Agenda item

Report from the Strategic Director of Finance and Customer Services.

Recommendations:

That Cabinet:-

1.    Note the update on the revenue budget financial outturn 2024/25.

2.    Note the Council’s progress on the delivery of the Local Council Tax Support Top Up payment.

At the Chair’s invitation the Assistant Director Financial Services introduced the report, indicating that the report aimed to give members an early indication of the outturn financial position for the fiscal year 2024-2025. This preceded the more detailed July outturn report.

The December monitoring position, reported to Cabinet in February, indicated a £3.1 million overspend. Efforts were made to reduce the overspend to mitigate the call on the Council’s reserves. The final quarter of the financial year saw improvement, reducing the overspend to £0.3 million. 

·       Homelessness Spend: Reduced through re-routing and cost reduction.

·       Home to school Transport: Cost reduction through re-routing.

·       Grant Maximization: Intensive work to maximize available grants.

·       Recruitment Holding: Holding recruitment where possible and reasonable.

·       Income Generation: Improved income generation in regeneration and environment sectors.

The direct pressures amounted to £12.8 million across the main directorates, primarily as a result of demand and market cost pressures in social care, home to school transport, waste management and homelessness. A proportion of that had been mitigated by planned budget contingencies approved in the budget for 24/25 which were held within central services. They were for social care and home to school transport and totalled £6.9 million.

It was noted that significant savings were achieved through Treasury Management due to the Council's borrowing and lending policies. In terms of savings delivery, about £5 million of the £9 million plan had been delivered. This was affected by challenges in delivering CYPS savings that would carry forward into 25/26. This challenge had been alluded to in the budget setting and budget planning process and MTFS process for 25/26 to 27/28.

The report provided an update on the local Council Tax Support scheme. The scheme had been completed for 24/25 and it was underway for 25/26, with the bulk of allocations having been made but the scheme remained open for new Council Tax Support claimants.

The Chair invited members of the Overview and Scrutiny Management Board (OSMB) to raise questions and queries on the points raised earlier.

In response to a question from Councillor Blackham the Assistant Director Financial Services explained the outturn position improvement was a reduced overspend. When the budget was set for 25/26 it was indicated that the Council had overspend by £3.1 million in 24/25. That position needed an additional call from the reserves that hadn't been planned for in 24/25 of £3.1 million. That balance had been reduced to £0.3 million. So, the Council was effectively losing more reserves from the outset at the start of 24/25, but only by £0.3 million rather than £3.1 million, so it was an improved position against December's but not against the start of 24/25. The Assistant Director Financial Services responded further that in the position where the 25/26 budget was set, it was indicated that £3.1 million of reserves would be used to balance 24/25.

Councillor A Carter expressed concern about the sustainability of using reserves to cover overspends. He questioned how many more years the Council could continue this practice before reserves were depleted to the minimum legal level. The Assistant Director Financial Services explained the £6.9 million budget contingency did not come from reserves; it was planned into the budget for 24/25. It was budget allocated for the financial risk that was anticipated within social care, and home to school transport. The decision was taken to keep that in Central Services at that point in time further intensive work was undertaken to assess what could be done to address the challenges of demand in social care and the challenges on demand in home to school transport.

The 25/26 budget allocated a provision for increased budget for home to school transport now it was felt that as much as possible had been done to address some of the home to school transport pressures and as much as possible had been done to address the children’s social care pressures and adult social care pressures. Those budget contingencies in 25/26 which weren’t in reserves had been allocated to those directorates.

Councillor A Carter said his recollection of the budget setting and the Medium-Term Financial Strategy (MTFS) was that the reserves were going to dip in the next few years. It was queried what impact would the reduced overspend have on the reserves, therefore? The Assistant Director Financial Services explained that across the MTFS position, the Council was utilising reserves to support the MTFS period over the next three financial years. From their perspective this was not at a significant level. The improved outturn position would improve the position in the budget and MTFS position by £2.8 million because the Council had planned to use £3.1 million, and was now using £0.3, so would be £2.8 million better off in the reserves position at this point in time, heading into 25/26.

Councillor A Carter asked a further question noting that the reduction in the overspend was in part due to lower spend on homelessness. Could that be explained further please? The Assistant Director Financial Services explained that efforts to reduce homelessness costs included increasing temporary accommodation and investing in the team for better prevention and case management. Councillor A Carter expressed concern about the financial impact of delays in moving people from temporary accommodations to more permanent ones.  The Strategic Director for Finance and Customer Services indicated the Housing team would be able to give a more detailed response, however the full outturn report would provide more information which would be presented to Cabinet in July.

Councillor Yasseen questioned the impact of vacancy control on services and the ongoing overspend in Children and Young People Services (CYPS). The Assistant Director Financial Services estimated that approximately £0.5 million saved through this approach. This was not stopping recruiting to those posts but delaying recruitment where it was possible and reasonable to do so.

Councillor Yasseen then raised concerns about the long-term sustainability of services given the pressures of carrying overspend and not recruiting in key positions. The Assistant Director Financial Services clarified it was not a freeze on recruitment but was a focus on senior managers taking sensible decisions about generating savings to support the wider budget position. It was noted that the CYPS overspend had been a recurring issue. Efforts were ongoing to reduce costs and bring spending in line with nearest neighbours’ benchmarking. There were a number of saving programs underway in CYPS that had not yet concluded, and this was an area that was under constant review.

The Assistant Director Financial Services indicated that Council’s financial position was robust, including the Council’s reserves. The upcoming spending review could lead to adjustments in planning and approach, particularly in CYPS social care and SEND placements.

Councillor Brent highlighted section 2.1.4 of the report and asked about the difference between "without impact on services" and "without adverse impact on services" in the context of vacancy control. The Assistant Director Financial Services indicated that it would be for the service to provide more detailed information on where those staff savings had come from. It was important to note that they would not be related to safeguarding posts. There would be occasions where services could accommodate a short delay to the recruitment process. It was understood that there would be some level of impact, but it was a mitigated impact. The Chair requested follow-up information on how many vacancies were held over the last year, broken down by directorate.

Councillor Tinsley expressed concerns about the impact of holding posts on staff workload and service delivery.

Councillor McKiernan asked about the statutory requirements affecting savings targets and whether the overall budget savings were not achieved due to these requirements. The Assistant Director Financial Services indicated the Council was trying to keep to the specific projects that were set aside to deliver CYPS savings and record and track the savings delivered against those specific savings to provide an audit trail for that planned delivery of savings across CYPS. However, it was difficult to track and separate the plan savings from the wider demand and market pressures in CYPS social care.

Councillor A Carter queried if a policy could be developed to set out the Council’s approach to delaying recruitment to post. The Chair indicated it would be prudent to get the information requested earlier regarding vacancies before considering if a review into this topic should be undertaken.

Councillor Baggaley sought clarification on the Council Tax Support scheme. The Assistant Director Financial Services clarified the scheme operated in exactly the same basis as in 24/25. The only change was that the award was more significant. It went up each year and was based on clearing a Band A council tax bill. So, the £126.12 that had been used as the top up payment for £25.26 was based on clearing to nil a Band A council tax for someone who was on full local council tax support to completely reduce their bill, effectively to zero. It was felt that as the award increased each year, more individuals were accessing council tax support due to the cost-of-living crisis, leading to a growth in numbers. The overall quantum of support being provided would increase slightly for 2024/25; however, it was still within the remit comfortably of what was set aside in the budget in MTFS.

Resolved: That the Overview and Scrutiny Management Board supported the recommendations that Cabinet:

1.    Note the update on the revenue budget financial outturn 2024/25.

2.    Note the Council’s progress on the delivery of the Local Council Tax Support Top Up payment.

Further actions that arose from discussions were that:

·       OSMB requested further information from Housing detailing what work was being undertaken to determine and mitigate any potential financial impacts of any delays in moving homeless people from temporary accommodations to more permanent accommodation.

·       OSMB requested information on the number of vacancies where recruitment to those vacancies was held for a period of time, listed by directorate and the potential impacts of delaying that recruitment process.