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 overall financial position in the statutory accounts.  It was highlighted that the deficit will have an impact on the council's overall financial position and the risk was being managed alongside the assessment of the adequacy of the council's reserves as part of the council's medium term financial strategy.  It was further highlighted that this issue is a major concern amongst local authorities nationally.  As of 1st of April 2024 the cumulative deficit brought forward was £6.1m, the  current in-year forecast shows an overspend of £7.6m which will increase the cumulative deficit to £13.7m by the 31^st March 2025.   It was noted that the council continues to work with the Department of Education, the Local Government Association and other local authorities to seek clarification on the position once the statutory instrument expires and for a sustainable funding strategy for the high needs.

The approved capital budget of £160m had been revised to £96.4m which included £15.3m of unspent project budgets brought forward from 2023/24, approved movements of £2.8m, removal of ‘the Maylords library’ project of £2.6m, £3.7m additional grounds.  It was confirmed that in line with external audit advice, the capital budget has been re-profiled at quarter 2 in line with expected delivery and £82.8m of the budget had been re-profiled to future years.  Full details are set out in Appendix B, table C. 

It was confirmed that significant progress with the delivery of the capital programme was being made. At the end of October 2024 capital spends were £30.9m with further commitments of £32.3m providing a total of £63.2m. In comparison to October 2023, it was noted that the capital spend was £19.7m and commitments were £21.9m, a total of £41.6m.  It was highlighted that this was an increase of £21.6m. 

There were comments from Cabinet members. Councillor Gandy highlighted that in respect of Table 3  delivery of savings,  there was no risk of being able to deliver Health and Wellbeing savings compared to this time last year.  It was also noted that whilst quarter 2 shows an overspend the cabinet member was confident that this would be resolved by the end of the financial year. 

Group leaders gave the views of their groups. It was noted that it was an in-depth report and there had been a positive move in the finances of the council over the previous 12 months.  A query was raised if there could be more uptake on the Green Home Grant and homes upgrade schemes.

Concerns were raised regarding deleting vacant posts, how confident cabinet were regarding savings and if there will be a reduced demand for social workers in children and young people directorate.  Also, whether the business cases referred to for projects were necessary. 

It was queried whether unused grants had to be repaid.  Also, if the £1m in the severe weather reserve was sufficient.

Specific questions were raised regarding the following points.

If the savings being delivered in the children's directorate were being returned to reserves.  It was noted this was the agreed position when the budget amendment was supported by full council in February 2024. 

If the additional income of £1.2m from higher interest rates being applied to council investments, will be used to support additional hardship initiatives. 

If the 2024/25 service level agreement with Hoople had been agreed and if not, what were the reasons for the delay. 

Concerns were also raised regarding the change in detail provided in the appendices regarding the shortfall in delivery of savings, what was putting the transformation savings at risk, why was the thrive programme not progressing and what was the issue regarding the new operating model.  It was also queried if the delivery plans existed and what management action was in place to delivery the improvements in the overspend that is forecast. 

Concern was raised that nearly £83m of the capital programme was being moved into the next financial year and whether the council will deliver on the remaining programme.   

In response to the queries, in respect of vacant posts it was confirmed they are cancelled because they are no longer needed to be filled.  It was confirmed this was not a case of getting rid of posts. 

Regarding reduction of demand in social workers it was clarified that the savings had largely been delivered through the conversion of agency workers to permanent staff and a small element of service redesign.  The directorate are looking at how it can use multidisciplinary workers to support children and families alongside social work, how families could be supported to meet their needs without having to move to social work intervention.  It was noted that this was a work in progress and the directorate will report on the progress in the new year. 

Regarding the amount of business cases, it was clarified thatbusiness cases were needed for all the projects.  However, it was raised that they may need to be reconsidered in light of ‘transformation’ and if the business cases were becoming too arduous it would be an opportunity to become more agile.

It was confirmed that the severe weather reserve was being used now and will bereviewed as part of the ear marked reserves work.  It was clarified that when grants are not used in-year, they do not have to be returned. 

Regarding Hoople, the savings and the SLA, it was confirmed that detail was provided in the appendix regarding the savings expected from Hoople and work is ongoing with Hoople in respect of services delivered.  It was confirmed that the SLA with Hoople had been signed. 

In respect of savings and the transformation initiative, it was confirmed that this was progressing and it was noted that the Director of Strategy & Corporate Services had now joined the council.

Regarding the level of detail in the delivery of the savings plan, it was acknowledged that this would be considered moving forward. 

In response to the speed of the capital programme being delivered, it was confirmed that there had been a 50% increase in delivery of the capital programme.  It was highlighted that the projects needed to be phased appropriately to avoid too many projects at one time. 

Regarding the home upgrade grants, it was noted that this was increasing year on year.  It was confirmed that the grant will be delivered to 230 homes this year, 130 properties have already received 278 measures, and 66 properties were pending installation with 35 at survey stage.  Reassurance was provided that this grant would be rolled out to its fullest extent. 

It was confirmed that written responses would be provided notably regarding; if the children’s savings would be repaid to reserves and if the £1.2m acquired in additional interest would be used to for hardship initiatives.

Councillor Swinglehurst proposed the recommendations, and it was unanimously resolved that Cabinet

a)    Reviews the financial forecast for 2024/25, as set out in the appendices A-D, and identifies any additional actions to be considered to reduce forecast cost pressures;

b)    Notes the progress in delivery of savings targets for 2024/25; and

c)    Approves the transfer of Earmarked Reserve balances to establish a Contingency Reserve to manage the risk of unforeseen demand and cost pressures