Agenda item

To submit a report by the Head of Function (Resources)/Section 151 Officer.

The report of the Head of Function (Resources)/Section 151 Officer outlining the financial performance of the Council’s services at the end of Quarter 2 relating to the period from 1 April, 2018 to 30 September, 2018 was presented for the Executive’s consideration.

The Portfolio Member for Finance reported that it was disappointing to report that based on information to date, the overall projected financial position for 2018/19 including Corporate Finance and the Council Tax Fund is an overspend of £2.660m which represents 2.3% of the Council’s net budget for 2018/19. This is due to similar budget pressures experienced in 2017/18 the most significant of which are statutory children’s services. Departments have been asked to look at ways of reducing expenditure for the remainder of the financial year and to bring forward saving plans. The Portfolio Member said that although this level of overspending can be funded from general reserves in 2018/19 doing so will further deplete the Council’s general balances. Having to use reserves to maintain a balanced budget shows the extent of the financial pressures on the Council and means that it will have to look carefully at how the budget for 2019/20 is set and how it is funded.

The Head of Function(Resources)/Section 151 Officer said that three of the Council’s major services – Adults’ Services, Children’s Services and the Learning Service are facing an increased level of demand which is leading them to overspend their budgets. Whilst the situation with regard to the Council’s other services is an improving one at the end of Quarter 2, it is not enough to offset the overspends by the three aforementioned services. Although it is hoped that the overspends have peaked and that expenditure can be contained from now on until the end of the financial year this depends on circumstances – specifically winter pressures and the level of demand. The Officer said that the Executive is also asked to support the use of the Equal Pay reserve which was created to deal with Equal Pay claims,  in order to fund the redundancies shortfall for the 2018/19 year. The Equal Pay process has more or less been completed with the majority of claims now having been settled leaving a surplus in the funds which can be transferred to help with the current budget situation.

The Executive in considering the report and the position it reflected made the following points-

•           That managing budgets which are demand led is difficult and that Anglesey is not the only council facing a challenge in trying to cope financially with escalating demand. It was noted that the Council has to respond to the needs of vulnerable adults and children but that the pace of growth in demand in these services is outstripping their budgets leading to overspending.

•           That it is likely that for the second consecutive year the Council will not be able to balance its budget without having to draw on general reserves thereby lowering the Council’s reserves to under the recommended minimum level. This suggests that the Budget is not sufficient to meet the Council’s needs.

•           That as the Corporate Scorecard shows, the Council is still managing to sustain the quality of services despite the financial pressures.

•           That the Finance Scrutiny Panel is supporting the Executive in its monitoring of the Revenue Budget by keeping a regular watching brief over the services that are overspending and by challenging the respective Heads of Service on their plans to mitigate overspending and manage expenditure.

•           That the level of detail in the budget monitoring report prepared by the Finance Service is helpful to the Executive both in terms of managing the budget and in responding when it is challenged on how resources are being used particularly with regard to agency and consultancy costs much of which is funded by external contribution. The Head Of Function (Resources)/Section 151 Officer clarified that from the total spend of £674,406 on agency and consultancy costs in Quarter 2, £155k came from the Council’s core budget and/or reserves with the remainder being funded by grant and/or external contribution which is about 75%.

It was resolved –

•           To note the position set out in appendices A and B of the report in respect of the Authority’s financial performance to date and expected outturn for 2018/19.

•           To note the summary of Contingency budgets for 2018/19 detailed in Appendix C to the report.

•           To note the position of the Invest to Save programmes in Appendix CH of the report.

•           To note the position of the efficiency savings for 2018/19 set out in Appendix D to the report.

•           To note the monitoring of agency and consultancy costs for 2018/19 detailed in Appendices DD and E of the report.

•           To approve the usage of the Equal Pay reserve to fund the redundancies shortfall for the financial year 2018/19.