Agenda item

Report from the Strategic Director of Finance and Customer Services.

Recommendations:

That Cabinet:

1.    Note the current General Fund Revenue Budget forecast overspend of £4.6m.

2.    Note that actions will continue to be taken to reduce the overspend position but that it is possible that the Council will need to draw on its reserves to balance the 2024/25 financial position.

3.    Note the updated position of the Capital Programme, including proposed capital programme variations to expenditure profiles and funding.

Consideration was given to the report which set out the financial position as at the end of November 2024 and forecast for the remainder of the financial year, based on actual costs and income for the first eight months of 2024/25. Financial performance was a key element within the assessment of the Council’s overall performance framework and was essential to the achievement of the objectives within the Council’s policy agenda. To that end, this was the fourth financial monitoring report of a series of reports for the current financial year which would continue to be brought forward to Cabinet on a regular basis.

As at November 2024, the Council estimated an overspend of £4.6m for the financial year 2024/25. This was largely due to demand led pressures on children’s residential placements, adults social care packages, home to school transport and the impact of the Local Government Pay Award. In addition, the Council was still impacted by the inflationary pressures in the economy. Even though inflation had fallen to 2.3% (albeit an increase from 1.7% in October), the Council’s base costs had significantly increased across the recent high inflation period by well in excess of 20%. Increased costs across this period were also being felt by the social care market, in particular leading to market prices increasing at above inflation levels and placing further pressures on the Council’s Budget.

Whilst the Directorate overspend which stood at £15.5m was concerning, it had reduced from a peak of £17.2m and elements of this overspend were forecast with two key Budget contingencies created as part of setting the Council’s Budget and MTFS for 2024/25. The Council had set a Social Care Contingency of £3.4m and a Corporate Budget Provision of £3.5m to support anticipated pressures across Social Care and Home to School Transport, whilst detailed review work of these services was undertaken, and operational improvements were delivered to reduce cost pressures and create cost avoidance.

The Council’s Treasury Management Strategy continued to perform well with the Council’s approach to borrowing adapted to minimise the level of borrowing and borrow short term, to ultimately minimise interest costs. It was estimated that this should see the Council generate savings of at least £4m for 2024/25, though again market conditions were out of the Council’s control.

As a result of the corporate provisions and savings, an underspend of £10.9m was forecast within Central Services bringing the Councils net overspend down to £4.6m, an improvement of £0.7m since the last Cabinet report. Although the £15.5m Directorate overspend was significantly mitigated, the residual pressure would need to be addressed in year by the Council to prevent further use of reserves. As such, Directorates continued to develop in year budget recovery plans and identify actions and opportunities to reduce the current overspend position. Further corporate operational budget controls had been implemented to assist with reducing the overspend position.

Looking ahead to 2025/26, the financial environment looked more positive for Councils with new funding announced within the Autumn Statement and Policy update. The new Government had declared that they would provide a further one-year settlement for 2025/26 with the aim of bringing in longer term financial settlements thereafter.

The report was considered by the Overview and Scrutiny Management Board (OSMB), who advised that the recommendations be supported.

Resolved:

That Cabinet:

1.    Note the current General Fund Revenue Budget forecast overspend of £4.6m.

2.    Note that actions will continue to be taken to reduce the overspend position but that it is possible that the Council will need to draw on its reserves to balance the 2024/25 financial position.

3.    Note the updated position of the Capital Programme, including proposed capital programme variations to expenditure profiles and funding.