To report July’s budget monitoring information and provide an indication of estimated outturn.

(Councillor AE Gray declared a personal interest.)

The Committee considered the budget monitoring position to the end of July 2009 and an indication of the estimated outturn.

It was noted that Cabinet had received and noted the report on 24 September 2009.

Revenue Budget

The Head of Financial Services presented the report.  She highlighted that the overall position on the revenue budget showed a projected overspend of £1.34 million representing 1% of the Council’s net revenue budget. 

She outlined the areas of projected overspend and underspend as detailed on page 65 of the agenda papers.  She noted the potential effect of reserves if they were used to meet the overspend.  She then commented on the financial position within each directorate as set out in the report highlighting the following points:

·         The largest projected overspend was on the Integrated Commissioning budget (£2.6 million).  She reported that a proposed recovery plan was being evaluated. 

      She drew attention to the 1.7% uplift in contracts that had been made in line with the Primary Care Trust (PCT).  However, this had not been reflected in service budgets and would need to be revisited in preparing the 2010/11 budget.  She also noted the potential financial implications of the reassessment of clients needing continuing healthcare, one case already having resulted in adult social care having to meet costs of £109,000 previously met by the PCT and the need to work with the PCT to ensure that PCT and Council funding was allocated appropriately.

·         In relation to Children’s Services which had a projected overspend of £755,000 she drew particular attention to the cost of foster placements. 

She reported that a recovery plan had been prepared.  However, it was possible that at this stage of the financial year it may not be possible to recoup the projected overspend which would have implications for the 2010/11 budget.

·         She expressed some concerns over the budget of the Deputy Chief Executive’s directorate now with a projected overspend of £230,000.  She noted that the key area of overspend was on legal and democratic services with four specific issues identified on pages 72/73 of the report. 

In discussion the following principal points were made:

·         Concern was expressed about the statement in relation to the Children and Young People’s Services Directorate that to achieve the level of savings required would require a reduction of 25-30 posts.  The Director of Resources assured the Committee that other options were being explored in particular the scope for reducing highly costly out of county placements.

·         Noting that by far the bulk of the overspend was attributable to additional expenditure on safeguarding and assessment, following the “Baby P” case in Haringey, a concern was expressed that this could indicate either that appropriate measures had not been in place beforehand or that there was now an overreaction.

·         Clarification was sought on the reference to an overspend in the audit section of the Resources Directorate which stated that additional costs were being incurred  on the Herefordshire Connects programme The Director of Resources commented that the expenditure related to the secondment of an auditor to the project.  The overspend would be met from within the Directorate.  In response to a question about savings generated by the project he replied that the project was delivering improved systems.

·         In response to a question about the pooling of Council and PCT budgets the Director commented that a number of arrangements were in place but that that there was scope for more such arrangements.

·         Concern was expressed that increased demand for learning disability services, where there was a projected overspend of £1.344 million had been foreseeable.  The Director noted that there was no provision in place to transfer budget from Children’s Services to adult services as people moved through the system and acknowledged consideration may need to be given to this point.

·         A Member suggested the value of residential college placements out of County also needed to be reviewed.

·         The overspend on legal and democratic services was discussed, noting that 3 whole time equivalent posts in legal and democratic services were not provided for within the budget. 

·         Members noted that interim staff costs were a further component of the overspend and that there were a number of interim posts on temporary contracts, which incurred a premium, across the authority.  Concern was expressed about the costs of these posts, the implications for continuity of service provision and their value for money.  The Director of Resources stated that the costs of these posts were met by individual directorates.  The costs of some senior posts were relatively expensive but that reflected the market rate.  It also had to be borne in mind that the interim posts supported or replaced existing posts.  Members proposed that their concern should be registered.

Capital Budget

The Head of Financial Services outlined the position on the capital programme budget.

In discussion the following principal points were made:

·         It was requested that a breakdown be provided on expenditure on consultants in connection with the Herefordshire Connects programme.

·         The Director agreed to confirm to Members the capital receipt from the disposal of part of the Nieuport estate, once the figure was in the public domain.

·         Asked about interest rates on borrowing the Director stated that short term rates were much lower.  Longer term rates had not changed greatly.  A decision would have to be taken shortly on whether to add to the level of prudential borrowing which was currently £115 million.  He noted that the expectation would be that the capital programme would be constrained in future years.

·         The Director acknowledged there was pressure on the budget that had been provided for the mortgage relief scheme.

RESOLVED:

That    (a)        the report be noted;

            (b)       the forecast outturn for 2009/10 agreed with Directors based on service and financial performance outlined in this report be noted;

            (c)        the continuing efforts of all Directors to ensure service targets are met within the approved budget be endorsed;

            (d)       it be recommended that consideration be given to the need for arrangements to provide for the transfer of budget from children’s services to adult services as people with learning disabilities moved from the responsibility of Children’s Services to the responsibility of Adults Services. 

            (e)       the planned review of expensive out of county placements as part of the adult social care recovery plan should include a review of the value for money of residential college placements out of County; and

            (f)        concern be registered about the costs of interim posts, the implications for continuity of service provision and their value for money.