To report the provisional financial outturn position for 2024/25 for revenue and capital budgets.

ChildrenCHTHE MEMBER the The member for finance and corporate services introduced the report.  It was noted that the financial position the current administration had inherited was dire with quarter 1 forecast of £13.8m on a revenue budget of £193.3m.  However, today the final outturn position for 2024/25 showed an underspend of £0.5m on a budget of £212.8m.  It was also highlighted that the draft statement of accounts had been published, one month earlier than the statutory requirements, which put the council in the top 3% of councils in the country. 

It was noted that this year’s multi year settlement will not be kind to this council given the Labour Government’s removal of the Rural Services Grant and reduction in the central government grant.  On that basis, it was confirmed, to place £0.5m underspend in the general reserve fund which increased it to £10.1m. 

It was noted that in November 2024 cabinet approved a transfer of £11m from business rates risk reserve to establish a budget resilience reserve to mitigate against in-year cost pressures.  At this outturn position it was confirmed that a planned transfer of £4m from the budget resilience reservice would be applied to cost pressures in adult social care and temporary accommodation budgets in the community well-being directorate in 2024/25.    

It was confirmed that the earmarked reserves and general balances policy statement for 2025/26 would be carried forward on 31 March 2025 to manage future emerging risks and in-year budgetary pressures over the medium-term period.

It was highlighted that the Children Young People directorate budget delivered an underspend of £2.8m in 2025/26 and the planned savings of £2.3m had been delivered in full. It was confirmed that the additional budget of £2.3m, following the budget amendment in February 2024, was never given to the directorate from reserves in 2024/25.  The reserves were not used by the directorate in the year but had been used as part of the year end close down process to manage the whole council position.  It was also noted that the £2.3m had always been reported separately and transparently throughout the year in the quarterly reports and was presented as an underspend in Table 1 of the 2024/25 revenue outturn. 

It was noted that the Community and Wellbeing directorate had faced some significant challenges this year with increased demand and included a transfer from the budget resilience reserve of £4m, which still left a £1.5m overspend.

It was confirmed that Appendix A showed the details of the outturn position by directorate which totalled a £0.5m underspend. 

Regarding deliver of savings, the council approved £19.5m of savings for 2024/25 which comprised of directorate savings of £11.6m and £7.9m of council wide savings. It was noted that £10.9m of savings had been delivered and where savings had not been recurrently delivered in 2024/25 a focused review of the original proposals and planned activity had been undertaken and revised saving plans had been developed where appropriate.  The individual savings plans were included in Appendix D of the report at Table D which totalled £8.6m of savings to be delivered.  It was highlighted that the council wide savings of £5.7m were a key priority for the cabinet member.

It was confirmed that the cumulative Dedicated Schools Grant (DSG) deficit was accounted for as an unusable reserve on the council's balance sheet as permitted by statutory instrument (which will remain in place until 31 of March 2026).   It was noted that beyond the statutory override period the expectation was that any balance on the DSG unusable reserve would transfer back to the council's total earmarked reserves.  It was noted that on the 1 of April 2024 the cumulative deficit was £6.1m, the out turn position for 2025/26 was an overspend of £13.9m in 2024/25 with the cumulative DSG deficit at £20m on 31 March 2025.  It was confirmed that a deficit budget of £20.2m had been approved for 2025/26 and if expenditure was contained within the approved budget the cumulative DSG deficit would total £40.2m on 31 March 2026 at the end of the statutory override.

It was noted that the earmarked reserves and general balances policy statement for 2025/26, reported to cabinet in January 25, highlighted the forecasted earmarked reserve balances, excluding schools’ balances, of £45.7m on 31 March 2026.  It was confirmed if reserves were required to support the council's financial position in 2025/26 there would be insufficient earmarked reserves to mitigate the cumulative deficit balance on 31 March 2026.  It was confirmed that the risk to the council’s overall financial position, once the override ends,  would be monitored and it was a major concern among local authorities nationally.  The council was continuing to work with the Department for Education, the Local Government Association and other local authorities to seek clarification on the position once the statutory instrument expires. Assurance was provided that the cabinet member maintained a close watching briefing on the DSG deficit management plan and will continue to ensure that cabinet remained fully briefed.

Regarding the capital outturn, the 2024/25 approved capital budget of £160m was revised to £97m.   The revised capital budget included £15.3m of unspent project budgets brought forward from 2023/24, approved movements of £0.3m, £4.1m additional grants and a reduction of £82.7m which had been re-profiled into future years.  This was confirmed in Appendix B in Table B.   It was confirmed that the final spend position was £74.1m which represented an underspend of £22.9m against a budget of £97m, with an increase underspend of £5.6m.  Appendix B, Table A set out the full details for each project. 

It was noted at the Scrutiny Management Board of 26 March 2025 that the cabinet member was asked by Councillor Harvey regarding his confidence in delivering the £79m forecast being reported and the cabinet member confirmed he was to the degree of 5% accuracy. It was noted the forecast was £79,637m and the final spend was £74,087m.  The final spend being 7% below target only.   

Comments from cabinet members.  Thanks were extended to the cabinet member and director of finance for all their hard work.  It was noted that long term demand for domiciliary care had increased by 23% over the last year and there had been an increased demand for extra care housing by 10%.  Regarding short term service users, home first had increased by 26% and the need for short term residential respite care had increased by 50%. Along with temporary accommodation, these factors had a large impact on the directorate. 

Group leaders gave the views of their groups. Thanks were extended to the cabinet member and the director for finance for their hard work.  Concern was raised regarding the presentation of the budget.   It was raised that the £0.5m underspend was due to using reserves otherwise there would have been a larger overspend.  It was also raised that the overspend in the Children and Young People’s directorate was no longer present due to increasing the directorate’s core budget.  Acknowledgement was given to directorates that had delivered on their budget savings, and the children’s directorate was highlighted with congratulations extended to the cabinet member and director. 

It was queried if the underspend on short breaks for Children and Young People was due to lack of capacity. It was asked if the reserve position and movements could be made clearer in respect of the underspend.  It was also queried what had happened to the climate reserve and the risks relating to PIP should be noted within Community Wellbeing. 

In response to queries, it was positively noted to have achieved a balanced budget, and it was positive to use underspends to bolster the council’s financial credibility.  It was confirmed that the council had been transparent, and the strategy had been reported for each previous quarter. 

It was clarified that the climate reserve was included, it had a balance of £953k at the start of the year, with in-year spending in accordance with the service plan, the closing balance was £726k. 

Regarding the issue of short breaks in Children and Young people it was confirmed that clarification would be provided to Councillor Toynbee.    

Councillor Stoddart proposed the recommendations, and it was unanimously resolved that: 

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That:

Cabinet

a)    review the financial outturn for 2024/25, as set out in the appendices A-E, and identifies any additional actions to be considered to achieve future improvements; and

b)    agree the transfer of the reported underspend of £0.5 million to increase the General Fund Balance