The Deputy Chief Executive/Director of Finance presented a summary of the position of the revenue accounts and General Fund balances as at 31 December 2011. The Financial Monitoring Statement included the composition of the original 2011/2012 budget by Department including agreed savings and the ‘one year’ policy options; monitoring against the 2011/2012 budget including the financial implications of any changes agreed through Cabinet decisions; anticipated variances not agreed by the Cabinet, against the original budget; and comments, which provided an explanation of variances and areas that were identified as requiring further attention.

The Director set out the impact of Cabinet decisions which had budget implications and highlighted the potentially volatile areas within departments that had been highlighted by Chief Officers. In response to questions from Members as to why some serious financial pressures were rated as Amber and not Red, the Director indicated that the rating was based upon a judgement by Chief Officers as to whether or not any overspend could be contained. Members expressed a view that more should be done to maximize income and that overspend should be flagged up earlier by Chief Officers to allow more time for remedial action to be taken. In addition, Members commented that Chief Officers should provide an early indication to the Cabinet as to whether budget allocations were realistic and sufficient for services to be delivered.

Resolved –

(1)  That the Financial Monitoring Statement be noted.

(2)  That the officers be requested to review the Red, Amber and Green rating system so that serious financial pressures will be flagged as Red at an earlier stage, to allow more time for corrective action to be taken.