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 provisional outturn for the Revenue Budget for the 2017/18 financial year was presented for the Executive’s consideration.

The Portfolio Member for Finance reported that it was disappointing to report that the outturn for 2017/18 is an overspend of £1.762k against a budget of £126.647m (1.39% of the Council’s net budget). This is despite the Authority delivering savings of £1.55m over the same period and means therefore that £1.77m has been taken out of the General Reserves in order to balance the budget thereby taking the level of usable reserves down close to the £6m threshold recommended by the Section 151 Officer and approved by the Council. Should the overspend be repeated in 2018/19 then that could lead to a further depletion of the Council’s general reserves. The most significant service demand pressures have been seen in Education and Children’s Services as has been reported throughout the year. An increase in demand in specific budgets within Adult Social Care over the final quarter has led to a higher overspend at outturn in Adults’ Services than was forecasted at the end of Quarter 3. Council Business is also £181k overspent at outturn which is an improvement on the end of the Quarter 3 prediction and which is due mainly to agency fees owing to maternity cover and long-term sickness absence. The Portfolio Member said that additionally he wished to draw attention to the summary of contingency budgets under Appendix C and specifically to the overspend on the salary and grading contingency budget as a result of meeting voluntary redundancies agreements; however these will lead to long-term savings for the Council.

The Head of Function (Resources) and Section 151 Officer said that the main pressure areas where the overspends are the highest are known and have been well documented throughout the year. Other emerging risk areas in Quarter 4 which could carry on into 2018/19 are increasing homelessness costs and the Leisure section which is having difficulties achieving income targets. In mitigation, Corporate Finance has underspent by £655k for the year; this includes an underspend of £258k on the Council Tax Reduction Scheme and an underspend of £449k on capital financing costs. With regard to the Council’s general reserves, the Officer said that the point is approaching where consideration will have to be given to developing a strategy as part of the MTFP to restoring the reserves to the £6m level; depending on if and by how much the Authority overspends in 2018/19, and how far below the £6m threshold the Council’s general reserves dip as a consequence it will need to consider over what length of time it proposes to build the reserves back up to an acceptable level and then factor this into subsequent budgets. The Council’s approach in previous years of setting aside reserves to cope with unplanned for financial pressures has helped it in 2017/18 and will likely do so again in 2018/19.

The Executive’s Portfolio Members summarised the end of year position with regard to their individual portfolio areas, including any variances and, where the outcome had been an overspend they outlined how the pressures on their services are being mitigated. A particular focus was put on Children and Families Services as the highest overspending area where the financial pressures are most acute and are ongoing. The Leader and Portfolio Member for Social Services said that the 72% increase in the number of children being looked after illustrates the extent of the challenge both locally and nationally – the Executive as part of the 2018/19 budget proposals did propose that part of the Council Tax increase be earmarked to meet budget pressures in Social Services where both Children’s and Adults’ Services are overspending. The Finance Scrutiny Panel is closely monitoring the position

 and in particular the Children’s Services’ plans to alleviate over expenditure within the service. The Portfolio Member said that increasing attention will have to be given to transforming how services are delivered and, in light of the 2017/18 budget overspend and the continuing financial challenges which the Authority faces, service transformation has to happen expeditiously. The Authority is having to operate in a climate of financial austerity whilst still seeking to protect services for the vulnerable and those in need. Much has been made of the Authority’s expenditure on agency staff – most of these costs are due to Children’s Services where agency cover has been required to fill existing vacancies and sickness absence where ensuring the continuation of the service is essential. Where agency staff have been engaged by other services it is in order to fill a gap due to staff absences to maintain a service. The Leader said that the end of year overspend was disappointing but could be taken to indicate that the Authority is nearing a tipping point under the pressure of the Government’s squeeze on local government funding.

With reference to Children and Families Services, the Assistant Chief Executive (Governance and Business Process Transformation) and Statutory Director of Social Services highlighted that the service has improved significantly over the course of the past two years and can evidence successes in recruiting, in reducing sickness absence and in providing a wider range of support for children, young people and their families. The overspend in the service is directly related to the increase in the number of children and young people requiring immediate and ongoing support – the service does have plans to source more cost-effective and more appropriate placements but this will take time. Whilst the service’s deployment of agency staff is a temporary but not necessarily short-term measure, they do have an important contribution to make in mentoring, supporting and strengthening staff in their day to day work. The service although it has made significant progress continues to be on an improvement journey.

It was resolved –

•  To note the position set out in Appendices A and B to the report in respect of the Authority’s financial performance for 2017/18.

•  To note the summary of Contingency budgets for 2017/18 detailed in Appendix C to the report.

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

•  To note the position of the efficiency savings for 2017/18 set out in Appendix D to the report.

•  To note the monitoring of agency and consultancy costs for 2017/18 set out in Appendices DD and E.

•  To note that the outturn reported in the document remains provisional until the completion of the statutory audit.