Agenda item

CAB 34/18 

May Revenue Budget Monitor

Options Considered/Reasons for Decision

The Leader introduced the report, providing an update on the latest revenue budget monitor.  As at May 2018, the Councils revenue budget was forecasting an overall underspend of around £1,828k, however this was in the context of a challenging position in terms of service area overspending in certain areas, particularly in demand-led areas.  It was noted that these pressures were common across Wales and the rest of the UK, and while demand continued to increase from 2017-18 levels, this position was currently being managed within the overall budget.

The overall underspend noted above was created by some unexpected and one-off income received in April/ May – Leisure related VAT rebates (£773k), back-dated NNDR rebates (£467k) and additional income distribution from the crematorium (£385k). Without these, the position would be finely balanced.

It was noted that people services had plans in place as to how to reduce spend in out of county Special Education Needs (SEN) and Children’s placements and were making progress in implementing solutions for children’s placements by increasing its own provision, at lower cost.  All aspects of the plan would be delivered as soon as possible.

The same pattern of overspending in 3-4 service areas, mitigated by under-spending / better income in non-service areas continued as last year. This pattern was anticipated when the budget was set, with a specific ‘People’s services’ budget contingency of £2.2m agreed to contribute towards management of the risk of continued overspending in these areas, pending action to reduce costs. This, alongside continued underspending / better income in non-service areas – was deemed sufficient to maintain a deliverable budget.

In addition, budgets set by schools for 2018/19 would see them overspending their available funding by c£2.5m which would reduce a significant number of school’s individual reserves to almost zero.

The level of forecast overspending within service areas had significant consequences for the Council’s work on its medium term financial plan (MTFP).  In the context of significant savings needed to be found, failure to stabilise and reduce spend permanently in these current areas of overspending would increase our budget challenge.

In speaking to the report, Cabinet Members noted the ongoing financial challenges facing the authority, and the difficult position of local government in general in terms of continuing to provide statutory services within the decreasing resources available.

Decisions:

1.    To note the overall budget forecast position including use of all budget contingencies to balance current forecast service overspending;

2.    To agree to instruct all areas of the Council to maintain robust financial management;

3.    To note the level of undelivered savings within each directorate and the risks associated with this;

4.    To note the forecast movements in reserves;

5.    To note the projected balances of individual schools over the next year.

Consultation

Strategic Directors, Head of Finance, Heads of Service, Budget Holders and Accountancy Staff.

Implemented By: Cabinet Members / Head of Finance / Senior Leadership Team / Corporate Management Team to confirm plans to:

-       promote and ensure robust forecasting throughout all service areas;

-       reduce over-spending within People and Place Directorates;

-       manage/ mitigate those projects that are unable to deliver required Medium Term Financial Plan (MTFP) savings.

The Leader introduced the report, providing an update on the latest revenue budget monitor.  As at May 2018, the Councils revenue budget was forecasting an overall underspend of around £1,828k, however this was in the context of a challenging position in terms of service area overspending in certain areas, particularly in demand-led areas.  It was noted that these pressures were common across Wales and the rest of the UK, and while demand continued to increase from 2017-18 levels, this position was currently being managed within the overall budget.

The overall underspend noted above was created by some unexpected and one-off income received in April/ May – Leisure related VAT rebates (£773k), back-dated NNDR rebates (£467k) and additional income distribution from the crematorium (£385k). Without these, the position would be finely balanced.

It was noted that people services had plans in place as to how to reduce spend in out of county Special Education Needs (SEN) and Children’s placements and were making progress in implementing solutions for children’s placements by increasing its own provision, at lower cost.  All aspects of the plan would be delivered as soon as possible.

The same pattern of overspending in 3-4 service areas, mitigated by under-spending / better income in non-service areas continued as last year. This pattern was anticipated when the budget was set, with a specific ‘People’s services’ budget contingency of £2.2m agreed to contribute towards management of the risk of continued overspending in these areas, pending action to reduce costs. This, alongside continued underspending / better income in non-service areas – was deemed sufficient to maintain a deliverable budget.

In addition, budgets set by schools for 2018/19 would see them overspending their available funding by c£2.5m which would reduce a significant number of school’s individual reserves to almost zero.

The level of forecast overspending within service areas had significant consequences for the Council’s work on its medium term financial plan (MTFP).  In the context of significant savings needed to be found, failure to stabilise and reduce spend permanently in these current areas of overspending would increase our budget challenge.

In speaking to the report, Cabinet Members noted the ongoing financial challenges facing the authority, and the difficult position of local government in general in terms of continuing to provide statutory services within the decreasing resources available.

Decisions:

1.    To note the overall budget forecast position including use of all budget contingencies to balance current forecast service overspending;

2.    To agree to instruct all areas of the Council to maintain robust financial management;

3.    To note the level of undelivered savings within each directorate and the risks associated with this;

4.    To note the forecast movements in reserves;

5.    To note the projected balances of individual schools over the next year.