Agenda item

At its last meeting the Committee agreed to defer consideration of this item. To ensure consideration is focused on the most recent available data this report only includes the BMMR data from September. The November BMMR data will not have been published by the time of this meeting. Invited to present this item are Cllr Levy, Cabinet Member for Finance, Lorna Baxter, Director of Finance, Kathy Wilcox, Head of Financial Strategy, and Louise Tustian, Head of Insight and Corporate Programmes.

The Committee is recommended, having considered the report and responses to questions, to AGREE any recommendations it wishes to make to Cabinet arising therefrom.

Having been a Cabinet member during the period covered by the report under consideration Cllr Phillips withdrew from the meeting at the commencement of this item and did not return.

Cllr Levy, Cabinet Member for Finance, Lorna Baxter, Director of Finance, and Kathy Wilcox, Head of Financial Strategy, were joined by Louise Tustian, Head of Insight and Corporate Programmes to present the Council’s Business Management and Monitoring Report, detailing the Council’s position with regards to finance, performance and risk.

Louise Tustian introduced the key issues around performance and risk. Six measures in the report were rated red. However, new data was to be published to Cabinet imminently, which showed that treatment of highways and revenue variance across the Council had been upgraded to red and amber respectively. The Council’s strategic risks were in the forthcoming report to be updated; Major Infrastructure Capital Projects now referred specifically to HIF1 and HIF2, Demand Management for Adults and Children were to be elided into one measure and a specific risk around SEND added. Two further risks around Policy and Budget, and Delivering the Future Together were also to be added.

Kathy Wilcox presented the financial situation. An in-year directorate forecast overspend of £17.4m would in the following report be shown to have improved slightly to £13.6m. This largely came about due to agreements over contributions to health budgets. The major contributor to the overspend was the forecast £11m overspend in children’s services for care placements and home to school transport. Slower than anticipated reductions in agency spend were the primary cause of the £3m overspend in Resources as well as inflation costs for school meals. The overall overspend, once money from contingency and reserves was taken into account was £8.5m, or 1.5%. The deficit for funding High Needs once the High Needs Dedicated Schools Grant was taken into account was £18.3m. This deficit would increase the total High Needs Deficit to £59.4m at 31 March 2024. This negative balance would, as required, be held in an unusable reserve which would be due to come to an end on 31 March 2026. Members were reminded this was a material factor for them to hold in mind when considering the budget proposals. Previously planned savings were forecast to reach £17.8m (63%) were assessed as delivered or expected to be delivered, £4.4m (16%) as amber and 6m (21%) red. Of the savings planned but not delivered in the last financial year 4m (40%) were assessed as delivered or expected to be delivered in 2023/24 and 4.9m (48%) as red.

In response, members raised the following issues:

-        Whether the need to reach a balanced budget disincentivised making available savings, and thus were there savings to be made before having to make tradeoffs. Budgets were challenged as part of the budget setting process, and unjustified provisions were to be taken as savings. Any savings made would offset the same quantum of pressures and would therefore relive some of the pressure of reaching a balanced budget. It did also need to be remembered, however, that delivering a balanced budget was one side of the Council’s requirements; it also needed to deliver to the maximum of its ability, services and funding levels needed to be reflective of the demand on services and the Council’s duty to supply. Members noted the threat of ‘gatekeeping’ if budgets were restricted too far.

-        The realism of budget assumptions based on the previous track record of delivering savings. It was explained that the s. 151 officer needed to sign off the budget with her agreement that the assumptions and forecasts were indeed robust. It was clear to her that previously there had been insufficient clarity over precisely how savings would be delivered. Greater challenge and scrutiny of savings proposals was already being undertaken and would be expected to yield higher rates of achievement. It was important context to recognise that the Council’s medium term track record of savings delivery was much stronger than the last two years (91%), which were significantly worse.

-        The methodology which allowed the Council’s overspend position to have moved from red-rated to amber. The threshold for the change was confirmed to be 1.5% of the budget spend, which the current position met.

-        Whether previous underspends reported around in Environment and Place could be used to cross-subsidise other areas. It was confirmed that this could be done and was already being undertaken. A caution was necessary, however, in not undermining the donor directorate’s ability to deliver its own services.

No observations or recommendations were made to Cabinet.