Agenda item

The Leader presented the report which provided an update on the Revenue Budget monitor.  The report confirmed the forecasts have been deteriorating throughout the year with demand continuing to grow beyond the budgets available.  At the last Cabinet update, the bottom line budget was finely balanced and the current position now shows an overall overspend of just over £700,000.

The report explained the reasons and trends for this and which follow a set pattern; a pattern that has been in place for approximately 2-3 years.  Whilst the majority of the Council’s activities are operating close to budget, there is significant overspending in a few areas.  Whilst there is some underspending in non-service budgets and a revenue budget contingency, these items are still not enough to mitigate the overspending, therefore the report confirms a net overall overspend of £700,000.

Service areas, excluding schools, are overspending by over £4m with social care contributing over £3m of that, due to rising demand.  £3.5m has been invested into the key demand-led activity areas in social care in this year’s budget, yet demand has continued to grow at a faster rate. 

The Leader confirmed there are some non-service underspends in the Council Tax Reduction Scheme due to lower demand for that and in Council Tax Income as more houses are built in the city – these amount to approximately £2m and alongside the revenue budget contingency of £1.4m, provide a good level of mitigation, but not enough.

The position is challenging, however, the Council does need to manage the overall budget as any overspend will require funding from reserves and there are no un-earmarked reserves easily available, also general reserves are at minimum levels.  Also, the Council has a very challenging budget to consider in due course.  Any unplanned use of reserves will therefore be problematic and give rise to difficult consequences and impacts.

The school’s financial position is looking very challenging too and education and finance colleagues are working hard with secondary schools to see what savings can and should be made to bring spend closer in line with funding.  Progress is being made and the Leader expressed her gratitude to schools, education and finance officers in achieving this, however, the Leader confirmed there is more work to be done before the situation can be stabilised. 

The Leader thanked officers for their hard work in managing the budget under very difficult circumstances.  The Leader welcomed the Chief Executive who has a huge job ahead of her in dealing with budget issues.  The Leader hoped that the Revenue Support Grant settlement for next year’s budget will provide some help and give the Council choices to support the services and functions which are under immense strain.  In the meantime, action is required to manage this year’s budget.

The Leader asked Cabinet to note the proposals contained in the report and to recommend, as the report proposes, that Directors take a lead with their Heads of Service to identify targeted savings and to cut back on expenditure wherever possible.  The Leader explained this is not a spending freeze, but a targeted reduction in spend given that the over-spend, whilst high, is not something which is “out of reach” to bring back.  The Leader encouraged Cabinet Members to discuss this as part of their regular briefings with Heads of Service.  Robust action is required in order to update the forecasts and then deliver them.  If this course of action doesn’t improve matters, then further action may well need to be considered.

The report’s appendices included:

Appendix 1      Overall budget dashboard – September 2019

Appendix 2      Revenue summary monitor – September 2019

Appendix 3      Schools’ funding and balances

Appendix 4      Planned movement in reserves

The Cabinet Members’ comments centred on the continuing austerity imposed by central government and the difficulties associated with those budget cuts.

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 mitigate, in part, the forecast overspends within service areas;

·         Agree that the Chief Executive and Corporate Directors work with Heads of Service to bring about targeted reductions in service area spending.  These are forecast to show progress and monitor delivery and agreed with individual Cabinet Members in their regular briefings;

·         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 sector.

Decision:

Cabinet approved the report and agreed that the Senior Leadership Team should impose a targeted reduction in spend across service areas and continue careful review and management of key budgets and risks.