Agenda item

Report from the Strategic Director of Finance and Customer Services.

Recommendations:

That Cabinet:

1.    Note the current General Fund Revenue Budget forecast overspend of £4.6m.

2.    Note that actions will continue to be taken to reduce the overspend position but that it is possible that the Council will need to draw on its reserves to balance the 2024/25 financial position.

Consideration was given to the report which set out the financial position as at the end of May 2024 and forecast for the remainder of the financial year, based on actual costs and income for the first two months of 2024/25. 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. To that end, this was the first financial monitoring report of a series of reports for the current financial year which would continue to be brought forward to Cabinet on a regular basis.

As at May 2024, the Council currently estimated an overspend of £4.6m for the financial year 2024/25. This was largely due to demand led pressures on children’s residential placements, adults social care packages and home to school transport. In addition, the Council was still impacted by the inflationary pressures in the economy, even though inflation had fallen to 2.3%, the Council’s base costs had significantly increased across the recent high inflation period. Increased costs across this period were also being felt by the social care market in particular. This was leading to market prices increasing at above inflation levels, placing further pressures on the Council’s Budget. Early indications also suggested that the Local Government Pay Award would be higher than anticipated when setting the Council’s Budget; the Council had no control over the level of pay award agreed.

The Directorate overspend stood at £14.5m which was concerning. However, elements of the overspend were forecast and two key budget contingencies were created as part of setting the Council’s Budget and Medium Term Financial Strategy for 2024/25. The Council set a Social Care Contingency of £3.4m and a Corporate Budget Provision of £3.5m to support anticipated pressures across Social Care and Home to School Transport, whilst detailed review work of these services was undertaken, and operational improvements were delivered to reduce cost pressures and create cost avoidance.

The Council’s Treasury Management Strategy continued to perform well with the Council’s approach to borrowing adapted to minimise the level of borrowing and borrow short term to ultimately minimise interest costs. This position had also improved due to the re-profiling of the Capital Programme delivery, which pushed back the need to borrow. It was estimated that this approach should see the Council generate savings of at least £3m for 2024/25, It was noted that market conditions were however out of the Council’s control. As a result of those corporate provisions and savings, an underspend of £9.9m was forecast within Central Services bringing the Councils net overspend down to £4.6m.

The Leader confirmed that there would be challenges ahead and that would require financial discipline from the Council.

Resolved:

That Cabinet:

1. Note the current General Fund Revenue Budget forecast overspend of £4.6m.
   
   
2. Note that actions will continue to be taken to reduce the overspend position but that it is possible that the Council will need to draw on its reserves to balance the 2024/25 financial position.