To report the forecast position for 2024/25 at Quarter 2 (September 2024), including explanation and analysis of the drivers for the material budget variances, and to outline current and planned recovery activity to reduce the forecast overspend.

The cabinet member for environment introduced the report and councillor Mason expanded on the report in Councillor Stoddart’s absence who was noted as on sick leave. 

Councillor Swinglehurst, cabinet member for environment, extended their congratulations to the finance team for winning the Chartered Institute of Public Finance and Accountancy (CIPFA) award. 

In respect of the Quarter 2 Budget report, it was noted that the forecast overspend was £10.2m, and with management action this will reduce to £2m.  The approved net budget for 2024/25 was £212.8m which included £11.6m of planned directorate savings and £7.9m of council wide savings.   It was noted there are cost pressures of £11.6m from in demand led services, supporting social care budgets, temporary accommodation and SEN transport services but is offset by the delivery in full of £1.4m of the 2024/25 savings targets in the children young people budget. 

It was highlighted that the report represents six months of actual transactions and six months of estimated income and expenditure.  It was noted that the children and young people budget line at quarter 2 was balanced, confirming that the directorate budget set for 2024/25 was sufficient and realistic.  It was confirmed that additional expenditure controls remain in place to support recovery action. 

It was noted that a review of the £19.5m savings for 2024/25 had been undertaken which confirmed that £8.9m (46%) of the total savings target had been delivered at quarter 2 and £5.6m (28%) were assessed as on target or in progress.  Savings of £5m (26%) were assessed at risk.  A breakdown by directorate of 2024/25 approved settings is shown in Table 3 of the report.  

Regarding ear marked reserves, the last report to cabinet in May 2024 noted total audited balances of £82.8m, comprising the general fund balance of £9.6m and earmarked reserve balances of £73.2m.  An assessment to confirm the adequacy and robustness of balances was undertaken annually by the section 151 officer as part of the budget setting process. It was highlighted that the council continues to experience significant in-year financial pressures in respect to social care budgets for adult and children and home to school transport, with these budgets representing the majority of the forecast overspend in quarter 2. 

A contingency reserve of £11m was proposed to mitigate against in-year and future year pressures.  The funds would be transferred from the business rates risk reserve, reducing this from £19.7m to £8.7m.  It was confirmed that a full risk assessment to determine appropriate levels of reserve balances would be undertaken as part of the budget setting process for 2025/26. Also, a full and detailed review and update of the future council’s reserve strategy will be presented at cabinet. 

Regarding the dedicated schools grant (DSG) deficit, it was confirmed that this is accounted for as an unusable reserve on the council's balance sheet as permitted by statutory instrument and remains in place until 31 March 2026.  It was clarified that this enables all local authorities to ring fence the DSG deficit from the  ...  view the full minutes text for item 35