Agenda item

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

The report of the Head of Function (Resources) and Section 151 Officer setting out the financial performance of the Council’s services for the third quarter of the 2017/18 financial year along with a summary of the projected position for the year as a whole was presented for the Executive’s consideration.

The Portfolio Member for Finance reported that in February, 2017, the Council set a net budget for 2017/18 with net service expenditure of £126.157m to be funded from Council Tax income, NDR and general grants. The overall projected financial position for 2017/18 including Corporate Finance and the Council Tax fund, is an overspend of £1.624m or 1.29% of the Council’s net budget for 2017/18. This is an improvement of approximately £300k on the end of Quarter 2 position. The table at paragraph 2.2 of the report provides a synopsis of the main variances in service budgets. The most significant budgetary pressures and consequently the largest overspends are in the Children and Families Service (Corporate Parenting associated costs) and Learning (Out of county placements and school transport costs). With the input of Scrutiny, measures are being taken to address the sources of overspending, and to manage expenditure in these areas. The situation is not unique to Anglesey with Children’s Services across Wales and beyond experiencing similar pressures which suggests that this is an issue that requires a national solution. Much of the Children’s Services budget is demand-led which makes it difficult to predict future costs and means also that the options for controlling spending are limited. Specialist placements which are sometimes required to meet individual needs can drive up costs significantly thereby leading to overspending.

The Head of Function (Resources)/Section 151 Officer concurred with the Portfolio Member’s analysis and said that the position has improved marginally. Although services other than those referred to by the Portfolio Member are largely performing within budget these too are approaching the limits of their budgets. Annual cuts which have been incorporated into individual service budgets have eroded what spare capacity there was. Underspends in corporate budgets are helping to offset the overspends elsewhere this year but these savings may not be repeated next year although the financial pressures will continue. The Council is therefore facing a challenging situation mitigated by the fact that it has sufficient reserves in hand to be able to fund the overspend on the revenue budget. This reflects a deliberate strategy by the Council over the past few years to maintain an adequate level of reserves in order to be able to respond to circumstances including supporting the revenue budget if or when necessary. The Officer said that the report also refers to agency and consultancy costs full details of which are provided at Appendices DD and E respectively. During the year to date, £951k has been spent on agency staff mainly relating to staff cover in Children’s Services while they seek to recruit permanent staff. Expenditure on consultancy during Quarter 3 was £746k with £377k of this funded externally from grants or contributions. There are a number of reasons for the use of consultants including the provision of specialist input and advice on specific projects.

Having considered the report, the Executive noted the following –

•  The Executive noted that the budgets of those service areas that have not used all their resources this year will be aligned with expenditure next year meaning that the financial cushion will not be available to these services in 2018/19.

•  The Executive noted that whilst circumstances are challenging, the Council’s reserves do provide a financial buffer against such pressures in the short-term but do not provide a solution in the long-term particularly in light of continued overspending in Children’s Services and the Learning Service. Having invested in prevention and intervention measures in Children’s Services, it is now imperative that those deliver on the savings expected of them.

•  The Executive noted that although agency staff fulfil an important function, it is expenditure that could be avoided if the Council was able to recruit on a permanent basis. It must seek to fill vacant posts as soon as possible.

•  The Executive noted that the Council will have to contribute to the costs arising from the flooding in Llangefni in November, 2017.The Executive sought clarification of the position and the extent of the financial impact on the Council’s budget. The Head of Function (Resources)/ Section 151 Officer said that the costs of repairs arising from the flood event in November, 2017 have been calculated at around £1.3m including staff costs at the time and in the immediate aftermath. Following an application to Welsh Government for help with the costs of repairing the Highway infrastructure, the Welsh Government has confirmed that it will contribute £374k towards the costs with the remaining costs to be borne by the Council. The Officer said that a sum in the region of £400k has been earmarked from reserves to this end. Discussions with the Highways service as to how the remainder of the work is to be programmed and accommodated are ongoing – it is likely it will have to be incorporated in next year’s scheme as part of the usual repairs and maintenance programme.

The Executive was agreed that the Finance Scrutiny Panel should be asked to look at this matter in greater detail, in particular the impact of the flooding event on Highways expenditure and programming with a view to drawing lessons for future planning for similar events.

It was resolved –

·      To note the position set out in Appendices A and B in respect of the

 Authority’s financial performance to date and expected outturn for 2017/18.

·      To approve a transfer of any underspend on Maritime to an earmarked

reserve to fund the repainting of the Beaumaris Pier.

·      To note the summary of Contingency budgets for 2017/18 as detailed

     in Appendix C.

·      To note the position of the Invest to Save programmes set out in

     Appendix CH.

·      To note the position of the efficiency savings 2017/18 set out in

     Appendix D.

·      To note the monitoring of agency and consultancy costs 2017/18 set

     out in Appendices DD, E and F.

·      To ask the Finance Scrutiny Panel to examine the impact of the

severe floods in November, 2017 on Highways Service expenditure and programming, with a view to improve future planning for similar events.