| Contents The new Budget Management Scheme is effective 22nd NOVEMBER 2007 REVENUE BUDGETS CAPITAL BUDGETS ACCOUNTABILITY ANNEX 1 ANNEX 2 REVENUE BUDGETS Budget Management 1) Assistant Directors are responsible for budget management. For the purposes of the budget management scheme the term 'Assistant Director' shall include a Head of Service reporting directly to a Strategic Director. 2) The Chief Executive and Strategic Directors have overall responsibility for the delivery of the strategic objectives for their areas of responsibility and thus have a responsibility for effective performance monitoring of Assistant Directors on matters of budget management. 3) Each Assistant Director will develop and maintain effective arrangements for financial management within his/her service area. Delegation is to be encouraged to service managers, although this will not remove ultimate responsibility for budget management and performance from the budget holder. 4) Services are to be managed within their budgets using virement and carry forward, as appropriate. The scheme applies equally to all the Council's trading activities. 5) In exceptional circumstances, the Chief Financial Officer, as the statutory responsible financial officer, may- following consultation with the Directors’ Group and Cabinet suspend the carry-forward and virement rules within the Scheme, pending a full report to the next meeting of full Council. Contents Virement (see Annex 1 for definitions of portfolios and services, and Annex 2 for clarification of virement rules application) 6) Any virement which has the effect of changing a policy contained in the Policy Framework must be approved by the Council. 7) Assistant Directors may independently approve virements between their Services and within portfolios 7.1 following consultation with their Strategic Director where each individual virement does not exceed £25,000, or, 7.2 following consultation with their Strategic Director and the Chief Financial Officer, and the relevant portfolio holder(s) where each individual virement exceeds £25,000 but does not exceed £50,000 Provided that the virement does not represent a change in policy or commit the Council to increased costs (both within the current financial year and on an on-going full year basis). 8) The Assistant Director shall notify the relevant Finance Manager of any virement when it occurs and shall notify the relevant portfolio holder of any virement exceeding £25,000. 9) Where a Cabinet decision is required (if the virement is between portfolios and/or above £50K) this can be made via the single member decision procedure. Where a virement is between portfolios all the relevant portfolio holders must agree to the virement being made. 10) The relevant Assistant Directors may approve virements between services falling within the responsibilities of more than one Assistant Director and within portfolio 10.1 following consultation with relevant Strategic Directors and portfolio holder where each individual virement does not exceed £25,000. 10.2 following consultation with the relevant Strategic Directors, the Chief Financial Officer and the relevant portfolio holder where each individual virement exceeds £25,000 but does not exceed £50,000. Any such virement must be agreed by all the relevant Assistant Directors 11) Virement shall not be used to create a commitment over and above existing cash limits beyond the end of the financial year in which it is exercised. All proposed virements should make clear the effects in the current financial year and future years, and whether or not it is proposed to change future year’s base budgets. 12) Assistant Directors may agree / recommend virements only if they are satisfied that they understand the implications for the service/s from which funding is being taken, and that Either 12.1 The service objectives of the relevant Services will not be impaired, 12.2 If the service objectives of the relevant Services are likely to be impaired the Cabinet may agree a virement if it is satisfied that resources are being targeted to best meet the Council's priorities and targets and must, notify the Council of the virement at the next available opportunity. 13) All virements must be reported to the Cabinet on a quarterly basis Contents Use of Balances 14) Any proposed use of general balances in excess of £25,000 must be recommended by the Cabinet and/or approved by the Council. The Cabinet must consider the advice of the statutory financial officer in recommending such uses. The Cabinet may approve a use of balances below £25,000, subject to a maximum total allocation of £50,000 in any one financial year. 15) Additional approved use of balances below £50,000 will be kept on a decision register for inspection by any members of the Council. 16a) In circumstances of urgency (i.e. where a decision is required sooner than the normal process (para 14/15 above) will allow, additional money may be drawn from balances by the Chief Executive following consultation with the Resources Cabinet Member, The Chief Financial Officer, and all Group Leaders (or nominees). 16b) In cases of emergency (where immediate decision is required) money may be drawn from balances by the Chief Executive in consultation with the Chief Financial Officer (or nominees of each when either/both is/are absent). 16c) Recovery of sums authorised under either 16a) or 16b) above (after any recovery of costs to the Council from people or corporate bodies outside the council) will then take precedence over any future carry forwards of under spend or spending on "non-urgent/emergency" items. For cases where use of balances in any one financial year has exceeded £50,000, a plan setting out the recovery of balances to a minimum agreed level should be made to the full Council at the earliest opportunity after the balances have been depleted (unless the Council waives this on the advice of the Chief Executive, Chief Financial Officer & Cabinet Member for Resources, subject to reserves being adequate). Contents Earmarked Reserves 17) Any Council earmarked reserve set aside by Council for a specific purpose may not be spent on any other purpose without the permission of Council. Contents Invest to Save Funding 18) This fund will be under the control of the Resources Cabinet Member and a report on the use of the fund will be made to Council, as part of outturn and budget setting, in July and February each year. Decisions to use the Fund will be recorded on the decision register Contents Carry Forward 19) With effective budget planning and management, overspending should not occur. If, however, one occurs it must be recovered. 1) The Assistant Director is responsible for making proposals for the recovery of any overspend to their Strategic Director in the first instance. Further reporting requirements will then be determined, depending on the size and nature of the problem. 2) Overspends will normally be expected to be recovered within the following year. However, a period of up to 3 years may be allowed for the recovery of overspends, depending on the level of overspend and the subsequent impact of recovery on service delivery. The decision as to whether a longer period is to be recommended will be made by the relevant Strategic Director and Cabinet Member following consideration of the proposals submitted by the Assistant Director. 3) All formal recovery plans will be submitted by the relevant Assistant Director to the Cabinet for approval. 20) (1) Assistant Directors may, following consultation with their Strategic Director and the relevant portfolio holder, put forward proposals for the utilisation of any underspends arising within their services, before the end of the financial year in which the underspend arises. (2) The Cabinet may approve proposals reported to it provided, in each case, the underspend a) is not unplanned or a windfall, b) does not relate to a matter funded as a service development that has not occurred, and c) occurs in the financial year in which it is reported. (3) No proposal to carry forward any underspend will be reported to Cabinet unless the management of any overspends occurring in the service areas falling within the remit of a Strategic Director have been agreed by the Strategic director and relevant Cabinet member. (4) An underspend will be considered to be a windfall if it has not been identified and reported to the Cabinet by the end of January in the financial year in which it occurs. (5) If the Council overall returns a net underspend, up to 60% of an underspend in a service may be available for carry forward subject to a proposal being put forward and approved in accordance with paragraphs 20 (1) and (2) above. 6) Note: Where Services have specific Cabinet agreement for “rolling” profit targets, amounts under or over achieved each year will normally be carried forward to future years, subject to annual review by the Cabinet. Services covered by such arrangements currently include: i) Heritage Services (agreed by Executive 01 September 2004) Contents Reporting 21) The Portfolio holders will receive quarterly financial reports (including capital monitoring) from Assistant Directors, starting with the actual v budgets (to be reported in July), and following with reports in October, January and April. These reports will contain information on the progress on the implementation of budget items, including capital schemes. Assistant Directors will provide monthly reports to Strategic Directors, to be forwarded, in aggregate, to Directors’ Group. 22) Reports will focus on the key issues. Under or over spends are to be flagged up at an early stage with Assistant Directors making proposals for the recovery of overspends or utilisation of under spends, regardless of the fact of any `netting off' effect. 23) The Cabinet is to consider the overall position four times a year. Proposals from Services with regard to over and under spends are to be considered at that time. 24) The Cabinet is required to approve the outturn position and final accounts within 3 months of the end of a financial year. Any action that officers are required to take to manage a budget that affects a change in policy and/or a reduction or increase in service will be reported to Council at the earliest opportunity. Contents CAPITAL BUDGETS Budget Management 1) Assistant Directors are generally responsible for budget management of all capital schemes (including major and other projects) within their service area, but all capital schemes must have a designated responsible budget manager who may or may not be an Assistant Director. In the case of major projects, accountability will rest with the Project Sponsor who may delegate to other officers responsibility for all or some budget heads but will retain accountability. 2) Before any scheme is included in any programme, budget management responsibility must be assigned. Budget managers (who may be Assistant Directors, Directors, other designated officers or Project Sponsors) will follow guidance issued by the Chief Financial Officer from time to time on budget approval process. The Cabinet will agree and keep under review a Project Board Governance structure covering the entire capital programme. The guidance will be based on the “Approval to Spend” Procedure attached. 3) Capital budgets are to be managed by individual scheme, with flexibility to combine smaller (up to £200k, say), schemes into a block of similar schemes. 4) The capital programme is to be approved and managed on a rolling basis over at least a 5-year period, with planned payments profiled into quarteryears for the first year at least. 5) The Capital Programme is agreed by Council following the process set out in Capital Review 2 (July 2006). The Cabinet will, during the year, monitor the programme and resources and may approve additional schemes for inclusion in the Programme, subject to analysis of the financial implications and a prudent view of resource availability. Schemes attracting 100% grant or 3rd party contribution can be incorporated into the Programme by the Cabinet and do not require the specific approval of the Council, provided the financial (including risk) implications are fully identified under the process set out in Capital Review 2 (July 2006). All other additional schemes, including those attracting 100% credit approvals, will require the approval of the Council. 6) No decision can be made by an officer, Councillor or the Cabinet that will incur future net total scheme capital costs to the Council over and above a previously agreed capital scheme (or group of schemes that constitute an agreed programme) within the financial plan totals without the approval of Council. Contents Scheme Substitution 7) Within block schemes the substitution of one scheme for another that is unable to proceed will be allowed. 8) For other schemes, scheme substitution of up to £100,000 will be allowed if the following conditions are met: a) The new scheme closely resembles the original scheme b) The new scheme is taken from a list of "pre-approved" projects already considered and approved by the Cabinet. c) The scheme can make use of the same type of funding approved for the original scheme d) The new scheme does not require significant additional design or "work-up" costs to be incurred before it can commence 9) Approval of the Council will be required for the substitution of a capital scheme not meeting the criteria within paras 7-8. 10) If funding has been allocated for specific schemes by Government Departments or the European Commission, then approval must be obtained from the relevant body, e.g. New Deal for Schools, as required under the terms and conditions of the funding. Contents Carry Forward 11) With effective budget planning and management, overspending should not occur. If, however, one occurs it must be recovered. The Assistant Director is responsible for making proposals for the avoidance or recovery of any overspending to their Strategic Director in the first instance. Further reporting requirements will then be determined, depending on the size and nature of the problem. Significant overspendings must be reported to the Cabinet at the earliest possible stage. 12) Within block schemes overspendings on payments during the year will be carried forward and the following year's capital programme correspondingly reduced. 13) On other schemes a Service will normally be expected to absorb any overspending by virement from other budgets or by deferral of other planned schemes. 14) Assistant Directors are encouraged to utilise resources in the year in which they are provided, especially where projects are funded through the receipt of Supplementary Credit Approvals. Schemes funded through SCA cannot be carried forward unless the approval specifically says so. 15) Planned spending should be profiled realistically across the 5-year Programme to ensure that the Council overall is able to make best use of its capital resources. Where a scheme slips, the in year under-spending will normally be carried forward in order to ensure completion of the scheme. Annually, however, Assistant Directors will be expected to review their programmes and identify schemes which have yet to commence and report these to the Cabinet who will report to full Council for its budget-setting meeting, to enable the Council to consider the priority of existing approvals alongside potential new approvals, in the context of the revenue implications of schemes and the overall revenue budget. If a scheme is expected to under spend against its planned total capital scheme cost then this review process will enable reallocation of the under spend. • Note: Slippage between years will be permitted where Services have specific Cabinet agreement for a planned programme of investment, subject to review by a nominated Advisory Board, Such slippage will still be subject to annual review by the Cabinet. Services covered by such arrangements currently include: a) Heritage Services : Roman Baths Development Programme; review by Heritage Advisory Board (agreed by Executive 01 September 2004) Contents Reporting 16) Capital Project Boards will receive regular (at least quarterly) reports of progress on capital schemes in order to focus on the key issues and to identify project spend in both the current financial year and over the lifetime of each project, and associated funding and revenue implications. Key issues arising from this will be reported to the Cabinet via PPB. Assistant Directors will provide monthly reports to Strategic Directors, to be forwarded, in aggregate, to Strategic Directors’ Group. Contents |