SUMMARY/PURPOSE

1. To inform members of the latest projections of expenditure against budget for the previous financial year, and, where appropriate, of any corrective action which may be required as part of the closedown process.

2. In addition to seek the Executive's comments on, and approval of, the format for the quarterly performance monitoring reports in future. The introduction of a quarterly report covering all elements of the Councils performance management framework - not just finance - was agreed as part of the Council's actions following the recent Comprehensive Performance Assessment (CPA).

CONFIDENTIAL/EXEMPT ITEMS

3. There are no confidential elements to this report

BACKGROUND

Revenue Expenditure

4. A number of spending pressures have arisen during the course of last financial year, many of which were relatively minor in nature and have been managed within existing service cash limits. This includes the overrun on the APT&C award, the impact of which was £200k more than originally provided. The Fire Brigade Union dispute is still ongoing and provision has been made within the Fire Service budget for the anticipated costs of settlement of the dispute for the period to 31 March 2003.

5. Major variances that have arisen and cannot be met in this way are:

	£000
Increased housing benefit demand	150
Rent underwriting for Enterprise House	135
Pop Festival – net Wight Leisure overspend, offset by application of earmarked reserves	386
Island Games bid	30
School transport charge increase	78
Fire-fighter pensions costs	38
Samuel White’s rental income	55
Health & Safety training	26
CPA consultants	37
Highway maintenance overspend	190
Highway capital design/supervision fees under-recovered	200
Increased landfill tax	93
	1,418

6. These can/have been offset in part by:

	£000
Restructuring savings in addition to those already taken account of in the budget	-132
Reduced capital financing requirement	-56
Lower waste management cost increases than budgeted	-329
Highway developers fees above budget	-90
Car Parking income above budget	-300
One-off cash grant – refrigerator disposal	-92
	- 999

7. This leaves a withdrawal from the General Reserve estimated at £419,000 which would then stand at just over £2 millions. At this figure it will be below the 2% of revenue spend which appears to be the Audit Commission’s view of a minimum acceptable level, although the 2003-04 budget process will include a more scientific assessment to determine whether the reserve is adequate, having regard to the risks it has to meet.

8. Apart from the above, initial indications are that there may be overspends in Community Development Services (£60,000 - £85,000) and Property Services (£50,000 - £70,000). These issues are currently being considered with the Service Managers and the final position will be available when full outturn figures for all service areas are reported in July.

Capital Expenditure

9. A list of capital spending against budget on a summarised basis is shown at Appendix A.

The appendix shows a significant underspend compared with budget as at 31 March. The figures in the appendix represent the first draft of the outturn for the year and are subject to further adjustment. It should be possible on this occasion to avoid losing capital resources, and any slippage will be accommodated within the programme for 2003-04. This might not be the case if such high levels of slippage persist in future years.

Format of Future Quarterly Performance Monitoring Reports

10. The District Auditors Annual Audit Letter and the CPA process drew attention to the lack of consistent reports to members on the Councils overall performance. Our response, as documented in the CPA Improvement Plan, approved on March 26^th, was to develop a quarterly performance monitoring report - QPMR for the Executive that could also be used by Select Committees to scrutinise progress on key issues. The format proposed for this is attached at Appendix B.

11. The proposed format seeks to cover all elements of the Councils performance management framework and is therefore quite sizeable. However it is only a ' top slicing' of many other action plans and strategies and is intended to operate on an exception basis i.e. if progress on all these other plans is being made according to timetable the QPMR will simply say this. The details will continue to reside in the subsidiary plans unless / until there is underperformance when the particular instance will be highlighted along with proposed remedial action in the QPMR.

12. A number of other authorities have been contacted for examples of their equivalent reports and there is no, single, best practice format to adopt. At this stage it is wise to accept that the format will change overtime and that the first QPMR's will be more variable as the system settles in and members decide what is most useful and how it should be presented. That process starts now. Appendix B deliberately does not contain any data, that will begin in July. What Appendix B is intended to do is to show is the range of performance data being proposed for regular reporting and give the Executive the opportunity to make any initial comments.

13. It should be noted that the budget monitor at Appendix A will, in future be included within the QPMR approach.

STRATEGIC CONTEXT

14. As members will see the QPMR will cover progress on corporate objectives and against all major plans including the Annual Action Statement of the Corporate Plan, the CPA Improvement Plan and, when a monitoring process is established, the Island Futures Community Strategy. Key numerical performance indicators and financial reporting will also be included. Individual actions will be found in the appropriate service plans. As such the QPMR will record progress against all strategic objectives of the Council and in particular those corporate governance commitments on; strong political and managerial leadership, excellence in service delivery and staff development.

CONSULTATION

15. The performance management framework has been developed through a process of consultation with all Directorates and members and builds on the work done last year by the Measuring Performance Task Group set up by the Resources Select Committee. The views of the IDEA, Audit Commission and other local authorities have also been sought

16. As far as Appendix B is specifically concerned, Heads of Service from all Directorates have already considered the proposed format at the first meeting of the Business Management Group.

FINANCIAL/BUDGET IMPLICATIONS

17. Most of the performance information in the new report is already being collected and monitored at officer level. The financial implications of the new reporting process are therefore minimal and will be met from existing resources.

LEGAL IMPLICATIONS

18. The QPMR is one part of the corporate response to the CPA and is an essential element in the drive to deliver best value services as required by the Local Government Act 1999

OPTIONS

19. To approve the proposed format at Appendix B or to approve amendments to it

EVALUATION/RISK MANAGEMENT

20. Budget monitor. Deviation of service and financial plans from those expressed in the budget is a key risk facing all councils, and can potentially lead to service disruption if not dealt with. The financial monitoring process, of which this report is a part, ensures that this risk is continuously monitored, and that necessary action is identified and delivered.

21. Future QPMR's. The risks are essentially two-fold. Firstly that the Council is not seen to be taking a serious approach to reporting performance to members in public. This would seriously damage the Council's standing and the way to avoid this assertion in future inspections is to adopt a comprehensive QPMR along the lines proposed in Appendix B. The second risk is that the proposed approach becomes too much of a burden but this will only become apparent over the first few quarters and the QPMR can be adapted in the light of lessons learned. At previously noted, the costs at present are essentially opportunity costs but the benefits are that this visible reporting will, by necessity, involve a significant number of staff and thus impact on the Authority's culture. The QPMR will go some way towards making performance 'part of everyone's job' in the Isle of Wight Council.

22. What the QPMR does do is provide an essential 'tripwire' to alert members to key targets that are in danger of being missed and, providing a suitable format is developed over time, it is therefore a measure that reduces risk to the Council.

RECOMMENDATIONS

To note the budget monitor and approve the format for a QPMR as at Appendix B for an initial 6 months.

BACKGROUND PAPERS

Council Publication - Budget 2002 -03

Papers and minutes of the Executive - 26 March 2003

ADDITIONAL INFORMATION

Appendix A Capital Expenditure against budget

Appendix B Proposed Quarterly Performance Monitoring Report

Contact Points : Stuart Fraser Telephone 01983 823657 e-mail [email protected]

John Bentley Head of Corporate Policy and Communications

Telephone 01983 823346 e-mail [email protected]

M J A FISHER

Strategic Director

Corporate and Environment Services

P HARRIS

Deputy Leader

P WILKINSON

Head of Financial and Business Services

R R BARRY

Portfolio Holder for Resources