Councillors are due to formally receive the financial outturn statement for 2018-19 from Wrexham Council that shows an underspend.
The report comes before the Executive Board on Tuesday, and contains proposals with regard to reserves and to determine the year end carry forward arrangements due to the net underspend of £490,000.
An overview shows collectively services spent £119m which was £1.3m more than the budget but corporate and central expenditure was underspent by £1.7m .
It is also noted that the net yield from local taxation was £130,000 greater than expected, resulting in a total net underspend of £490k.
Council Leader Mark Pritchard is presenting the report as he is lead member for finance, and in it he explains where some of the underspend will go, recommending topping up the Winter Maintenance Reserve by £105k as it used that sum during the year, adding “Furthermore, I recommend that £104k is transferred initially to the Capital reserve to fund specific projects.”
As always there is a explanation from Chief Officers of the variances of spending compared to budgeted plans included in the document, and the usual arrangements are noted that if a department which underspends its budget can normally carry forward the
underspending (up to a maximum of 5% of the department’s budget) to the following year. Conversely, where a department overspends its
budget, then the deficit can be carried forward as a “first call” on the following year’s budget allocation. It is however proposed that that the overspends on Environment & Planning (£877k), Children’s Social Care (£769k) and Education (£128k) are written off to balances.
The Environmental department has a £1.1m overspend with main wodge being ‘due to the Waste Service (£1,045k) operating increased recycling vehicles and staff with a reduced Welsh Government grant. Clearly the reductions by Welsh Government in the Waste Grant since 2015/16 of £490k have led to pressures in this area. This overspend is being offset by other areas of Streetscene
(-£112k) achieving reduced spend as part of the agreed in-year deficit recovery plan.’
Car Park income is noted as a £219k overspend due to reduced level of car park income in council carparks.
The department has helped attempt to balance the books by delaying some highways maintenance contracts and generating an extra £63,000 in additional income from the crematorium.
Comparatively Adult Social Care has balanced the books, helped with a sizeable (£618k) underspend labelled Learning Difficulties, explained as: “The underspend is due to adopting an enablement approach to new packages of care; this has resulted in our in-house provider working with individuals for a period a time to maximise independence and reduce long term costs; this has been vital as recipients of the former Welsh Independent Living Grant (WILG) have been reviewed. The programme of reshaping the service in order to realise the 2019/2020 savings has resulted in some early saving which has included some funding agreements with Health.”
Children’s Social Care has a stated overspend of £769k with the explainer that the over spend is due to the continued pressures the department is facing due to service demand and the nature of young people it is having to support. Out of county placements contribute to the biggest (£1.2m) figure, however the overspends are offset by the utilisation of grants, reserves and ‘other department efficiencies’ totalling £1.4m . A note reads, “The department continues to look for efficiencies to try and manage the impact of the additional service demand. The increase in service demand is a national issue.”
As you would hope with a Finance department the numbers look good, with an underspend of £278k however there is a request and proposal to recommend for £250k to be retained to invest in new computer systems. A note in the report explains that the current system in use was inherited back 1996, and the most recent upgrade was in 2009, which in computing terms is almost prehistoric. It is explained that although the current system gives ‘basic functionality’ a failure to upgrade could mean regulatory and thus reputational problems for the council. There is also a recommendation to allow £5k to be retained ‘to fund a virtual car parking system’.
Corporate & Central department saw an underspend of £1.7m, with two main chunks relating to a ‘reduction in caseload’ for the Council Tax Reduction Scheme (£453k) and a one-off VAT refund of £528k following a European Court of Justice decision which allowed local authorities with in house leisure facilities to opt to treat leisure income as exempt rather than taxable.
It was also noted that schools overspent their delegated budgets by £191k
Eleven schools were in a deficit position at the end of the year, five Primary schools, five Secondary schools and the Special School. Eight of these deficits were at schools operating under approved WCBC licensed deficit conditions. Two Primary schools and one Secondary school exceeded their budget during the financial year. The total deficit for those schools is 63k.
The report generously notes, “In light of the severe financial situation forecast for schools in their 2019/20 indicative budgets, it was agreed not to clawback any excess balance at 31 March from any school where their outturn balance exceeded 5% of their delegated budget.”
Perhaps most worryingly for the future the report adds: “At the start of the financial year, there were ten schools in deficit with a combined deficit of £631k. The combined deficit figure for the eleven schools with closing deficit balances is £1.053m”
There is also a note in the report that reads “An amount of £26k has been transferred to the election expenses reserve”, with no detail however could be pre-empting one or more General Elections / Referendum on top of the EU Election this year.
The overview outturn sheet is below, showing where the Council’s cash came from, and where it went compared to planned budgets.
Top pic: How we imagine the finance department watches webcasts.
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