Agenda item

To present the Revenue Budget monitoring report for Quarter 3 2016/17.

The report of the Head of Resources and Section 151 Officer setting out the financial performance of the Council’s services for the third quarter of 2016/17 along with the projected position at year end was presented for the Committee’s consideration.

The Head of Function (Resources) and Section 151 Officer reported that the overall projected financial position at Quarter 3 for 2016/17 including Corporate Finance and the Council Tax fund is for an overspend of £16k which marks a significant improvement on the position predicted during Quarter 2. However, an overspend of £756k (0.70%) on services is projected for 31 March, 2017 with the most significant variances occurring in the Lifelong Learning and Children’s Social Care budgets where overspends of £700k and £718k are forecast respectively. An underspend is projected on capital financing due to reduced borrowing costs from the Authority’s use of surplus cash balances rather than external borrowing on the capital programme. Also, the way in which costs are apportioned has been revised so that the Housing Revenue Account takes on an increased proportion of interest charges thereby reducing the costs on the Council Fund. The revision of charges seeks to apportion costs between the HRA and the Council Fund more fairly; it does not increase risk to the HRA Business Plan which has been prepared on the revised basis. This has generated a one off saving which has contributed towards the delivery of a balanced budget in 2016/17 and it has been taken into account in setting the 2017/8 budget. This cushion will not be available in 2017/18 so any service overspends during 2017/18 could potentially pose a problem. While the current situation could change in Quarter 4 as the pressure of demand continues in Children’s Services and in specialist out of county placements in the Lifelong Learning Service, with the winter period and the additional costs which that can bring having passed, it is envisaged that the overall end of year position will be one of marginal overspend which can be met by the Council’s reserves.

The Committee considered the information and made the following points –

•           The Committee noted the projected overspends in Children’s Services particularly with regard to Looked After Children and in the Lifelong Learning Service in relation to specialist out of county placements. The Committee sought clarification of the Authority’s mitigation strategy to deal with the pressure on these services especially in a context where local authority budgets are in effect   decreasing year on year. The Head of Function (Resources) and Section 151 Officer said that the pressure experienced by these service budgets is a national problem. Other outcomes within the overall budget have been favourable thereby lessening the effect of the over expenditure in these services. However, the underlying pressure on these two services will continue and could become more acute unless the demand is managed. To that end, greater investment is being made in preventative services e.g. the Edge of Care Team in Children’s Services to provide early intervention where it is needed to avert the escalation of cases into the full statutory care system where the costs are high. The Assistant Chief Executive (Governance & Business Process Transformation) and Director of Social Services said that the costs associated with Looked After Children have stabilised over the past 6 to 9 months. The main issue relates to a small number of cases involving adolescent young people who have been on the periphery of the care system whose needs are now such that meeting them can very easily lead to over-expenditure and for whom the outcome might have been different had intervention occurred sooner.

•           The Committee noted that only 80.9% of the savings have already been achieved or are deemed achievable during the year suggesting that the contribution of savings to achieving a balanced budget has been overestimated. The Committee questioned whether achieving a balanced budget in 2016/17 was therefore fortuitous in that there were other factors that worked in the Authority’s favour; the Committee also questioned whether the delivery of a balanced budget in 2016/17 is of itself a reliable indicator of how resilient the 2017/18 budget is given the ongoing demand and pressures on service budgets and in particular budgets in Children’s Services and the out of county element of the Lifelong Learning budget. The Head of Function (Resources) and Section 151 Officer said that services primarily have regard to the bottom line and that it is difficult to assess in what way scrutiny of specific savings would add value if services are succeeding in balancing their budgets. There are certain factors which are outside services’ control e.g. a group of children requiring specialist educational placements out of county entered the system in Quarter 3 causing an issue which the Lifelong Learning Services could not have foreseen or planned for. From the Committee’s perspective, it should be able to derive assurance from the fact that the General Fund Balance is being maintained at an appropriate level and provides flexibility and mitigation in terms of responding to budget pressures.

The Assistant Chief Executive (Partnerships, Community and Service Improvement) said that services are also working to address the ongoing financial challenges by reviewing thresholds and by looking at the way services are provided and commissioned and by transforming the way some services are delivered. In the case of Children’s Services and the Lifelong Learning Service, the reasons for commissioning high cost out of county placements have to be looked at to establish whether the needs of the service users can be met effectively and safely in another more efficient way.

It was resolved to accept and to note the financial performance at the end of Quarter 3 as set out in the report of the Head of Function (Resources) and Section 151 Officer.

NO FURTHER ACTION ARISING