The original 2006/07 budget was set at £568.4 million, an increase of 5.2% on the adjusted budget for 2005/06. Higher spending than forecast of £11.1million on Adult Social Care in 2005/06 required a review of the 2006/07 budget to be undertaken in July 2006. The review was required not only to reinstate the general fund balance which had fallen below the assessed minimum required level, but also to allow for a two year recovery plan for spending on adult social care to be brought back into line with the budget. A transfer of £8 million from other reserves and savings on other budgets enabled a projected overspend of £10.9 million on adult social care to be included in the revised budget, while still retaining a general fund balance of £10.3 million at 31 March 2007.

At the year end spending on adult social care was £7.5 million higher than originally budgeted but £3.4 million lower than the revised budget and overall  spending was £14.2 million (2.3%) below the revised budget. However after allowing for decisions to earmark particular sources of income or underspendings for specific future purposes, there was a net underspending of £6.4 million to be added to the general fund balance, as summarised in the table below.

The underspending resulted in a £12.6 million addition to the general fund at 31 March 2007, as the revised budget allowed for an increase of £6.2 million.

The income and expenditure account shows the cost of providing services in 2006/07, and the sources of income available to fund those services, drawn up in accordance with UK accounting standards.

Movement on the General Fund Balance

The County Council is required to set a council tax which provides for an adequate balance on the general fund. The statement of the movement on the general fund balance summarises the costs which are recorded in the income and expenditure account but are not chargeable to the general fund, and thus shows why the general fund balance has increased by £12.6 million during 2006/07, despite the £17 million deficit on the income and expenditure account.

Notes

1. A new specific grant (£610 million) to fund school budgets was introduced in 2006/07 to replace support from general Government grant and national business rates. Specific Government grants are accounted for within the net cost of services.

2. Depreciation on assets used in the delivery of services is charged within the net cost of services, but is then reversed out and replaced by the statutory provision required for the repayment of loans.

3. Non-cash backed reserves are those reserves that result from the accounting treatment of fixed assets and pension liabilities, but which are not available to finance additional spending or reduce council tax.

The balance sheet shows the assets and liabilities of the County Council at the beginning and end of the financial year, and this records the net worth of the County Council.

Notes

1. Other long-term assets – mainly comprises contributions from other local authorities in respect of transferred assets originally financed by the County Council.

2. Pension fund net liability – represents the assessed value of the County Council’s total liability to pay retirement pensions in excess of the value of the Pension Fund assets. It is matched by an equivalent non-cash backed reserve so that there is no direct effect upon the level of council tax.

The County Council spent £173.2 million on capital projects in 2006/07, investing in the following categories of assets: