Agenda item

To report the level of spending and exposure against the Council’s Revenue budgets and reserves and balances for the first 4 months to 31 July 2023.  The report also includes an update on the Medium Term Financial Plan 2024/25 – 2026/27.

Mr Mark Golden, Head of Accountancy (Deputy S151 Officer) provided an update on the financial performance monitoring as at Month 4 and the Medium Term Financial Plan 2024/25 – 2026/27. He noted the improvement in the overspend by £627k from Month 3 and that there had been early indications of a further improvement in Month 5.

There were encouraging signs in Children’s Social care with a reduction in residential placements and a lower level of agency staff. It was also reported that Council Tax and NNDR collection rates were up year on year.

The Board was informed that working balances had reduced to cover the in-year pressure and that these would need to be reinstated to the target level of £6m.

It was also reported that Earmarked Revenue Reserves (ERR) had fallen in-year mainly due to the planned use of £9.9m to set the 2023/24 budget. ERR remained relatively high at £33m.

In response to a question on the impact of the projected overspend of £4m plus in Children’s Services, Mr Golden explained that this would be covered by working balances. These were set aside to provide a cushion for in-year pressures and had been reinstated to £6m at the start of 2023/24.  However, he advised that it was imperative to try to reduce the overspends across Directorates which in turn would boost working balances. The Leader of the Council added that work was ongoing to review high cost placements and to bring placement costs down. The innovative work being undertaken in this area by the Council was highlighted.

The Board queried the projected position at the end of the year. In response, Mr Golden advised that an overspend of £5.1million was forecasted with working balances at £1.7million at the end of March 2024. He advised that financial procedure rules stated that overspend should not exceed 1% of the gross revenue budget and that working balances should not be below £3million. If the projections were correct the overspend would be marginally below the 1% allowable, however, working balances would be lower than in the rules. Council services were working hard to identify potential savings and reduce costs in year in order to improve the position. He noted that should the position not improve and working balances remain less than in the rules then a revised emergency budget would need to be produced by the end of the financial year. However, he reiterated that he hoped this would not be required due to the ongoing work.

In response to further questions, Mr Golden advised that the budget process for 2024/2025 had commenced in April 2023. Meetings were being held fortnightly with the Corporate Leadership Team in order to identify savings proposals for the next year. It was noted that the Scrutiny Leadership Board was due to feed into the budget process in December 2023 and January 2024 and that a focus on the assumptions being made in the budget would be helpful with any ideas for budget savings welcomed. Mr Golden also agreed to recirculate the guidance note provided in July 2023 on good financial scrutiny.

A key issue was identified as future Council Tax collection, level of income generated, the spread of bands, locations and discounts and it was agreed that the Board set up a review panel in order to consider this issue in more detail. A scoping meeting would be held with a proposal brought back to a future meeting of the Board.

The Board agreed:

To establish a review panel to consider Council Tax and bring back a scoping proposal to a future meeting.