PURPOSE

1. For members to consider the Council’s performance during the fourth quarter of 2006/07 (the quarter ended 31 March 2007).

OVERVIEW OF QUARTERLY PERFORMANCE.

REVENUE BUDGET

2. There has been a continuing focus of attention in the fourth quarter via the Service Board process to ensure that the revenue budget is under control.

3. At the end of the previous quarter the projected overspend had been reduced to just £138,000. By the end of the fourth quarter the net forecast outturn for 2006/07 is a net under spend of £ 767,000. The Committee should note that the accounts for the year have not been finalised and this position could yet change.

4. An analysis by Cabinet Member of the Council’s revenue position at the end of Quarter 4 is attached in Appendix 1 to this report.

CAPITAL BUDGET

5. Details of the Capital Programme are also shown at Appendix 1. The outturn for 2006/07, although not finalised as yet, appears to be very different from our expectations in that the programme has under spent (ie slipped) by over £6 million. The main areas (accounting for over 50% of the problem) where this has occurred are:

	Underspend/Slippage £000
IWHA Oakfield (Housing)	1,154
Nettlestone Rural Housing Scheme	557
National Grid for Learning (RGB)	400
NGFL - Broadband Connection	316
SIMS Licences and Support	293
Sandown High - Entrance and Sixth Form	242
Waste Performance and Efficiency Grant	196
Shalfleet - Mobile and Windows	139
Strategic Monitoring Study	130

6. This does not present a financing problem to the Council as funding will ‘roll-forward’ to match capital expenditure. It does however raise concerns about:

(a) The inability to deliver capital investment which is needed and which delivers improvement for the public; and

(b) The inability to accurately forecast outturn spending

7. New capital service boards have now been established to ensure delivery of the capital programme. Meeting monthly, they will review:

(a) The achievement of the programme, slippage and its implications for financing, including the availability of capital receipts;

(b) Spending on schemes which have been released to start;

(d) Schemes which are ‘invest to save’ initiatives which must be based on a robust business case.

KEY PERFORMANCE INDICATORS

8. The Committee will be aware of its Terms of Reference that includes the following:

Monitoring the overall performance of the Council by receiving regular reports.

9. This report (and see Appendix 2) summarises the performance information presented to Service Boards from January - March 2007 and is listed by Cabinet Member as at 31 March 2007. It is the Cabinet’s desire that the Audit and Performance Committee receive this report before themselves so the Committee can focus on any particular area of concern in order to make recommendations to the Cabinet on how performance can be improved. This will ensure that problems are being effectively resolved and represents good practice. Therefore the following issues have been identified that need further action:

10. Safer Communities and Fire and Rescue Modernisation:

(a) Number of criminal damage incidents - end of year actual is over 600 (21%) more incidents that the annual target set.

(b) Number of violent crimes (common assault and wounding) - end of year actual is over 250 (16%) more than the annual target set.

Recommended: That for both these measures the current action plan to reduce these numbers is presented by the relevant Cabinet Member to the June Audit and Performance Committee for consideration.

11. Assets, Planning and Housing:

(a) Number of affordable housing units built - end of year actual is 100 units (40%) less than the end of year target.

Recommended: That for this measure the current action plan to improve this measure is presented by the relevant Cabinet Member to the June Audit and Performance Committee for consideration.

12. Island Health and Community Well-being

(a) Number of carers aged 18-64 who have received an assessment or review during the previous 12 month period - the March actual is the lowest it has been since December.

Recommended: That for this measure the current action plan to improve this measure is presented by the relevant Cabinet Member to the June Audit and Performance Committee for consideration.

(b) Number of looked after children - the year end actual is 7 more than the year end target with concerns expressed at the high number of children being looked after.

Recommended: That for this measure the current action plan to reduce this number is presented by the relevant Cabinet Member to the June Audit and Performance Committee for consideration.

13. Resources and Town/Parish Council Empowerment

(a) Total hours outsourced to external solicitors - this has been steadily increasing over the last four months resulting in the end of year target being missed by 775 (78%).

Recommended: That the relevant Cabinet Member report at the June Audit and Performance Committee the reasons why this measure has missed its target.

(b) Although both the procurement measures of purchase orders transacted electronically and by procurement card have been improving steadily since December, there is still a cause for concern on the progress of the roll-out of e-procurement.

Recommended: That the relevant Cabinet Member present to the June Audit and Performance Committee the progress so far on the e-procurement project with reasons for the non-achievement of the targets.

RISK MANAGEMENT

14. The Council has made significant progress in the ‘in-year’ management of both financial resources and performance. At officer level the delivery of that improvement has been the monthly service boards where each director and his management team are held to account for their performance. The outcomes of that process provide the basis for reporting to members, firstly through this Committee and after that to the Cabinet.

15. This improvement in the process now needs to be developed into a third theme of risk. This report therefore represents the first instance of a developing process where members can review risk routinely. As previously reported, the Council seeks to manage risk at three levels:

· Strategic risk – which have the potential for threatening strategic objectives

· Significant service risks – those which have the potential for threatening significant service objectives

· Operational risks – those which do not pose a threat to key, but rather to operational objectives.

The intention of reporting risk to members is to only report on the first of these – strategic risks.

16. Strategic risks by definition are those which must be managed routinely by the Directors Team. Directors have identified those risks which they consider to be strategic, assessed risk in terms of impact and probability, have assigned ownership to individual directors, and have developed risk mitigation plans in respect of each one. The current set of risks deemed to strategic are shown at Appendix 3.

STRATEGIC CONTEXT

17. The Council has set itself an ambitious improvement programme which includes the better use of resources through improved financial, performance and risk management.

18. Performance management was highlighted as one of the Council’s areas for improvement in last year’s Comprehensive Performance Assessment. It is also an important component of the Direction of Travel judgement made by the District Auditor in his annual Audit and Inspection Letter. Risk management was also described by the CPA inspection as ‘under-developed’. Member engagement with the risk management process is a key part of the Council’s improvement agenda.

CONSULTATION

19. The Council’s performance management system involves the examination of performance at monthly service boards. As such, senior management are involved in discussions about performance on a routine basis.

20. As reported above, the Audit and Performance Committee now has the opportunity to review performance and can make its recommendations before Cabinet meets.

FINANCIAL/BUDGET IMPLICATIONS

21. There are no direct financial implications arising from this report.

LEGAL IMPLICATIONS

22. The Council has a statutory requirement under the terms of the Local Government Act 1999 to achieve the Best Value in the delivery of its services. The performance of a service against expectations forms a key component of the test of Best Value.

RECOMMENDATIONS

23. The Audit and Performance Committee is recommended to:

(i) Note the anticipated outturn of the revenue and capital budget for 2006-07.

(ii) Make recommendations to the Cabinet included in para 10-13 above.

(iii) Note the strategic risks being actively managed by the Directors Team shown at Appendix 3.

BACKGROUND PAPERS

Quarterly Financial and Performance Management (Quarter ended 31 December) Cabinet 6 March 2007.

APPENDICES ATTACHED

Appendix 1 – Financial Information

Appendix 2 – Performance Information

Appendix 3 - Strategic Risk Register

Contact Point : Bob Streets, Programme Lead for Compliance ( 823622, email [email protected]

or Heidi Marshall, Principal Policy Officer, ( 823250, email [email protected]

STEVE BEYNON

Director of Children’s Services

BOB STREETS

Acting Section 151 Officer

APPENDIx 1

Financial Management Report for Quarter 4 (to 31 March 2007)

Revenue Budget

The Council’s budget for 2006-07 was based on an ambitious programme of redirection of resources, to be funded by £7.5 millions of efficiency savings and additional income generation.

By the end of the third quarter of the financial year, and despite a number of significant additional pressures which had arisen in year, management action through the Service Board process had constrained all budget pressures to an anticipated overspend of £156,000.

Another three rounds of service boards have taken place since quarter 3, and further corrective action has been identified converting a potential overspend into a predicted underspend at the year end. The current amount of the predicted underspend is £767,000, however the accounts for 2006-07 are still being closed down which may result in some final adjustments to that figure.

Key features of the current projection by Cabinet Member areas of responsibility are as follows:

Cllr Wood	A net overspend of £375k, due in particular to ICT project costs, has been partially offset by a contribution from the corporate contingency budget for Land Charges; in addition, savings in the Finance directorate budget from unfilled posts mean there is a net underspend at the year end of £58k
Cllrs Joyce and Cousins	A net overspend of £1.337m, due in particular to increased agency placement costs and other client costs has now been offset by a contribution from the corporate contingency budget, resulting in a net year end underspend of £50k
Cllr Cousins	The demographic growth budget has been applied in part to the learning disability budget and other adult services pressure areas, leaving a net sum of £1.043m which has been returned to the corporate contingency budget. Net underspend at year end of £50k
Cllr Ward	The concessionary fares budget has experienced higher levels of take-up than anticipated resulting in an overspend of £1.088m. After applying £900k from the corporate contingency set aside for the costs of the residents parking permit, not required for that purpose, a net underspend of some £286k has been returned to the corporate contingency
Cllr Hunter-Henderson	A net overspend of £365k arises largely from the Business Transformation unit and staffing costs in the call centre
Cllr Abraham	Net savings of £448k have been identified in particular from Fire and Rescue Service efficiencies and income from other service areas
Cllr Brown	Higher than anticipated planning fee income and savings from other service areas, in particular restructuring of the homelessness service, have contributed to a net underspend at the year end of £240k

Capital Budgets

The following table shows the total budget by cabinet member for capital schemes, forecast spend by year end and the total overspends and total underspends on schemes by the end of the current year. Also shown are the totals for schemes projected to be over or under spent over their whole life. These two sets of measures taken together provide an indication of how much expenditure variances are an issue of timing, and how much they represent a change in the total financing requirement of the programme.

	Budget	Projected	Variance
	£000	£000	£000
Cllrs Joyce & Mrs Cousins	12,704	10,234	-2,470
Cllr Cousins	3,669	1,578	-2,091
Cllr Hunter-Henderson	1,337	1,072	-265
Cllr Abraham	356	231	-125
Cllr Wood	861	883	22
Cllr Ward	7,347	6,066	-1,281
	26,273	20,064	-6,209