Agenda item

To consider the controls being implemented to manage the strategic risk relating to

Sustainability of the Council.

The Committee considered a progress report in relation to the individual risks identified on the Strategic Risk Register. The Committee discussed plans to control and mitigate the risks with Mr Steve Thompson, Director of Resources and Mrs Diane Booth, Director of Children’s Services. 

Mr Thompson advised Members of the controls and mitigations that were in place for the sub-risk ‘Insufficient funding to deliver services’. He explained that a six year Medium Term Financial Sustainability Plan was in place until 2019/2020 and financial modelling was one of the primary controls to mitigate the risk. Beyond this, he reported that there was considerable uncertainty due to a number of factors that included, but were not limited to, the start of a new settlement period, end/start of the adult social care precept, outcome of the Fair Funding Review, introduction of 75% business rate retention, triennial pension revaluation and Brexit transition by 1 December 2020.

In terms of the content of the Medium Term Financial Sustainability Plan, the Committee was advised that outlined various financial controls in place such as a Treasury Management Strategy, capital programme, Statement of the Chief Finance Officer and Final accounts and external audit process. Mr Thompson informed Members that the Treasury Management Strategy would be reviewed in the 2019/2020 cycle.

Following questions from the Committee about the long term affordability of business loans, Mr Thompson advised that such loans contained an element of risk and that interest rates were set accordingly.   Members were assured that the due diligence processes for business loans and lending criteria were audited. He added that future projects would be rigorously appraised for their affordability, timeliness, reliability and accuracy in addition to bad debt which would continue to be meticulously accounted for. Ms Greenhalgh confirmed that an audit of the business loans fund was scheduled to take place in 2018/19.

In response to a concern noted about the Nett risk score versus the Gross risk score against the risk of ‘Insufficient funding to deliver services’, Mr Thompson reported that the various controls discussed were regarded as sufficient to offset the overall risk score. In relation to the issue of a business loans strategy, it was explained that lending criteria and settlement rates were reviewed and external advice was sought and that the sign-off of loans would be delayed where appropriate until greater certainty about outcomes could be achieved. Most of the authority’s business loan fund of £100m had been loaned out though the Committee was advised that it would be highly unlikely that borrowing levels would ever exceed net assets given the measures in put in place to mitigate the risk such as financial benchmarking with other authorities. The Committee noted that despite challenges and future uncertainty, the Council had continued to deliver services and the overall financial picture was favourable.

Mrs Booth, Director of Children’s Services, discussed the sub-risk of ‘Insufficient central government funding for Social Care, an addition to current constraints on cash limited budgets such as withdrawal of service funding due to a loss of custom or commissioning’ and advised Members that a combination of staffing issues and lack of leadership in certain areas had hampered transformation planning and implementation. However, monthly meetings of the Improvement Board had focused on transformation planning with partner agencies. Concerns about the level of participation and contribution offered by the Police had been noted and dialogue aimed at holding people to account and improving the situation had already begun with the relevant representatives. Following a question about potential barriers to delivering transformation, it was reported that predicted overspends nationwide in Children’s Services combined with uncertainty over the Fairer Funding Review made it difficult to make accurate predictions. Despite this backdrop, Members were advised that changes to the work culture and appointment to all but one leadership role within the department had already brought about greater stability.

With regard to Heads of Service contributing to commissioning reviews and service developments, Mrs Booth reported that the Sufficiency Strategy and Commissioning Framework were being reviewed and the former would focus on the key areas of fostering, placements and support in the home. The strategy would be linked to the ‘journey of the child’ work and be concerned more with preventing children from becoming looked after rather than on statutory intervention. Members agreed that more should be done to use in-house services where possible and minimise the use of external placements with private providers which could result in extremely high costs to the authority.

The need to provide appropriate levels of care and support to children with a wide range of complex needs and at a variety of different ages remained a key challenge and increasing fostering uptake would be a key method of reducing the cost of children looked after. In terms of barriers to young people leaving care, Mrs Booth advised that the permanence team had suffered from a period of instability through a number of staff absences and resultant use of agency staff. Added to this was the relatively high number of particularly complex cases.  Out of borough placements were all currently in private settings and the Committee expressed concern that these providers seemed to be dictating the cost of placements which were far higher than equivalent care provided by the Local Authority and partners. The Committee therefore agreed it would be prudent to continue to investigate the feasibility of pooling resources with other authorities in order to improve outcomes and limit expenditure.

Mr Thompson added that in terms of financial modelling, the pressures on both children’s and adult services had been incorporated and that a national solution to underfunding, particularly of adults services would be the most desirable outcome.