Agenda item

This report outlines forecast financial position of the organisation at the end of 2024/25 based on the information known at the end of the second quarter.

Cabinet Portfolio Holder – Councillor Peter Butlin

Councillor Peter Butlin, Portfolio Holder for Finance and Property, reminded Members of the overspends because of service demand which were set out in the quarter 1 report and of the financial recovery plan that was put in place as a result.  The position in quarter 2 was a headline overspend of £41.6m, however, taking account of funding and reserves already set aside the net residual overspend was £9.5m which would need to be funded from reserves at the end of the financial year. In percentage terms, the net residual overspend was at 2.4% which was over the +/- 2% tolerance but it was a considerable improvement from the quarter 1 position when it was 6.7%.   Councillor Butlin noted that the net overspend masked the fact there was a £24.8m net service overspend, off-set by £15.3m corporate services underspend, which included higher than budgeted interest from treasury management returns.  He explained the service pressures related to an ongoing increase in volume and demand in social care (Adult and Children’s), market failure in terms of excessive costs for placements and lack of capacity, insufficient funding for SEND, and Home to School Transport. 

Councillor Butlin went on to outline the savings forecast as 59% of the £16.2m required for the year and explained that the shortfall (£6.6m) was largely due to the service pressures causing overspends.

He concluded by referring to the section of the report dealing with Capital, and the quarter 2 forecast for controllable spending which sat at £176.1m with the total forecast on capital spend rising to £201.2m when other spend such as s278 contributions and economic-growth related activity was also considered.  

Councillor John Holland commented on the need to focus on putting residents first.  He noted the challenges of bring up children with SEND and the high (emotional and financial) cost of taking children into care.  However, he considered that there was more to be done with partner agencies who were able to raise funds to support those who required services. 

Councillor Jerry Roodhouse referred to the unsustainable increases in demand for services set out in the report and whilst he had noted the content of the Chancellor’s Autumn Statement particularly regarding funding for SEND, the detail of this and the Local Government Settlement were still awaited.  He had concerns regarding the service pressures causing overspends as although spending was slowing, the trajectory was still heading in the wrong direction and he sought assurance that the Council was not heading towards a Section 114 Notice from the Section 151 Officer. 

Councillor Isobel Seccombe noted that all groups would be having conversations with the finance team regarding budget preparations.  She noted that Officers had worked hard to support the Financial Recovery Plan and the Council was now in a better position. This did not resolve the challenge of increasing demand for services which was being faced nationally.   The Council was aware of the challenges and was working hard to mitigate the cost of demand by putting in solutions and trying to reduce costs.  The Council had a responsibility to all tax payers to provide the services that mattered to them and it was a challenge to manage everyone’s needs and expectations.

Councillor Andy Crump supported the pre-emptive steps that had been taken to balance the budget and emphasised the need to manage the budget properly and sensibly.  He noted the impact of the Chancellor’s Autumn Statement on businesses in the private sector which supported Council services and foresaw additional budgetary pressure as a result.

Councillor Peter Butlin emphasised that the Council had never not delivered a service, but there was a need to balance the budget.  The Council had an obligation to deliver services in the best and most affordable manner.  The statutory override was only available until 2026 and the only foreseeable way the position could be resolved was through the introduction of new legislation.  He noted the government’s announcements regarding increasing National Insurance Contributions and the national minimum wage would be an additional pressure as a lot of the Council’s services were commissioned.  Overall, he considered it was a good report and the Section 151 Officer would keep Group Leaders up to date on the pressures and how the budget was being balanced.  He welcomed the efforts of Officers to control expenditure whilst continuing to deliver services.

Resolved:

That Cabinet:

1.     Notes the forecast net residual service overspend of £9.487m (2.4%) that would need to be funded from reserves at the end of 2024/25;

2.     Notes the forecast delivery of savings for 2024/25 of £9.529m (59%), and the consequent shortfall against the target;

3.     Notes the forecast capital spend for 2023/24 of £176.138m;

4.     Notes and approves the movement in the forecast spend on the capital programme of £12.776m from 2024/25 into future years; and

5.     Approves the transfer of £4.885m from the Revolving Fund to the Revenue Investment Fund as detailed in Section 6 of the report.