Agenda item

To submit a report by the Head of Function (Resources)/Section 151 Officer.

The report of the Head of Function (Resources) and Section 151 Officer setting out the provisional outturn of the financial year from 1 April, 2016 to 31 March, 2017 was presented for the Executive’s consideration.

The Portfolio Member for Finance reported that the overall projected financial position for 2016/17 is an underspend of £633k; this is an improvement on the forecast overspend reported at Quarter 3. The explanations for significant variances on the controlled budgets by services are included within the report. A number of items are excluded from the service budgets as expenditure against these are outside the control of the services. After taking into account these items, the overall underspend for the Council decreases to £311k which is the sum available to be transferred to the Council’s General Balances.

The Portfolio Member for Finance highlighted the following as issues to be noted –

·      A potential commitment in the region of £2.8m to settle outstanding equal pay claims which reduces the uncommitted reserve level from £7.886m to £5.086m.The Council is at present seeking to obtain the Welsh Government’s agreement to be allowed to treat this expenditure as capital expenditure which would charge the cost to the revenue budget over a number of years. Should the Welsh Government accede to the request then the £2.8m becomes uncommitted and goes back to the general reserve available to the Council.

·      A deterioration in the position of the Central Education budget’s position being overspent by £861k at year end compared to £775k at Quarter 3. An increase in specialist out of county placements from the commencement of the new academic year has led to significant budgetary pressures on the service and accounts for £396k of the overspend. School transport costs have also overspent to the sum of £331k.

·      Children’s Services were overspent by £1,019k at outturn which is significantly more than the projected outturn at Quarter 3 and is attributable to the cost of meeting the often specialist provision for looked after children. This is a demand led provision over which the service only has limited control. However, mitigating measures are being implemented primarily by taking a preventative approach to ensuring the wellbeing of the looked after population on Anglesey as described in paragraph 3.3.2 of the report.

·      An underspend of £1.541m on Corporate Finance due mainly to a one off windfall and savings on Corporate Financing will fund the overspend on services.

The Portfolio Member for Finance concluded that the savings achieved in 2016/17 were due in part to providential circumstances which raises the question as to their continuing availability in 2017/18.The message to services is that it is imperative they hit their savings targets for the 2017/18 financial year.

The Head of Function (Resources) and Section 151 Officer reiterated that services, especially Education and Children’s’ Services are experiencing financial pressures. Moreover as savings are factored into budgets it becomes increasingly difficult for services to underspend; it is a situation that calls for close and careful management.

The Executive noted the overall position and made particular reference to the overspend in the Central Education Budget. The Executive noted that School Transport is an area that has historically overspent on budget and given so it was asked whether the budgets for this provision as well as for out of county placements are realistic and whether these budgets would benefit more from a zero based budgeting approach where funding is allocated on a needs basis. The Head of Function (Resources) and Section 151 Officer said that he believed that school transport could yet yield further savings by considered and careful organisation; the education out of county placements budget came under pressure in September which could not have been foreseen; it is a budget that is especially susceptible to the movement of children in and out of the care system.

The Executive noted that the 2017/18 financial year is likely to prove challenging and needs to be closely monitored.

It was resolved –

·      To note the position set out in respect of financial performance for 2016/17.

·      That the outturn as reported in this document remains provisional until the completion of the statutory audit.