Agenda item

September 2022/23 Financial Monitoring Report

Report from the Strategic Director for Finance and Customer Services.

Recommendations:

That Cabinet:

1. Note the current General Fund Revenue Budget forecast overspend of £18.2m.

2. Note that actions will continue to be taken to reduce the overspend position but that it is likely that the Council will need to draw on its reserves to balance the 2022/23 financial position.

3. Note the updated Capital Programme.

4. Approve the proposed use of the Market Sustainability and Fair Cost of Care Fund.

5. Approve the proposed use of the Homelessness Rough Sleepers Initiative Grant.

Minutes:

Consideration was given to the report which set out the financial position as at the end of September 2022 and was based on actual costs and income for the first 6 months of 2022/23 and forecast for the remainder of the financial year.

Members noted that financial performance was a key element within the assessment of the Council’s overall performance framework and was essential to achievement of the objectives within the Council’s Policy agenda. The report was the third in a series of monitoring reports for the 2022/23 financial year which would continue to be brought forward to Cabinet on a regular basis.

As of September 2022, the Council currently estimated an overspend of £18.2m for the financial year 2022/23. Whilst the core Directorates’ services had a forecast year end overspend of £8.1m on the General Fund, there was £10.1m of estimated unbudgeted cost resulting from the wider financial impact of the war in Ukraine, inflation, energy price increases and the impact of the 2022/23 pay award; costs that the Council could not have projected within its Medium Term Financial planning. These additional financial challenges had been factored into the current forecast following a review of the impact of these pressures on the current year and Medium Term Financial Planning.

Whilst the energy price rises and inflation would impact the Council’s costs in the provision of services, there would be some mitigation in future years by increased core funding as business rates income was indexed to the rate of inflation. This position could change should Government announce changes to the funding of local authorities or if Government did not provide inflation uplifts in line with the Council’s assumptions. Government had provided a Budget announcement on the 17th November, after publication of the report and as such, the impact of the announcement could not be factored in.

It was currently expected that the period of high inflation would last for around 2 years before returning to a more normal level but the cost increase being experienced would raise the base cost of services on which future inflation was applied meaning a compounding impact. Work was underway to understand the impact of the Government’s energy support package for councils on the current financial year.

As such the Council faced significant financial pressures that would need to be managed and mitigated through the Medium Term Financial Strategy and through significant use of the Council’s reserves. Whilst there were demands nationally for additional support to the public sector to address the uncontrollable cost increases, it was not currently expected that additional funding would be provided to local authorities as part of the financial settlement for 2023/24.

The Leader explained that councils everywhere were facing budget pressures as many factors were outside of the control of local authorities. Additional costs relating to placement pressures within Children and Young People’s Services, Home to School Transport pressures within Regeneration and Environment and CYPS and pressures relating to the longer term recovery from Covid-19 were also highlighted. The Leader stated that the Autumn Statement from Government did not provide the level of support required but there was some financial resilience in the level of reserves. It was expected that at some point, holes in the budget would have to be addressed and it was important to be clear about that.

Paragraphs 2.45-2.49 of the report submitted provided details on the Market Sustainability and Fair Cost of Care Fund 2022 to 2023. Rotherham had received £908k, 75% of this was expected to be allocated to increase fee rates paid to providers in scope, where necessary, and beyond pressures funded by the Local Government Finance Settlement 2022/23. Up to 25% could be used to fund implementation activities associated with meeting the fund purpose. It was proposed that £37k would be used to support additional posts that were recruited to undertake the work and the remainder of the available fund be apportioned (as a one-off payment) between Older People’s Care Homes and Home Care providers.

Paragraphs 2.50-2.54 of the report submitted provided details on the Homelessness Rough Sleepers Initiative Grant Funding 2022-25. Rotherham Council would receive £1,250,260 over the 3 year term. It was proposed that £513,213 of the funding would be used for the procurement of an 8 bed Emergency Accommodation Hub developed by the Council in response to the Rough Sleepers Initiative in 2019.

An update on the Capital Programme finances was set out in Paragraph 2.56 of the report submitted. The Capital Programme 2022/23 totalled £173.847m split between the General Fund £130.575m and Housing Revenue Account £43.272m. This was a decrease of £14.291m to the position as at the end of July reported to Cabinet on 19th September, 2022.

This report had been considered by the Overview and Scrutiny Management Board as part of the pre-decision scrutiny process. The Board fully supported the recommendations.

Resolved: