Agenda item

Report of the Strategic Director of Finance and Customer Services

Cabinet Member:     Councillor Alam

Commissioner:         Myers (in advisory role)

Recommendations:-

That Cabinet:

·           Notes the current 2016/17 forecast overspend of £1.775m, after management actions and the allocation of additional in year budget. (Paragraph 3.1)

·           Notes and endorses the specific actions being implemented to challenge planned spend between now and the end of March to reduce the forecast overspend and minimise the call on reserves. (Paragraph 2.7)

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

·           Notes that a detailed Dedicated Schools Grant (DSG) High Needs Sufficiency Strategy and Financial Plan to address funding and provision will be discussed and consulted upon at the 13^th January 2017 Schools Forum meeting. (Paragraph 3.16)

·           Recommends to Council the inclusion of the following schemes in the 2016/17 Capital Programme (paragraphs 2.13):

o    Capitalisation of Building Repair and Maintenance Costs - £157,000

o    Capitalisation of costs relating to Pit House West - £85,000

o    Capitalisation of Grass Cutter - Rother Valley Country Park - £35,000

·           Recommends to Council the approval of changes to budgets identified in Appendix 3 for projects which are already included in the Approved Capital Programme.

·           Notes the position in respect of the Mid-Year Treasury Review and recommends that Council approves the changes to the 2016/17 prudential indicators.

Consideration was given to the latest report which set out the financial position for both the Revenue Budget and the Capital Programme at the end of November and was based on actual costs and income for the first eight months of the financial year and forecast costs and income for the remaining four months of 2016/17.

The revenue position, before adjusting for the additional budget allocation approved by Council on 7^th December, showed a forecast overspend of £9.623m after currently identified management actions. The additional in year budget approval had reduced the forecasted overspend down to £1.775m, however, this additional budget approval had to be funded and the extent to which in year revenue spend across the whole Council could not be reduced, would inevitably impact the Council’s reserves and future financial sustainability.

The Council report approved additional in-year funding to address pressures, predominantly in Children’s Services (£7.848m) and £608k for new investments for Adults, Children’s and Corporate Services which would enable the delivery of significant savings in future years. The report also approved additional funding for 2017/18 of £11.005m which would be built into the Medium Term Financial Strategy and specific budget plans for next year.   

There was also a significant forecast overspend (£5.505m) on the Dedicated Schools Grant (DSG) High Needs Block. This was a forecasted increase of £4.5m in an eight month period. Whilst this did not affect the Council’s financial position directly at this time it was imperative that the recovery strategy reported in September Financial Monitoring Report to Cabinet was implemented in order to address this position and avoid any risk to the Council in the future.

The report showed the detailed reasons for forecast revenue under and over spends by Directorate after management actions which have/were already being implemented and which also included extensive controls with monthly budget challenging meetings, the Workforce Management Board which scrutinised all requests for recruitment etc. and was chaired by the Assistant Chief Executive, management of procurement spend and deep dives into unspent budgets.

The Capital Programme was currently on target to deliver within the overall approved budget and the report provided a detailed update and sought support to recommend to Council the inclusion of £277k costs capitalisation in the 2016/17 programme and the re-profiling of some approved budgets to reflect revised timescales for project delivery.

The report also detailed the revisions to the regulatory framework of treasury management during 2009 which introduced a requirement that the Council receive a mid-year treasury review, in addition to the forward looking annual treasury strategy and backward looking annual treasury report required previously.  The review informed on performance against the plan and included key messages on investments, borrowing and governance, which was monitored by the Audit Committee.

The Leader asked for Directorates/Cabinet Members to report on some of the pressures they were facing and the corporate mitigating actions being taken, but similar to other Local Authorities across the country Rotherham was facing overwhelming pressures in Adult Social Care.

The Cabinet Member for Adult Social Care and Health and Strategic Director confirmed pressures on Adult Social Care was a national issue due to underfunding by the current Government.  The main pressures included direct payments, which saw 180 new clients during 2015/16 and a further 86 since April, 2016.  Linked to this were demographic pressures, an increase in the aging population in Rotherham, living with frailties and the high cost of placements.

The work being done was excellent with officers looking carefully at high cost packages, monitoring closely demographic pressures, weekly budget meetings looking at current pressures and spending levels, scrutiny and challenge of assessments and spending decisions authorised by Heads of Services or above only.  All this action meant the transformational programme was on hold while the overspends were being dealt with.

The National trend was outlined and Rotherham’s frailty had been exposed over the last few weeks at the hospital with patients staying longer in hospital and replicated in the community.  An in-depth analysis of the aging cohort over the next few months would give a clearer and transparent picture of charges that may be faced.  Working to obtain best value and challenge to managed accounts could lead to a further reduction in spend.   Another area to be robustly challenged was continuing health care which could unlock some disputed packages over next few months. 

The Directorate were not under-estimating the challenges being faced and which had led to contact being made with the recently retired Director, now working with the LGA, from one of the three only underspent Departments for Adult Social Care nationally to see if he could offer support from a different perspective and bring real positive intelligence into Rotherham.

The Deputy Leader with responsibility for Children and Young People’s Services and the Strategic Director confirmed there were three things which impacted on the demand for children in care.  Firstly,  the improving practice for taking action earlier for children at risk, secondly, the use of agency staff, which was currently at 18% and nationally 16%; and thirdly, a number of ongoing CSE investigations which required additional social work support.

Action was being taken which included the moratorium on non-essential spend, scrutiny of all requests for children deemed wanting local authority care, reviewing all existing placements to get value for money, children placed for adoption quickly where appropriate, reunifying birth families where appropriate, implementing the Sufficient Strategy by recruiting foster care families closer to Rotherham and investing in improvements so that children could remain at home to achieve better outcomes where it was safe to do so.

Further information was provided on workforce statistics with the reported vacancy rate for social workers which was at 17% nationally and in Rotherham at 10%.  The latest recruitment round was excellent with people wanting to come to work in Rotherham.

The Dedicated Schools Grant was being managed separately and the £5 million overspend on the High Needs Block needed to be addressed with school partners where there was a higher proportion of SEN, the increasing trend on the numbers of children excluded thus requiring high quality alternative provision and working with the CCG to ensure there was appropriate provision locally for children with complex needs.  Work was taking place with the Rotherham Schools’ Forum on a strategy that would tackle this over the next few years.

The Strategic Director for Regeneration and Environment described the managed process approach to assist in managing the overspends and underspends where this could be achieved.  There was robust challenge at management team level, a planned management process in place, key reviews taking place which could impact on potential service delivery and deliver savings in the future.  There were also some key challenges which could not be ignored particularly around Planning and Building Control, ongoing problem with winter maintenance which was weather dependent,  street scene and home to school transport which was demand led.  There was an overall fleet review plan of action which could reduce the liability over future years.  Whilst there were some underspends it was not without its challenges to assist in the overall budget balance to Council.

The Strategic Director for Finance and Customer Services also confirmed the Directors of Finance and Customers Services and Assistant Chief Executive, which were primarily staffing budgets were both underspending overall and the majority of this related to vacancies.

In terms of the wider corporate measures work was taking place through into year end and final accounts and consideration given to where revenue spend could be capitalised.

Actions and delivery of the capital programme had seen some slippage which helped free up resources.  The 2016/17 budget had a £2m set aside from capital receipts and intended to be used for any redundancy costs required.  Not all this figure was required and thus freed up some of the resources to fund transformation revenue spend. In addition, the capital receipts received was greater than £2 million, which would feed into the MTFS for next year as part of the finalisation of the budget proposals. 

The Leader of the Council briefly summarised information shared which included the pressures on social care in Councils across the country, identified the impact on austerity across the board, the need to prioritise the most vulnerable people in the community and the challenges on the delivery of priorities for the people of Rotherham in a difficult and financial context.

Resolved:- 

Revenue

1.      That the current 2016/17 forecast overspend of £1.775m, after management actions and the allocation of additional in year budget. (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 and minimise the call on reserves (Paragraph 2.7) be noted and endorsed.

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

4.      That a detailed Dedicated Schools Grant (DSG) High Needs Sufficiency Strategy and Financial Plan to address funding and provision will be discussed and consulted upon at the 13^th January, 2017 Schools Forum meeting (Paragraph 3.16) be noted.

Capital & Mid-Year Treasury Review

5.      That Council be recommended to include the following schemes in the 2016/17 Capital Programme (paragraphs 2.13):-

o      Capitalisation of Building Repair and Maintenance Costs - £157,000

o      Capitalisation of costs relating to Pit House West - £85,000

o      Capitalisation of Grass Cutter - Rother Valley Country Park - £35,000

6.      That Council be recommended to approve changes to budgets identified in Appendix 3 for projects which are already included in the Approved Capital Programme.

7.      That the position in respect of the Mid-Year Treasury Review be noted and Council be recommended to approve the changes to the 2016/17 prudential indicators.