Agenda item

Report of the Strategic Director of Finance and Customer Services

Cabinet Member:    Councillor Alam

Commissioner:        Myers (in advisory role)

Recommendations:-

1.           Notes the current forecast overspend after management actions of £9.319m for 2016/17. (Paragraph 3.1)

2.           Notes and endorses the specific actions being implemented to challenge planned spend between now and the end of March to reduce the forecast overspend. (Paragraph 2.10)

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

4.          Notes that a recovery strategy for the forecast overspend on the Dedicated Schools Grant High Needs Block has been developed and that options for consultation on the overspend will be taken to Schools Forum on the 9^th December with a view to agreeing a way forward at their January meeting. (Paragraph 3.12)

5.          Subject to Council’s approval of the funding allocation as detailed in the MTFS update report on 7^th December, approve that the currently unallocated (one-off) Social Care Contingency budget (£1m) be allocated to Adult Social Care. (Paragraph 3.37)

6.          Notes that a capital grant funding bid has been made to the Sheffield City Region in respect of the A618 Growth Corridor.  Cabinet are asked to recommend to Council that this project be added to the 2016/17 Capital Programme, in the event of the bid being successful. (Paragraph 3.43).

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

The current position showed a forecast revenue overspend of £9.319m after currently identified management actions totalling £3.968m.  There was also a significant and increasing overspend on the Dedicated Schools Grant which had now reached £5.393m.

Cabinet on 14^th November, 2016 considered a Medium Term Financial Strategy (MTFS) update report which sought approval for additional in-year spending of up to £8.456m. This was considered and agreed by Full Council on 7^th December, 2016.  £8.149m of this was spending which was already being incurred in order to address significant pressures predominantly in Children’s Services whilst £307k of it was for new spending on investments in both Children’s and Adults Social Care. 

The spending on pressures was outside of the approved budget set by Council in March and it was important that this be approved and funding identified.  The forecast overspend would reduce by up to £8.149m and would reduce the current forecast overspend of £9.319m to £1.170m.

Whilst the reported figures would be more favourable, this was still spending of Council resources that was not planned for at the beginning of the year and that had to be funded from elsewhere.  Financial plans were being developed to identify the most appropriate funding mechanisms, but at the present time it should be assumed that, to the extent that the newly implemented spending controls were unable to fully mitigate the forecast overspend, the funding would need to come from the Council’s reserves.

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 2016/17. Further work was in train to bring forward options for consideration in due course and there was a further £1m to be achieved within 2017/18 (£2m full year effect). The non-delivery of this saving was reflected in the forecast outturn in this report. 

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.

Actions were essential if the Council was to bring spending further in line with the original budget as soon as possible and minimise the use of reserves. All actions implemented would have due regard for the safeguarding of vulnerable children and adults, the needs of clients and the potential impact on the citizens of Rotherham.

There was also a significant forecast overspend (£5.310m) on the Dedicated Schools Grant (DSG) High Needs Block. This was a forecast increase of £4.3m in a seven month period. Whilst this did not affect the Council’s bottom line directly it was imperative that the recovery strategy reported in last month’s Financial Monitoring Report to Cabinet was implemented in order to address this position. Options for consultation regarding addressing the High Needs overspend were taken to Schools Forum on the 9^th December, 2016 with a view to agreeing a way forward at their January meeting.

Resolved:-

1.          That the current forecast overspend after management actions of £9.319m for 2016/17. (Paragraph 3.1) be noted.

2.          That the specific actions being implemented to challenge planned spend between now and the end of March to reduce the forecast overspend. (Paragraph 2.10) be endorsed and noted.

3.          That any additional actions be recommended which could be implemented to help manage down the current forecast overspend.

4.          That a recovery strategy for the forecast overspend on the Dedicated Schools Grant High Needs Block had been developed and it be noted that options for consultation on the overspend would be taken to Schools Forum on the 9^th December with a view to agreeing a way forward at their January meeting (Paragraph 3.12).

5.          That, subject to Council’s approval of the funding allocation as detailed in the MTFS update report on 7^th December, the currently unallocated (one-off) Social Care Contingency budget (£1m) be approved and allocated to Adult Social Care (Paragraph 3.37)

6.          That it be noted that a capital grant funding bid had been made to the Sheffield City Region in respect of the A618 Growth Corridor and should the bid be successful Council consider adding this to the 2016/17 Capital Programme (Paragraph 3.43).