Agenda item

The Leader presented the report which showed a challenging picture.  The position overall is positive in that the overall forecasted position points toward a balanced position; the challenge is that all contingencies are needed to achieve this so early in the financial year.

The report stated the vast majority of the Council’s activities are spending at or close to budget and the budget challenge is restricted to a small number of demand led areas, though that challenge is quite significant.

Significant investment has been made this year and in previous years, but demand continues to accelerate. This is not confined to Newport as all local authorities are struggling across Wales and the UK, in order to meet the demand for essential services from the most disadvantaged residents.

The report showed that service areas, excluding schools, are forecasting overspending by approximately  £3.7 million, most of which comes from social care - in particular children’s out of area placements and fostering.  Non-service budgets are underspending by just over £2 million, mainly from lower Council Tax Reduction Scheme costs and more Council Tax income; the resulting net overspend of £1.5 million is covered by the revenue budget contingency which is also £1.5 million.

The schools’ position continues to be challenging.  Schools are forecasting to overspend by approximately £2.6 million and whilst school reserves will fund that, it will leave very small school reserves.  The Leader confirmed the Chief Education Officer, the Head of Finance and their teams are actively engaged in discussions with Secondary schools, where the main areas of challenge lie and are looking at options for schools to reduce spend.   

The situation is finely balanced with the continuation of overspending in a small number of areas balanced by non-service budgets and the contingency. 

As the financial year progresses, the Council will continue to refine forecasts and reflect any changes arising from key issues such as the demand in social care, progress on Council Tax collection and the cost of the Council Tax benefit.  The Leader confirmed that officers advised the need to monitor the position over the next two months or so and assess what Council-wide action may then be necessary, to ensure the Council has the best chance of managing the overall budget.  The Leader proposed this as a sensible and balanced approach. 

The Cabinet Members confirmed the ongoing difficulty of balancing budgets during the period of continued austerity.

Cabinet was asked to:

·         Note the overall budget forecast position including use of all the general budget contingency in addition to significant underspending in non-service budgets to balance forecast overspends within service areas;

·         Agree to instruct all areas of the Council to maintain robust financial management;

·         Note and agree the Head of Finance comments that the Cabinet and Senior Management, considers a Council-wide approach to reducing costs after the September position if the position has not improved;   

·         Note the level of undelivered savings within each directorate and the risks associated with this;

·         Note the forecast movements in reserves;

·         Note the projected balances of individual schools over the next year and that work is on-going in respect of reducing school overspending in the secondary school sector.

Decision:

Cabinet agreed the report and confirmed to continue with careful review and management of key budgets and risks.