financial updates if there were any significant issues to report.
The reporting pack contains a summary dashboard of the financial indicators and an executive summary explaining the financial performance. It also provides a more detailed explanation of each of the relevant indicators covering outturn to the third quarter, payment of creditors and recovery of debt. The reporting of procurement compliance to Members as part of the quarterly financial reporting was introduced in quarter 1 of 2012/13.
The style and layout of the financial reporting pack reflects the discussion and feedback arising from the Members’ financial training at the end of September 2010.
Central finance and departmental management teams have worked together to develop the information within the reporting packs.
Key Issues
Current and Forecast Revenue Position for 2012/13
The financial position for the Council at the end of Quarter 3 is a net departmental under-spend of £1.44m (1.6%). The forecast year end departmental position is an under-spend of £1.03m (0.9%), which is well within the acceptable variance limit of 3%.
The key elements of the year to date net under-spend relate to:
· Expenditure on Invest to Save projects below quarter 3 budget position (£270k)
· In Health and Environmental Services (£426k) mainly due to the receipt of additional income in Building Control, reduced waste tonnages, staff vacancies and delays in the commencement of programmes of work largely due to the time taken for the Policing and Community Safety Partnership to be established.
· In Parks and Leisure (£496k) due to delays in planned works on playgrounds and work programmes mainly in leisure development activities, offset by the loss of external income.
There are four main components of the forecast year end position of a £1.034m under-spend. These are:
· A potential under-spend of £250k in the Invest to Save budget. Demand on this budget will increase over the next few years as the complexity of the Efficiency Programme increases.
· A £650k under-spend in the Health and Environmental Services budget due to the receipt of additional income, reduced waste tonnages and delays in establishing the Policing and Community Safety Partnerships.
· An under-spend in the Development Department budget of £175k mainly due to vacant posts arising during the structural reviews.
· An over-spend of £161k in Parks and Leisure Services for increased utility costs and reduced external income.
Capital Financing
The capital financing budget, of £10.14m, is forecast to be on budget at the year end and is made up of £2.05m to finance existing loans relating to the City Hall, Ulster Hall and Grove Wellbeing Centre projects with a further £6.97m used to finance other committed capital programme projects. The balance of the budget will be used to finance feasibility work to support the Investment Programme (£0.15m) and non-recurrent expenditure works (£0.92m).
Rate Income
The forecast LPS outturn for Quarter 3 has been maintained at the Quarter 2 position which was a favourable outturn of £138k. Officers will be meeting with LPS over the coming weeks to discuss the forecast particularly in relation to debt and outstanding appeals.
Reserve Movements
The movement in reserves, including the forecast departmental outturn of £1.03m and the allocation of £400k for the ‘Backin Belfast’ initiative mean that the general reserves position is forecast to be £13.03m at the year end.
Investment Programme
The performance report has been updated to include key financial information for Members on the progress of the Investment Programme.
Committed expenditure approved by the Strategic Policy and Resources Committee for the 3 year Capital Programme stands at £29m, leaving £46m of schemes within the 3 year programme at the uncommitted or emerging project stage.
Committed expenditure on LIF projects at Quarter 3 totals £4.2m, leaving a balance of £0.8m in the Local Investment Fund.
The amount of levered external funding for the Investment Programme which has been agreed in principal increased to £17.4m at Quarter 3, with £16.6m of these funds confirmed through letters of offer.
Actual capital expenditure at Quarter 3 was £5.4m with a year-end forecast spend of £9.9m against an annual budget of £19.4m, while non-recurring expenditure is forecast at £0.9m for the year end against a budget of £1.8m. A detail report on the capital programme will be presented at the 23 March Strategic Policy and Resources Committee meeting.
Better Services: Creditors and Debtors
The average number of creditors paid within 28 days was 75.5% at the end of Quarter 3, which was above the target of 70% for the period. As part of the Investment Programme a target of 75% has been set for 31st March 2013. To ensure that this target is achieved a project team has been set up to implement improvement actions during 2012/13. Progress in implementing these improvements will continue to be reported to Members as part of the quarterly financial reporting.
The Quarter 3 average for debt under 90 days old is 57.5% which is below the target of 65% and 52.4% of debt has been collected within 30 days, against the target of 60%. However the overall level of council debt has been reduced by £0.7m during the year to £3m at the end of Quarter 3. Staff in the Central Transaction Unit are monitoring those accounts where payment terms have been exceeded and legal action is being taken, where appropriate, to ensure debt is recovered.
Better Services: Procurement Compliance
Procurement compliance refers to purchases that are made in compliance with BCC’s standard procure to pay process. These processes help ensure that our creditors are paid in a timely fashion and our accounts are accurate and up to date. Two compliance indicators have been set for 2012/13 and although these indicators are monitored by management on a monthly basis and from Quarter 1 2012/13 are now reported to Committee.
Indicator 1 – compliant purchases. This indicator shows how often goods or services are ordered with a valid purchase order being created prior to the order being placed. A target of 85% was set for this indicator with the council achieving 83.5% compliance at the end of Quarter 3.
Indicator 2 – timeliness of goods on the system. This indicator shows when goods are received into the council whether they have been marked on the system as received (compliant) or whether the operator has waited for the invoice before marking the goods as received (non-compliant). A target of 65% was set for this indicator for Quarter 3, with the Council achieving 56.4% compliance at the end of the period.
The improvement plan being implemented to increase the number of creditors paid within 28 days includes improvements in both purchase ordering and goods receipting compliance.
Recommendations
Members are asked to:-
a) Note the financial report for Quarter 3 2012/13 and the year end forecast outturn of a departmental under-spend of £1.03m (0.9%).
b) Consider the year end outturn in the context of the funding proposals presented in separate reports at this meeting covering the following areas:-
· Support for Advice Centres (£426k)
· Northern Ireland Hospice Redevelopment (£200k)”
The Committee adopted the recommendation.
Supporting documents: