Report of the Director of Finance and Public Value (DF/22/68) relating to the Budget Monitoring Position at Month two, attached.
(a) that the month 2 budget monitoring forecast and the very challenging
financial position faced by the Council be noted;
(b) that the immediate action being taken to safeguard the financial
sustainability of the authority be supported; and
(c) that progress on the Safety Valve Intervention programme also be noted.
(Councillors Adams, Bailey, Biederman and Brazil attended in accordance with Standing Order 25(2) and spoke to this item).
The Cabinet considered the Report of the Director of Finance and Public Value (DF/22/68) on the Budget Monitoring Position at Month two, the Report having been circulated prior to the meeting in accordance with regulation 7(4) of the Local Authorities (Executive Arrangements) (Meetings and Access to Information) (England) Regulations 2012.
At Month 2 it was estimated that budgets would overspend by £30.5 million, excluding the dedicated schools grant deficit below. There was a further risk that inflationary pressures could result in costs, in addition to this overspend, of more than £10 million this year. The Cabinet noted that immediate action must be taken to safeguard the financial sustainability of the authority and that work had commenced to identify services and projects in both revenue and capital that could be transformed, modernised, remodelled, funded differently, ceased, or postponed.
The Dedicated Schools Grant projected deficit, relating to Special Educational Needs and Disabilities (SEND), was forecast to be £32.1 million and discussions with the Department for Education as part of the Safety Valve Intervention continued.
Integrated Adult Social Care services were forecast to overspend by £6.0 million and Children’s and Young People’s Futures services were forecasting an overspend of £17.9 million (excluding the projected deficit of £32.1 million on Special Education Needs and Disabilities (SEND)). At the end of 2021/22 the DSG reported a cumulative deficit of £86.5 million which had been carried forward as a deficit reserve as per government guidance. When combined with the current year forecast the deficit was expected to be £118.7 million by the end of 2022/23.
In relation to the Safety Valve Intervention programme, it was expected that the DfE would be submitting a business case to Treasury in July. The timescale for resolution of the Safety Valve Intervention was set by Central Government.
The Climate Change, Environment and Transport directorate was forecast to outturn to budget as well as Public Health, Communities and Prosperity. Corporate services were forecasting an overspend of £394,000, mainly as a result of pressures within Legal and Democratic Services due primarily to additional legal costs supporting Adults and Childrens services.
Whilst national pay negotiations were at an early stage, indications were that increases to the National Living Wage coupled with the cost-of-living crisis would result in a higher than expected pay claim this year, but the estimated cost had been included within the forecast overspend.
Corporate debt stood at £2.9 million, being just under 0.9% of the annual value of invoices, against the annual target of 1.9%.
The Cabinet also noted that an organisation wide Financial Sustainability Programme had been created to examine areas of expenditure and to propose financial recovery options for Members to consider. It was vital that every service, across the authority, responded at pace and at scale.
Whilst it was very early in the financial year, the current forecast position was unprecedented and immediate action must be taken. The Council had never before faced a combination of demand growth and price shock pressures of this scale.
The matter having been debated and the other relevant factors as set out in the Directors Report and/or referred to above having been considered:
it was MOVED by Councillor Twiss, SECONDED by Councillor Hart, and
(a) that the month 2 budget monitoring forecast and the very challenging financial position faced by the Council be noted;
(b) that the immediate action being taken to safeguard the financial sustainability of the authority be supported; and
c) that progress on the Safety Valve Intervention programme also be noted.