Agenda item

To receive the information, consider the risks arising from the forecast expenditure against the budget, and scrutinise the decisions to be presented to Cabinet regarding budget management by the Council and its departments.

 

 

DECISION:

 

·         To accept the report on the end of November 2023 review of the Revenue Budget

·         To consider the latest financial position regarding the budgets of each department / service

·         To note that significant overspend is anticipated in the Adults, Health and Well-being Department, the Children and Supporting Families Department, and the Highways, Engineering and YGC Department this year.

·         To agree with the recommendation to Cabinet (23-01-24) to approve a transfer of £4,241k of underspend on corporate budgets to the Council's Financial Strategy Reserve

 

Note: The Cabinet is requested to,

·         consider the timetable for the Adult Health and Well-being Department's overspend review and the Environment Department's overspend review (Integrated transport issues)

·         consider the imbalance in the use of grants.

 

Submitted - the report of the Cabinet Member for Finance requesting that the committee scrutinises the position and relevant risks in respect of the Council's budgets and those of its departments and considers the recommendations for the Cabinet 24-01-23.

 

The Cabinet Member set out the context for the report, noting the following:-

·         Following a review at the end of November, the projections suggested that all of the ten departments would overspend by the end of the year.

·         There was substantial overspend by the Adults, Health and Well-being Department, the Children and Supporting Families Department and the Highways, Engineering and YGC Department.

·         A delay in realising savings was a factor.

 

He added that the Finance Officers merely reported on the situation, and that the Departments themselves were responsible for their budgets.

 

The Assistant Head of Finance highlighted, following a review at the end of November, that the projections suggested that all the ten departments would overspend by the end of the year, with significant overspending by the Adults, Health and Well-being Department, Children and Supporting Families Department, and the Highways, Engineering and YGC Department. Additionally, it was anticipated that there would be a financial deficit of £8.1 million (compared with £9.1 million in the August Review), and therefore, although the situation was a million times better overall, that the one-off grants had to be used to help the departments' situation.

 

Reference was made to the main matters:

·         Adults, Health and Well-being Department - the latest projections suggested £5.4 million overspend, being a combination of several factors including several new cases and costly supported accommodation in the learning disability service, higher staffing costs, sickness levels and high rates of non-contact hours in the field of Home Care, as well as high fees by private providers in Older People's Services. In light of the exceptional overspend projection by the Department, it was noted that the work commissioned by the Chief Executive now conveyed a detailed picture of the complexity of adults’ care spending and gave a better understanding of those matters to create a clear programme to respond. It was reiterated that the work was led by the Statutory Director of Social Services.

·         Children and Supporting Families Department - the department's financial situation had worsened substantially since the end of August review, following an increase in costs because of the complexities regarding the out-of-county packages provided. By now, it was anticipated that there would be an overspend of £1.3 million by the end of the financial year.

·         Education Department - a clear increase in the pressure on taxis and school buses funding this year, with an anticipated overspend of £1.5m. It was noted that the transport field had already been subject to a strategic review to try and manage the increase in spending and it was suggested that work continued to try and decrease the overspending and take advantage of efficiency opportunities. It was reiterated that a combination of underspend in other fields, as well as use of funds in reserve, reduced the departmental overspending.

·         Byw'n Iach – Covid has had an impact on the Byw'n Iach Company's income, and as a result, the Council gave £550k of financial support to Byw'n Iach in 2022/23 to allow them to maintain their services. ⁠It was noted that the financial support would remain this year and the required amount had further reduced to £350k.

·         Highways, Engineering and YGC Department - an overspend of £780k was anticipated by the department because of a reduction in the work that had been commissioned by external agencies that, as a result, had a negative impact on the highways services’ income. ⁠In the context of municipal matters, it was explained that there was a combination of factors that included additional pressure on the budgets of street cleaning and cleaning public toilets as well as loss of income in the fields of ground maintenance and public toilets.

·         Environment Department – an annual trend of overspending in waste collection and recycling continued. It was noted that additional circuits had led to overspending on employment and fleet costs as well as levels of sickness and overtime and additional costs in terms of renting vehicles.

·         Housing and Property - the trend of significant pressure on temporary homelessness accommodation services remained intense. It was highlighted this year that £3m of council tax premium had been allocated as well as a £1.2m one-off corporate covid provision to address the additional costs.

·         Corporate - prudent assumptions when setting the 2023/24 budget and a reduction in the numbers that had claimed council tax reduction compared to previous years. ⁠The impact of the current treasury management policy meant that it was possible to avoid external borrowing and therefore associated capital costs. Underspend on other budgets was assisting to alleviate the additional pressure in terms of the national increase to the salaries of Local Government employees, which was confirmed in November.

 

It was anticipated that the Council's reserves would have to be used to fund the £8.1 million anticipated for 2023/24. Despite being premature to transfer money from funds until the financial situation is final at the end of the year, it was reported that the intention was to recommend to the Cabinet to approve using £3.8m of the Post-Covid Recovery Arrangements Fund with the rest to be budgeted from the Council's Financial Strategy along with approving a transfer of £4,241k of underspend on corporate budgets to the Council's Financial Strategy Reserve Fund.

 

During the ensuing discussion, the following observations were made by members:

·         The report did not convey good news - the situation reflected the pressures on each Department by now.

·         There were references to undertaking reviews, e.g., a review of overspending in the Adults, Health and Well-being Department, a strategic review of transport in the Field of Education and implementing a WRAP review in the field of Waste. ⁠A concern regarding the lack of a timetable to report back on the results of these reviews; eager for the Cabinet to press for a timetable where appropriate. 

·         Information was required regarding the brief and shape of the reviews above and whether engagement and consultation had occurred.

·         Did the national grants arrangements mean that the Council depended on this money and, as a result, spent the revenue budget on fields that did not necessarily correspond to the Council's priorities. Was it possible for the Cabinet to consider the imbalance of grants use. 

·         Concern about the sustainability of the situation; this level of overspending could not continue in the long-term. 

 

In response to the comments, the Head of Finance Department noted, in the context of the Adults, Health and Well-being Department review, that it was not a huge review about the Department's spending, but a series of smaller reviews that focused on specific fields. He reiterated that an application had been made for further details of where there was overspending in some of the departments.

 

In the context of grant arrangements, he noted that there was a finding of "micromanagement" by the Government of the Local Authorities' work, but that there was a plan in place to bring more grants to the settlement, so that the Authorities had more flexibility to prioritise. He reiterated that revenue bids being presented whilst setting the budget for 2024 - 2025 more or less regarded getting to grips with overspending, except for a few applications related to the Digital Plan. He also noted that the bids had been subject to detailed challenging by the Chief Executive and the Corporate Directors to ensure that they dealt with genuine cases of lack of budget, and not failure of managing the budget.

 

RESOLVED:

 

·         To accept the report on the end of November 2023 review of the Revenue Budget.

·         To consider the latest financial position regarding the budgets of each department / service.

·         To note that significant overspend was anticipated in the Adults, Health and Well-being Department, the Children and Supporting Families Department, and the Highways, Engineering and YGC Department this year.

·         To agree with the recommendation to Cabinet (23-01-24) to approve a transfer of £4,241k of underspend on corporate budgets to the Council's Financial Strategy Reserve.

 

Note: The Cabinet is requested to,

·         consider the timetable for the Adult Health and Well-being Department's overspend review and the Environment Department's overspend review (Integrated transport issues)

·         consider the imbalance in the use of grants.