Agenda item

To report the level of spending and exposure against the Council’s Revenue budgets and reserves and balances for the first 9 months to 31 July 2023.  The report also includes an update on the Medium Term Financial Plan 2024/25 – 2026/27.

Mr Steve Thompson, Director of Resources provided a comprehensive overview of the financial performance monitoring as at Month 9. He noted that the Board had last received the monitoring information at Month 4 when a £5.1 million overspend had been forecast. At Month 9, the overspend had significantly reduced to £1.8 million with working balances of £5 million.

The pressures in Children’s and Adult Services remained. However, after significant efforts to manage demand in Children’s Social Care, the number of children in residential placements was reducing. The overspends in these two service areas, which comprised 75% of the Council budget, were being offset by other areas such as treasury management.

Mr Thompson highlighted that the Executive received financial monitoring information from Month 3 to Month 10 with the data presented in the same way every month in order to provide consistent reporting allowing for the identification of trends. The information presented also included an aggregate position of the Council’s wholly-owned companies, the income and expenditure of all services and the performance of key income streams including Council Tax, the Council Tax Reduction Scheme and Business Rate collection.

It was reported that the draft Month 10 data indicated further improvement to the financial position and a positive trajectory and Mr Thompson identified that reserves were currently at an acceptable level. He also highlighted that 45 Councils were known to be in financial distress.

The Chair highlighted the role of the Scrutiny Leadership Board in providing an independent review of the financial and operational performance of Council services.

Members noted that it had been indicated that the Medium Term Financial Plans of Children’s and Adults’ Services should be considered by the relevant scrutiny committees and queried how often it would be appropriate to do so and in what timescale they could be presented. Mr Thompson noted the request and advised that he would seek to identify with the relevant directors when they would be available for scrutiny.

In response to a question regarding the current risk appetite of the Council, Mr Thompson advised that he would not want earmarked reserves to fall lower than their current level of £28 million and that approximately £10 million of that total related to insurance. He noted that Leisure Assets had made an in year surplus for the first time and it was hoped that this would continue and add to reserves in future years.

Growth and Prosperity was also highlighted as an area with future potential and it was noted that the service also had its own Medium Term Financial Plan. Mr Thompson advised that it was a significantly different type of Plan to that in Children’s and Adults’ Services and it would not provide an accurate picture for scrutiny due to timing. It was noted that Mr Thompson would refer the Plan to scrutiny if in the future he considered it would be beneficial.

The Board considered the previous low interest rates and recent increases. In response, Mr Thompson advised that it was expected that long term rates would start to come down and therefore higher short term rates were currently being used. He added that borrowing was very carefully managed with the Council taking its own decisions following careful consideration. Due to the time of year, borrowing had been utilised whilst waiting for revenue grant payments.

With regards to the Dedicated Schools Grant, Mr Thompson noted the current pressures being caused by the increase in Education, Care and Health Plans and advised that the current deficit was being supported by additional funding with an expectation of a break even position in two years.

Members noted a lack of narrative data in the report regarding the Public Health spend and it was agreed that the Levelling Up Scrutiny Committee be requested to consider the data relating to the Public Health spend in more detail.

Concern was raised regarding the Integrated Care Board (ICB) and in securing contributions towards the budget towards work that positively impacted NHS services. Mr Thompson noted that he met with colleagues from the ICB on a regular basis and that they were forecasting a significant budget deficit. He added that some financial support had been received from the Board, although not to the extent that was initially indicated. He agreed that should any concerns arise, he would feed these through to the Adult Social Care and Health Scrutiny Committee.

It was queried whether the current level of capital projects warranted an in-house capital projects team to alleviate the need for external consultants to be employed. In response, Mr Thompson considered that the issue could be explored should the number of capital projects be sustained. The annual expenditure on consultants’ report was considered by the Levelling Up Scrutiny Committee with the detail potentially providing the basis for such considerations.

In regards to the development of the budget for 2025/2026, Mr Thompson advised that fortnightly meetings were being held with expected budget gaps identified. The details of the settlement were expected at the end of the year. He added that a report was due to the Executive on the details of the Levelling Up funding announcement recently made.

The Board agreed:

1.      That the Children’s and Adults’ Medium Term Financial Plans be received by the relevant scrutiny committees as soon as possible.

2.      That the Levelling Up Scrutiny Committee be requested to receive a report on the Public Health spend.

3.      That should the Director of Resources identify any concerns regarding the Integrated Care Board’s financial relationship with the Council, these be highlighted to the Adult Social Care and Health Scrutiny Committee.

4.      That should the Director of Resources identify that it would be appropriate for the Levelling Up Scrutiny Committee to consider the Growth and Prosperity Medium Term Financial Plan at any time, he make this known to the Committee.