Agenda item

September Financial Monitoring Report

Report of the Strategic Director of Finance and Customer Services

 

Cabinet Member:     Councillor Alam

Commissioner:         Commissioner Myers (in advisory role)

 

Recommendations:

 

That Cabinet:

 

·           Notes the current forecast overspend after management actions of £8.635m for 2016/17. (Paragraph 3.1)

 

·           Endorses the need for additional management actions to be urgently developed, agreed and implemented and for these to be documented in future Cabinet Financial Monitoring Reports.

 

·           Require that Directorate management actions to mitigate forecast overspends are clearly and comprehensively documented, including an evaluation of the likely financial impact of these actions (quality assured by Finance Business Partners), and a detailed implementation plan is produced which is regularly reviewed by each Directorate Leadership Team. 

 

·           Note the Recovery Plans included within this report that provide a summary of the current proposed management actions, and performance against those actions currently used to help mitigate the forecast overspend

 

·           Recommend any additional actions which could be implemented to help manage down the current forecast overspend.

 

·           Note and approve the recovery strategy for the forecast overspend on the Dedicated Schools Grant High Needs Block. (Paragraph 3.15)

 

·           Note that this report should be considered in conjunction with the Medium Term Financial Strategy (MTFS) update report elsewhere on this agenda.

 

·           Note and approve Appendix 3 which details the budget savings approved by the Council in March 2016 that are now to be delivered by other means.

 

·           Notes the current forecast outturn position on the approved Capital Programme for 2016/17 and 2017-2021. (Sections 3.57 to 3.73 and Appendix 4)

 

·           That the following projects be supported for inclusion in the Approved Capital Programme 2016/17.

o   Area Assembly – Neighbourhood Investment - £140,000 (already approved ‘in principle’ by Council on 2nd March 2016).

o   Swinton Civic Hall Refurbishment - £44,868

o   Replacement of Damaged Waste Bins - £150,775

o   Capitalisation of Cleansing Equipment - £40,000

o   Capitalisation of GIS Transport Software - £25,000

 

·           That Council be recommended to include the above schemes in the Approved Capital Programme.

 

·           That Council be recommended to approve the changes to budgets identified in Appendix 6 for projects which are already included in the Approved Capital Programme.

 

Minutes:

Consideration was given to a report which set out the financial position at the end of September and was based on actual costs and income for the first six months of the financial year and forecast costs and income for the remaining six months of 2016/17.

 

The current position showed a forecasted revenue overspend of £8.635m after currently identified management actions totalling £3.781m. These management actions were further detailed within recovery plans included as Appendix 2 to this report, and would enable the Council to meet the current forecast outturn position.  They were not, however, expected to further reduce the current forecast overspend, for this to happen additional management actions/recovery plans would need to be explored and developed to further reduce the projected overspend within Children & Young People’s Services and Adult Care & Housing; and additionally to further improve the balanced or forecast underspend position within the remaining Directorates.

 

This forecast overspend was set against a backdrop of the Council successfully delivering savings of £117m over the last five years and having to save a further £21m in 2016/17.  The majority of the approved budget savings for 2016/17 were being achieved, the main exception being the £1 million saving from the review of staff terms and conditions of employment agreed by Full Council in March which would not now be delivered in the expected timescales in 2016/17. Further work was in train to bring forward options for consideration in due course as there is a further £1m to be achieved within 2017/18 (£2m full year effect). 

 

The key pressures contributing to the current forecast overspend were:-

 

·                The continuing service demand and agency staffing cost pressures for safeguarding vulnerable children across the Borough and the strengthening of Social Work and management capacity; and

 

·                Demand pressures for Direct Payments and Managed Accounts, Residential and Domiciliary Care across all Adult client groups.

 

All Directorates continued to identify and implement additional management actions to further mitigate the forecast overspend and to tightly control spend until the end of March, 2017. A further report would be submitted to Cabinet in December updating on the progress made to address the specific pressures in the demand-led services and to accelerate the Council’s improvement activity in order to bring spending further in line with budget as soon as possible.

 

There were a number of investment proposals outlined with the MTFS update report (elsewhere on this agenda), which subject to their approval, would help to ensure that the current year forecast outturn position could be delivered.  Due to the timing of their approval, and time taken to implement, they were expected to have a limited impact on improving the current in year position. Although they were not expected to reduce the current forecast overspend any further for 2016/17, they would enable significant savings to be achieved from 2017/18.

 

There was also a significant forecast overspend (£4.830m) on the Dedicated Schools Grant (DSG) High Needs Block. This was a forecast increase of £3.8m in a six month period. Whilst this did not affect the Council’s bottom line directly it was imperative that a recovery strategy was developed in order to address this position. This recovery strategy had now been produced and was detailed within this report.

 

In response to reduced Government funding, the Council needed to reduce its net spending by around £42m over the next three years with at least £13m of that falling in 2017/18.  Should the current level of overspending continue or additional budget be required for any parts of the Council, the required overall budget reduction next year would be higher to that effect and would have to be identified from the remaining Council services.  Whilst the Council held sufficient reserves to accommodate unexpected events they were not sufficient to support ongoing service overspending.  Therefore, if overspending were to continue at this level, urgent and drastic action could become necessary which would inevitably impact directly on the citizens of Rotherham.

 

Appendix 1 to this report showed the detailed reasons for forecast under and overspends by Directorate after management actions which have/are already being implemented.

 

The Capital Programme was currently on target to deliver within the approved budget for 2016/17. 

 

Councillor Yasseen, Cabinet Member for Neighbourhood Working and Cultural Services, welcomed the neighbourhood investment into Area Assemblies which should have an impact on community priorities.  Evaluation of the impact this funding had made would be captured and monitored.

 

Resolved:-

 

1.         That the current forecast overspend after management actions of £8.635m for 2016/17. (Paragraph 3.1) be noted.

 

2.         That the need for additional management actions to be urgently developed, agreed and implemented and for these to be documented in future Cabinet Financial Monitoring Reports be endorsed.

 

3.         That Directorate management actions to mitigate forecast overspends be clearly and comprehensively documented, including an evaluation of the likely financial impact of these actions (quality assured by Finance Business Partners), and a detailed implementation plan be produced which is regularly reviewed by each Directorate Leadership Team. 

 

4.         That the Recovery Plans included within this report, that provide a summary of the current proposed management actions, and performance against those actions currently used to help mitigate the forecast overspend, be noted,

 

5.         That any additional actions be recommended which could be implemented to help manage down the current forecast overspend be noted and approved.

 

6.         That the recovery strategy for the forecast overspend on the Dedicated Schools Grant High Needs Block (Paragraph 3.15) be noted and approved.

 

7.         That this report should be considered in conjunction with the Medium Term Financial Strategy (MTFS) update report, elsewhere on this agenda, be noted.

 

8.         That Appendix 3, which details the budget savings approved by the Council in March 2016, that are now to be delivered by other means, be noted and approved.

 

9.         That the current forecast outturn position on the approved Capital Programme for 2016/17 and 2017-2021 (Sections 3.57 to 3.73 and Appendix 4) be noted.

 

10.      That the following projects be supported for inclusion in the Approved Capital Programme 2016/17.

 

·                Area Assembly – Neighbourhood Investment - £140,000 (already approved ‘in principle’ by Council on 2nd March 2016).

·                Swinton Civic Hall Refurbishment - £44,868

·                Replacement of Damaged Waste Bins - £150,775

·                Capitalisation of Cleansing Equipment - £40,000

·                Capitalisation of GIS Transport Software - £25,000

 

11.      That Council be recommended to include the above schemes in the Approved Capital Programme.

 

12.      That Council be recommended to approve the changes to budgets identified in Appendix 6 for projects which are already included in the Approved Capital Programme.

Supporting documents: