Agenda item

To consider a report outlining the financial position as at the end of July 2022 and forecast for the remainder of the financial year, based on actual costs and income for the first four months of 2022/23.

Cabinet Portfolio: Corporate Services, Community Safety and Finance

Strategic Directorate: Finance and Customer Services.

The Cabinet Member for Corporate Services, Community Safety and Finance introduced the report, setting out the financial position as at the end of July 2022 and forecast for the remainder of the financial year, based on actual costs and income for the first four months of 2022/23.

As at July 2022, the Council estimated an overspend of £11.4m for the financial year 2022/23. Whilst the core directorates services had a forecast year-end overspend of £7.4m on the General Fund, there was £4.0m of estimated unbudgeted cost resulting from the wider financial impact of the war in Ukraine, inflation, energy price increases excluding the estimated impact of the 2022/23 pay award. This additional financial challenge 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 have an 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. It was expected that the period of high inflation will last for around two years before it returned to a more normal level although there this would have a compounding impact. As such the Council faced significant financial pressures that will need to be managed and mitigated through the Medium Term Financial Strategy and through significant use of the Council’s reserves. There was no indication as yet as to whether additional funding will be provided to local authorities as part of the financial settlement for 2023/24. It was noted that a budget update was expected shortly and further financial planning would take place following the announcement from the Treasury.

The Chair invited Board Members to question the report. It was noted that the report also referred to a larger overspend and sought clarification on the differential. It was noted that the pay award had not yet been agreed, however, figures would need to be revised in future reports to reflect the pressure once it had been finalised. Assurance was given that regular monitoring and planning was taking place to reflect changes and market fluctuations.

It was noted that there was a number of savings to be delivered in children services. Given the changing financial situation were these on track or was there a need to re-profile how they were to be achieved? It was outlined that careful monitoring was taking place however, it was difficult to reduce costs of placements because of demand across the country. It was noted that the Borough was one of few local authorities to reduce the numbers of children in care. Other developments included building in-house residential placements and increase regional working to manage commissioning costs.

Further clarification of the £9m overspend in relation to the market redevelopment project and what steps were being taken to ensure that it was still viable and deliver value for money for Rotherham residents. The Leader outlined that work was underway across all capital projects to examine if savings could be made without making significant changes to the service.  In terms of the market project shortfall, approximately £5m could be supported through South Yorkshire Combined Authority funding and alternative grant funding streams could be utilised for the remaining balance. While inflationary pressures were anticipated in budget setting, these were not to the same extent as now experienced. Services were being asked to identify funding from other projects which were a lower priority to enable the delivery of higher priority schemes. It was felt that the market redevelopment scheme was an important part of the wider town centre regeneration and would deliver value for money. The scheme had met all the viability requirements set out by Government to secure external funding streams from the “Future High Streets Fund” and due diligence was being satisfied.

The Chair of the Improving Places Select Commission had undertaken a focussed review of the market service and commented that current provision was reaching end of life. He reiterated the importance of the markets as part of the town centre masterplan.

Clarification was sought about the slippage in relation to fleet management costs and what mitigations were in place.  It was outlined that this was not a cost pressure but rather had not yet been spent.  It was highlighted that there had not been a robust plan in place to renew the fleet to make best use of green technologies and secure value for money. The service had been tasked to develop an action plan to identify options. It was noted that progress was likely to be made with small fleet vehicles in the first instance. A request was made for an update to be provided to scrutiny on progress.

Resolved:

1.             That Cabinet be advised that the recommendations be supported.

2.             That a further update is provided to scrutiny on the fleet management vehicle purchase project.