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. The forecast 2023/24 outturn shows a net overspend of £10.7 million at Quarter 3.

The Cabinet member for finance and corporate services introduced the report. It highlighted that the 24/25 revenue budget approved by Council on 9 February included an additional £250k for the lengthsman scheme for the public rights of way together with £445k for drainage works.  Details of how these schemes will operate will be released to Parish Councils by the end of March 2024.  Noted that invoices for these schemes will be processed through the Council priority supplier programme. 

The approved revenue budget is £193.3m which includes planned savings of £20m. At Quarter 2 the forecast overspend was £13.8m, as a result of management action alongside expenditure controls this had been reduced to £10.7m at Quarter 3. The Quarter 3 overspend variances were set out for each directorate and confirmed that each directorate were continuing with expenditure controls to support existing recovery actions in 23/24 and review of expenditure on goods and services, changes in staffing arrangements and increased rigor would continue for the rest of the financial year. 

Highlighted that the management activity is expected to reduce the forecast overspend to £9.4m and each directorate will continue to identify further recovery action, options to mitigate their risk savings targets and develop recovery plans to manage delivery of services within the approved budgets.  Noted there had been a saving of £0.7m within Children and Young People showing clear evidence that the directorate is turning a corner. 

It was confirmed that Cabinet are fully committed to the delivery of savings to ensure that the 2023/24 outturn position is balanced and to prevent further pressures on future year’s budgets.  Noted that internal financial reporting had been strengthened to identify emerging pressures and key risks which will enable monitoring at monthly Cabinet meetings.

Council approved £14.1m directorate savings for 2023/24.  A review of the status of the 23/24 savings has been undertaken and identified £6.5m of the target was at risk of in year delivery, these were outlined in Table 3 of the report.  Progress on delivery of savings will be monitored and reported in the next budget monitoring report to Cabinet. 

Noted the revised 2023/24 Capital budget of £147.8m had been re-profiled in line with expected delivery which had reduced the 2023/24 budget by £78.9m.   The forecast position was now £53.2m which represented an underspend of £15.7m against a budget of £68.9m, the underspend breakdown was detailed.

There were no comments from Cabinet members. 

Group leaders gave the views of their groups.  The forecasted reduction in overspend was welcomed overall but concern was expressed regarding the assumptions that underpinned the projected savings and progress of the savings.  Queried whether the ‘capital development fund’ could be unlocked as this was the second or third year where no monies have been spent from that fund.  It was queried why the Home Upgrade Grant had an underspend of £1.5m and noted this was a repeating annual problem.  It was requested for Cabinet to lobby for better funding from Government for this grant.  Concern was raised regarding the lack of progress in shifting the balance between agency and permanent staff in Children’s and Young People and the effect on staff costs.  Noted that the savings in the Capital Programme are not truly reflective of the position due to money forecasted to be spent had been moved to be spent in future years which would be causing a delay in delivering infrastructure projects.  It was also queried which earmarked reserves, that weren’t specifically ring fenced, will be used to fund the £10m overspend. 

In response to the points and queries raised it was confirmed that the Quarter 3 performance report provided a more reflective picture of how the Home Upgrade Grant is rolling out but noted the points regarding the criteria for these grants.  It was confirmed that another scheme was coming forward which had a less restrictive criteria.   In respect of agency staff in Children’s and Young People it was confirmed that Appendix 2 showed there had been a reduction in cost pressure of £0.4m since Quarter 2.  Lastly, regarding earmarked reserves it was confirmed that it has been normal practise for a review of earmarked reserves to be undertaken during Quarter 4 period and reported as part of the normal process.  It was also clarified that Appendix 2 referred to was appendix A in the report. 

It was unanimously resolved that:

Cabinet

a)    review the financial forecast for 2023/24, as set out in the appendices A-D, and identifies any additional actions to be considered to achieve future improvements;

b)    Note the forecast revenue outturn position at Quarter 3 2023/24 of a £10.7 million overspend, before management action, and the potential impact of this overspend on the council’s reserves;

c)     Note the impact of the 2023/24 forecast outturn on the 2024/25 budget requirement and the future financial sustainability of the council;

d)    Request that Scrutiny Management Board reviews the budget monitoring position and that relevant Cabinet Members provide explanation for key variances and actions identified to address key pressures; and

e)    Agree the continuation and strengthening of management actions to reduce the forecast overspend as identified in this report.