Agenda item

To receive a report of the Strategic Director of Finance and Customer Services that provides an update to Cabinet on a number of financial matters.

Recommendations

1.             That the update on the revenue budget financial outturn 2023/24 be noted.

2.             That the Councils progress on the delivery of the Local Council Tax Support Top Up payment 2024/25 be noted.

3.             That the Councils delivery of the Household Support Fund 2023/24 be noted.

4.             That provisional allocations of the Household Support Fund Grant 2024/25 of £2.489m be agreed as detailed in Section 2.5 of this report. 

5.             That Cabinet delegate authority to the Assistant Chief Executive in consultation with the Cabinet Member for Social Inclusion, to determine revised and final allocations for the Household Support Grant to include provision for other eligible actions within the use of Household Support Fund should it not be possible to achieve full spend of the grant through the approved provisional allocations.

6.             That Cabinet approve the capital budget variations as detailed in Section 2.6 of the report.

At the Chair’s invitation Rob Mahon, Assistant Director for Financial Services introduced the report, noting that the main purpose of the update was to give the headline outturn position for the 2023-2024 financial year. This was ahead of a more detailed outturn report that would be submitted to the July Cabinet meeting, which would detail the specifics around the directorate overspend and underspend and provide a more detailed update regarding the reserves position of the Council. 

It was worth noting the reported overspend for the Council was at £1.2m at the position for December 2023’s monitoring reported to February 2024’s Cabinet as part of the budget and Council’s report setting process for 2024-25. At that point it was indicated that the Council would try to reduce the overspend position by identifying any potential savings, cost reductions, maximisation of grand funding that it would receive between December and March. Due to that work and to ongoing maximisation of grants, the final outturn position was reduced down to £0.1m. The report covered this by directorate.

Overall, some of the key messages was the directorate overspends were £8.8m across, in particular Children and Young People’s Services (CYPS) and Regeneration and Environment (R&E) with the main pressures being CYPS placements, home to school transport and catering. These were offset by £8.7m savings in central services which was where the Council held the £5m budget contingency reserve and £3.7m savings from Treasury Management. That position was how the £0.1m overspend was reached.

The report covered saving progress, which was split into two key areas. The new savings that were agreed as part of the 2023-24 budget setting process. Those savings had been fully delivered and was a positive position to report in terms of savings delivery. He highlighted that they were over delivered by £54k. Where a savings programme had been identified, the Council would continue to try to over-deliver on those.

He then provided an update on the old savings that had been carried forward and re-profiled as part of the Council’s budget for 2023-24 and 2024-25 and the Medium-Term Financial Strategy (MTFS) Update. Those savings were rolled forward into 2023-24. The updated reported the Council was still behind on some of the CYPS savings in placements, which had been discussed as part of the monitoring reports that had been presented to OSMB and Cabinet. There would be work to do in 2024-25 to continue the delivery of the savings but these were reported through the monitoring reports and the outturn report and through the Statement of Accounts as well to ensure the current position was as robust and clear as possible.

The report also included an update on progress on the local Council Tax support top-up scheme for 2024-25, which was agreed as part of the Council’s budget. The scheme had been launched and residents were receiving that support. A progress updated on the Household Support Fund 2023-24 and the proposals for how the Council would use the 2024-25 Household Support Fund which would only run for six months to September 2024-25. The later part of the report listed a number of capital variations, which included minor adjustments to a couple of highways schemes.

Councillor Marshall asked that acronyms be explained in any tables within the report to provide clarity. The Assistant Director for Financial Services said the tables for future reports would be adjusted accordingly.

Councillor Yasseen queried why the Leader, the Chief Executive, or the Cabinet Member were not in attendance to present the report. She also expressed concerns that the repeated overspend in CYPS year on year which were not being resolved or meeting the savings requirements which was undermining the whole. She noted that all of the other directorates could meet their savings targets, but the budget would still be overspent overall because CYPS was not achieving its savings. She noted that various measures were in place to address this, but these were not on target and asked when the savings put in place a number of years ago would be achieved.

The Chair clarified that the Cabinet Member, Councillor Alam had given his apologies to him personally, which was why he was not in attendance.

The Assistant Director for Financial Services understood the concern regarding CYPS not delivering the savings however in terms of CYPS placements he clarified that the number of placements were decreasing so the demand was reducing. From a finance perspective in terms of considering the budget and the MTFS it felt like things were heading in the right direction although this was slower than projected during budget planning. He indicated the challenge that CYPS faced was the placement mix along with the complexity of the placement. He explained that the number of children placed with external residents was still higher than projected so the key challenge for the Council was to move from the current placement mix of high-cost external residential placement to our in-house programme, which were more efficient placements. The in-house programme was a little behind due to challenges getting the right properties and once those were in place setting them up to be a live in-house residential property. Whilst the Council could move in the right direction to address demand and get the right placement mix, having one child with complex needs could adversely affect the budget position.

The Chair noted that every children’s service in the country overspent, and it did have an effect on the Council’s budget, and it was up to Cabinet to manage those impacts.

The Cabinet Member for Children and Young People Services provided some context around the profile and further direction of the budget, noting that it did not take into account unaccompanied asylum-seeking children. Whilst those children were welcome in Rotherham, it was not foreseen at the point the budget profile was set. If those numbers were removed the Council had safely reduced the number of children in care. She explained that creating residential properties for children was a difficult and slow process. She highlighted that the number of foster carers being recruited and retained had increased.

Councillor Yasseen asked why budgets were being set that were not achievable as this undermined the whole budget. She also queried why the Council was setting targets for directorates that were not achievable. The Chair clarified that officers only made the budget recommendations; it was the Councillors who set the budget. The Assistant Director for Financial Services reiterated that the report was broadly presenting a balanced outturn position. It was a £0.1m overspend position so he acknowledged that CYPS was overspent but the budget for 2023-24 set out a clear strategy that would enable the Council, through the use of the budget contingency, to bring the budget back into line through assessments in the MTFS and treasury management planning where it was anticipated that the Council may be able to cover pressures it encountered through the year if the savings in CYPS were not delivered to time.  He noted that the CYPS budget was moving in the right direction and the Council did not want to lose that by increasing the budget.

Councillor McKiernan noted that the report indicated that Central Services had delivered an underspend of £8.7m and asked for further information about this. The Assistant Director for Financial Services explained that when the budget for 2023-24 was set it acknowledge the challenges in CYPS around placements and home to school transport, which would be difficult to manage in terms of demand, cost due to inflation, placement mix and market pressures. As a result of those pressures the Council allocated £5m for those pressures that were expected to be incurred throughout the year without knowing the true cost of those pressures.  A budget and contingency reserve was set aside in Central Services to held mitigate that pressure. He clarified that Central Services was the Corporate directorate where most of the IT was paid from.

The treasury management budget had performed well over the last few financial years. This was due to a strategy the Council adopted around using short term borrowing. He then explained that treasury management budgets were the Council’s management of banking loans, investments and day to day cash flow. In 2021-22 the Council took out long-term borrowing from central government called the Public Works Loans Board (PWLB) to finance historic capital debt, in doing so it took a big loan out. Having cash in the bank the Council was then able to invest that up until the point it needed to be used to incur costs for services, which was the treasury management function. He went on to explain that over the course of 2023-24 interest rates had been high due to inflation and Bank of England base rates had been high meaning the Council was generating greater returns on its investment that previously.

Councillor Blackham sought clarification that the Council had borrowed long-term from the PWLB and had invested it short in the market to get higher interest rates which was generating income. The Assistant Director for Financial Services clarified that the Council had not borrowed ahead of need, it had borrowed to refinance historic debt. Every year the Council had debts from previous years, such as capital programmes that came up for refinancing and over the past three to four years the Council had not been refinancing them but had been dragging down it’s cash balances. Previously the Council would not have received a return on its investments due to the low interest rate. Through this process the Council built up a bill that it needed to borrow for and when rates were historically low, it borrowed from the PWLB meaning the historical debt was secured and the Council had another cash balance that it could either keep and invest or reduce the cash over time. Due to the spike in inflation the Council was about to make use of its position however the intention wasn’t to invest at higher interest rates, it would have been to sort out the historical debt position and reduce the interest rate risk.

Councillor Yasseen noted that section 2.6.2 of the report discussed the wall at Bellows Road and the proposed reinvestment to alter the height of the wall, querying why the due diligence had not been right in the first place. The Assistant Director for Financial Services explained that the issue was cause by the removal of the subway rather than the wall, which had not been built recently. The subway had been removed and because people were used to crossing the road at that point, they were now doing so by straddling over the wall, which was not high enough to stop people doing this, creating a health and safety risk. The height of the wall would not have been a consideration originally as the subway was in place, therefore the reinvestment was to rectify an issue that could not have been foreseen at that point in time.

Councillor Yasseen then went on to ask about the Sheffield Road cycleway which was proposing to use levelling up funding for the project. She questioned why additional funding was being requested for the project and she did not feel it was a good use of levelling up funds to address the cosmetic look of the cycling scheme.  The Assistant Director for Financial Services explained that the levelling up fund was not paying for the cycleway project, it was paying for the public realm uplift that was at the side of the cycleway project. They were trying to get the benefits of efficiency by completing the cycleway and public realm works at the same time.

Councillor Yasseen sought clarification regarding the payments for the Commissioner Support to Nottingham City Council. The Assistant Director for Financial Services noted this funding was received by RMBC as a recompense whilst this work is ongoing from Nottingham City Council.

The Vice-Chair reiterated comments made by other members who expressed a view that it would have been useful to have some representation from Cabinet at the meeting to enable further lines of questioning to be undertaken. He went on to ask the Assistant Director for Financial Services what he felt the greatest area of risk was for the budget. The Assistant Director for Financial Services explained that in terms of the revenue budget the biggest risks remained social care demand as detailed in the budget report for 2024-25 and whilst inflation was reducing, it was not reducing the costs which were significantly higher than previous years.

The Vice-Chair queried what advice was provided to the Cabinet prior to the budget setting, were they being advised to raise council tax further. The Assistant Director for Financial Services explained that the advice provided to all members regardless of political party during the budget setting process was confidential.

The Chair explained he would speak with the Leader regarding sending substitutes if a Cabinet Member was not able to attend however in most instances the substitute would not be appropriate as each has their own portfolio.  He did suggest that members could submit questions to the Cabinet Member in writing after the meeting if the Cabinet Member was unable to attend. 

Resolved:

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