To review performance for Quarter 1 2023/24 and to report the forecast position for 2023/24, including explanation and analysis of the drivers for the material budget variances, and outline current and planned recovery activity to reduce the forecast overspend. 

To provide assurance that progress has been made towards delivery of the agreed revenue budget and service delivery targets, and that the reasons for major variances or potential under-performance are understood and are being addressed to the cabinet’s satisfaction.

Cabinet members considered a report setting out the performance of Quarter 1 2023/34 and the forecast position for 2023/24. 

The cabinet member for finance and corporate services introduced the report and highlighted that this report is the first outline position for 23/24 and clearly demonstrates the challenges faced in delivering the revenue budget set by the previous administration in February 2023.  This year’s revenue budget £193.3m which includes planned savings of £20m arising from £14.1m director savings together with £5.9m central budget savings.

The cabinet member set out that the Quarter 1 report for the last four years has traditionally forecast a overspend. In:

• 2019/2020 Quarter 1 showed a zero overspend and final overspend of £600k;
• 2020/2021 Quarter 1 forecast was £15.9m with a final over spend of £0 which was underwritten by £10.2m of Covid funding;
• 2021/2022 Quarter 1 forecast was £9.4m with a final overspend of £12.6m.

Therefore this year’s overspend will be less than the Quarter 1 forecast.  The Quarter 1 forecast is £13.5m overspend and the Medium Term Financial Strategy, which was approved by previous administration, has a cumulative funding gap of £15.8m over a three year period (2024-2027). The cabinet member highlighted that these two figures clearly demonstrate the scale of the financial challenge we have been left by the previous administration.

The cabinet member outlined what they are going to do to address the £13.5m overspend which equates to 7% of the net budget with the most significant overspend being in Children and Young People Services at £10.6m.  The cabinet member highlighted the following points:

• The overspend reflects significant national pressures including inflation, unprecedented demand for adult and children social care and national living wage increases;
• Recovery action has been identified to reduce the cost by £4m and timely delivery of this activity is a priority for the Cabinet.  This includes restrictions on procurement, non-essential spends, target reductions for third party spends and reduction on the number of interim and agency staff as well as number of directorate specific measures. Table 3 shows the revised forecast in light of these actions;
• Improvement in Children’s Services are supported by a robust three year financial plan.  Activities planned within this service aim to reduce reliance on agency staff, improve the balance of social workers to 90% permanent employees and 10% agency staff.  The lack of sufficient childrens social work places and increase in residential placement costs will be monitored over this period;
• Efforts to recruit in house foster carers to reduce the Council’s need to use independent fostering agencies will renewed;
• Fully committed to reduce in year over spend and as part of 24/25 budget.  A three prong approach will be adopted; Firstly, this report sets out the immediate management actions to deliver savings through controls and these actions will continue and develop into next year; Secondly, the Council will invest in the economy to generate growth; Thirdly the Council will innovate to increase revenue through maximum utilisation of Council owned assets. 

The cabinet member advised  ...  view the full minutes text for item 26