Agenda item

Report from the Executive Director of Corporate Services.

Recommendations

That Cabinet:

1.    Note the current General Fund Revenue Budget forecast overspend of £5.9m.

2.    Note the updated position of the Capital Programme.

3.    Approve the capital budget variations as detailed in Section 2.17 of the report.

At the Chair’s invitation, Councillor Alam OBE, the Cabinet Member for Finance and Community Safety reported that, as of July 2026, the forecast outturn position was an overspend of £5.9m, comprising Directorate overspends of £10.9m offset by a projected £5.0m underspend in Central Services.

The main pressures were within Social Care, driven by increasing demand, complexity of need and market costs, and within Regeneration and Environment, where the overspend had increased by £2.9m, due to Waste and Home-to-School Transport pressures. It was noted that wider economic conditions remained uncertain, with energy and fuel costs affected by conflict in the Middle East and inflation remaining at 24.6%. The Council was expected to implement mitigating actions and was anticipated to reduce the projected overspend during the financial year.

The Service Director, Financial Services, Rob Mahon advised that the key change in the financial monitoring position was an increase in the overspend within Regeneration and Environment Services, while the position within the Social Care Directorates had remained unchanged. The £2.9m increase in Regeneration and Environment was attributed to pressures in Home-to-School Transport and Waste Services. It was noted that a significant proportion of these pressures had been mitigated through Central Services, including additional benefits from the Treasury Management Strategy and lower-than-budgeted inflationary pressures on major contracts.

The Chair invited members of the Overview and Scrutiny Management Board (OSMB) to raise questions and queries. The Vice-Chair, Councillor Bacon raised concerns regarding the scale of forecast overspends across Children and Young People's Services, Adult Care, Housing and Public Health, and Regeneration and Environment, including whether the Council remained in control of its financial position. Clarification was sought on the recovery actions being implemented, accountability for delivering those actions, and the timescales for achieving a balanced budget position.

In response, the Service Director, Financial Services acknowledged that the forecast overspend remained a significant challenge. Social Care pressures were attributed to placement demand and market conditions. Actions to address the position included the in-house residential homes programme, the Children's Services step-down programme and Adult Social Care savings initiatives. It was also noted that Central Services savings, inflation contingencies, and treasury management benefits were helping to mitigate pressures while further recovery actions were being developed.

The Executive Director of Children and Young People's Services reported that Children’s Services continued to face significant placement pressures, particularly in residential provision. Progress was being made through the residential homes programme, recruitment activity, and placement reviews to ensure children were supported in the most appropriate settings. The forthcoming Families First programme was also expected to strengthen preventative support for families. It was noted that these measures were beginning to reduce the overspend, although improvement would take time to be fully realised.

The Vice-Chair raised concerns regarding the effectiveness of the waste collection strategy, including the reasons for the reliance on hire vehicles and whether delays in introducing greener replacement vehicles had contributed to the Regeneration and Environment overspend.

In response, the Chair noted that a further report would be presented on this topic at the next meeting. The Executive Director of Regeneration and Environment, Andrew Bramidge reported that increased waste service costs were primarily due to the continued use of hire vehicles and agency staff, although overall service performance had remained strong. It was noted that procurement of the replacement vehicle fleet had been completed, with new vehicles on order and expected to be delivered in spring 2027. Recruitment activity had also been accelerated to reduce reliance on agency workers through the appointment of additional drivers and loaders.

Councillor Monk asked why the report continued to reference the High Needs Stability Grant, and why the figures quoted did not appear to correspond with 90% of the Council's stated DSG deficit?

In response, the Service Director, Financial Services explained that the Council's High Needs Stability Grant allocation was affected by its participation in the Safety Valve programme and therefore did not directly equate to 90% of the reported DSG deficit. It was noted that the Council had already received substantial Safety Valve funding over previous years, with the High Needs Stability Grant effectively providing additional support through a different funding mechanism.

Members were advised that future funding beyond the end of the Safety Valve arrangement remained subject to Government confirmation, although indications suggested continued support for high needs pressures. It was further noted that the calculation methodology was complex and that additional information setting out the position and future projections could be provided to members.

Councillor Yasseen queried the ongoing reliance on Central Services underspends to offset Directorate overspends, including the source of these underspends and whether this approach was sustainable in the longer term.

In response, the Service Director, Financial Services explained that Central Services was not an operational service area but comprised budgets relating to levies, treasury management, PFIs, pensions and inflation contingencies. The underspend did not arise from services or activities being withheld but was attributable to inflation provisions not being fully required and continued treasury management savings. It was acknowledged that reliance on these savings presented an ongoing challenge, and that the associated risks were reviewed annually to determine whether such gains should remain as contingencies or be allocated elsewhere.

The Chair, Councillor Steele asked whether the 2026/27 pay award had been agreed and, if so, whether it had been fully reflected in the budget. It was reported that the 2026/27 pay award had been settled at 3.3% and that sufficient provision had already been included within the budget, meaning it did not create an additional financial pressure.

Councillor Yasseen questioned why demand in Adult Social Care and SEND appeared higher than national averages and whether the causes were being analysed. The Service Director, Financial Services and Ian Spicer, Executive Director of Adults, Housing & Public Health, advised that regular benchmarking and demand analysis were undertaken, noting that similar pressures were experienced by many comparable authorities. They added that performance reviews, external challenge, value for money assessments and checks on proportionality of support help monitor and manage demand.

In response to the Chair’s question the Executive Director of Adults, Housing & Public Health confirmed that benchmarking was undertaken against comparable councils, enabling the authority to understand differences in performance and demand.

Councillor Yasseen asked whether above-average SEND demand could indicate that children were being over-diagnosed or over-labelled. The Executive Director of Children and Young People's Services advised that the Council did not believe this was the case, noting that robust assessment and scrutiny processes were in place and that audits had not identified inappropriate diagnoses. It was further noted that the reasons for higher SEND prevalence were not fully understood and that research with a university partner was being explored.

Councillor McKiernan asked whether some of the additional demand arose from people moving into Rotherham from elsewhere, making demand harder to predict. The Executive Director of Children and Young People's Services advised that, while there was some anecdotal evidence of families moving to areas with strong services, this was not considered a significant driver of demand. It was also noted that uncertainty around future SEND reforms had contributed to increased requests for Education, Health, and Care Plans. The Executive Director of Adults, Housing & Public Health, added that changes to ordinary residence arrangements could occasionally transfer responsibility between authorities, but this was not regarded as a major factor in Adult Social Care pressures.

Councillor McKiernan asked whether the existing SEND backlog was likely to create further budget pressures over the next two to three years. The Executive Director of Children and Young People's Services advised that SEND remained a significant financial pressure and that future costs had been modelled as part of ongoing planning work. It was noted that expenditure was expected to continue rising without legislative reform, that the Safety Valve programme had provided temporary financial stability, and that uncertainty remained around the detail and timing of proposed Government reforms.

The Chair asked for an explanation of the overspend in home-to-school transport. The Strategic Director of Regeneration and Environment, advised that costs had increased due to rising numbers of pupils with Education, Health and Care Plans requiring transport, a greater need for individual travel arrangements, more pupils attending provision outside the borough, and changes made to ensure transport arrangements complied with Council policy.

In a supplementary question the Chair asked whether taxi company contracts were regularly retendered and renewed. The Strategic Director of Regeneration and Environment confirmed that transport arrangements were reviewed and renewed through a regular procurement process, with services delivered through a combination of Council-operated vehicles and contracted taxi providers.

Councillor Tinsley asked why Markets was forecasting a £0.6m overspend from income shortfalls and whether this had been accounted for during the regeneration and refurbishment programme. The Service Director for Financial Services advised that income loss during the regeneration programme had been anticipated, but the associated loss of income had not been built into the revenue budget. It was noted that project delays had extended the impact, although income was expected to improve once the new market facilities became fully operational.

Councillor Monk asked whether route optimisation in home-to-school transport had resulted in any children who previously travelled in groups requiring individual transport arrangements. The Strategic Director of Regeneration and Environment advised that he was not aware of any cases where this had occurred and explained that route optimisation was undertaken annually to identify opportunities for appropriate shared transport arrangements.

Councillor Baggaley asked how confident the Council was that the remaining £1.2m of identified savings would be delivered and whether further savings opportunities were being considered. The Service Director for Financial Services said the identified savings were considered achievable, although delivery within the current financial year could be challenging. It was noted that route optimisation, Adult Social Care savings initiatives and improvements within Country Parks and Waleswood were expected to support delivery, and that further savings opportunities would continue to be explored through the budget-setting process.

In a follow up question Councillor Baggaley asked how sustainable the Council's reliance on Central Services and treasury management savings was and requested further information on the £5m underspend. The Service Director for Financial Services advised that treasury management savings were built into the budget and reviewed annually as part of the budget-setting process. It was noted that confidence remained in achieving these savings in the current year and potentially the following year, subject to changes in economic conditions and borrowing requirements.

Councillor Alam OBE, the Cabinet Member for Finance and Community Safety stated that Cabinet were comfortable with the position, noting that the risks had been identified and were reviewed through the Council's regular budget monitoring process. The significant financial challenges arising from demand exceeding available funding were acknowledged and the importance of continuing efforts to deliver a balanced budget by year-end was emphasised.

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

1. Note the current General Fund Revenue Budget forecast overspend of £5.9m.

2. Note the updated position of the Capital Programme.

3. Approve the capital budget variations as detailed in Section 2.17 of the report.

An additional recommendation to Cabinet from OSMB was that:

4. OSMB recommend that future financial monitoring reports include updates on the delivery of overspend recovery actions, progress against savings plans, management of key financial risks, and the ongoing deliverability of the Capital Programme.

Further actions that arose from discussions were:

·       That a report be provided to OSMB setting out the underlying causes of the Home to School Transport overspend, together with the actions being taken to strengthen cost control, improve service efficiency, and mitigate future budget pressures.