Council chief executive wants action on expected overspending

4:23pm Wednesday 15th October 2008

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HEREFORDSHIRE Council is already on course for a near £2 million overspend on its budgets for the current financial year, with all services warned that further savings are expected - on top of last year’s efforts - to balance the books.

The council’s first cashflow forecast for 2008/2009 has two key directorates - Environment and Culture, and Regeneration - racking up projected spending rises of well over £500,000 each on budgets of nearly £28 million and £10 million respectively.

Adult and community services, which needed more than around £1 million of contingency cash last year to avoid an overspend estimated at four times that sum, has a projected rise of £331,000.

Projections for the children and young people’s directorate put the rise at £267,000 on a budget of £24.5 million, while the rise for deputy chief executive’s directorate - a remit ranging from emergency planning to corporate communication - is pitched at £170,000 on a near £11 million budget.

Given the projections, council chief executive Chris Bull said he now “expects” all directorates to bring spending back into balance by the end of this financial year.

On paper, there’s little ease to the squeeze after the action taken last year when combination of tighter cash management and the use of contingency funds paid off in bringing an overspend initially estimated at around £2 million down to nearly £600,000.

But essential to that strategy was £800,000 of additional interest from investments, a factor that the forecast says cannot be taken for granted this time.

At present, the projected overspend - ahead of any management action - is £1.671 million or 1.2% of the council’s current £131.778 million net revenue budget.

This figure, for August, is the first indication of the council’s financial position for 2008/2009 and - in light of last year - reflects cautious assessment by directors. It is a much lower forecast for this point than in previous years as a more vigorous approach to cash management continues to develop.

The council has reserves ready to offset overspends if needed. As at April this year the reserve fund was worth nearly £7 million, but some of that has since been committed to Herefordshire Connects.

Another £16.6 million is held in earmarked reserves for projects as diverse as waste disposal and the Edgar Street Grid. This figure includes £5.657 million ring-fenced for schools.

A one-off £429,000 came from the government as a “restoration fund” after last year’s floods. Whitehall has not said how this should be spent, but it will probably ease the projected overspend in environment and culture.

BUDGET PROJECTIONS - BY DIRECTORATE Adult & Community Services Budget for 2008/2009 - £38,757 million. Projected overspend - £331,000 A major budget review of this directorate has been underway over the past two months with the aim of matching resources to both known and expected commitments. The projection assumes that the Primary Care Trust will cover the costs of those needing continuing health care - this amounts to £942,000.

Around £1.2 million is being allocated to modernization schemes to make savings.

Children & Young People Budget for 2008/2009 - ££24,432 million. Projected Overspend - £267,000 Balanced its books last year with the help contingency cash and now subject to a detailed budget review and new management structure.

The cost of residential care placements and fostering continue to creep up.

Deputy Chief Executive’s Directorate Budget for 2008/2009 £10,733 million. Projected Overspend - £170,000 Extra costs include the council having to pay for inquests for service personnel. Land charges income is also reduced as private sector companies compete for the work. This, alone, could lose the council around £100,000.

The once problematic ICT budget is, however, operating at balance.

Environment & Culture Budget for 2008/2009 - £27,812 million. Projected Overspend - £566,000 Already targeted for help through contingency cash. Particular pressure on budgets for road maintainance, street cleaning, and public toilets.

Waste management will be a big factor in overall budget performance with the risk of increased contract payments.

Leisure is expected to overspend by £200,000 because of the current HALO job evaluation payment issue, and another £100,000 has to be spent on maintaining public access PCs in libraries - which saw an £88,000 overspend last year.

Regeneration Budget for 2008/2009 - £9,858 million. Projected Overspend - £537,000.

The planning department faces a number of cost pressures and is expected to overspend by £225,000 alone.

Housing is on course to overspend by £312,000.

Resources, Corporate Budgets, Human Resources All projected to break even on budgets of £7,561 million, £2,618 million, and £1,402 million respectively.

Resources, however, could be hit hard next year through additional spending on office accommodation, including the ongoing adaptation work at Plough Lane.