The Director of Finance will submit a report (Document “F”) which provides Members with an update on the forecast year-end financial position of the Council for 2022-23.

It outlines the revenue and capital budgets and the year-end financial position based on information at the end of May 2022. It states the Council’s current balances and reserves and school balances. 

Recommended –

That the Overview & Scrutiny Committee review and comment on the Qtr 1 Finance Position Statement for 2022-23.

(Andrew Cross - 07870 386523)

The Director of Finance submitted a report (Document “F”) which provided Members with an update on the forecast year-end financial position of the Council for 2022-23.

It outlined the revenue and capital budgets and the year-end financial position based on information at the end of May 2022. It also stated the Council’s current balances and reserves and school balances. 

Based on a projection at the May 28th 2022, the Council is forecasted to overspend the £388.5m net revenue budget by £55.9m in 2022-23.

c£20m of this is due to the expected extraordinary impact of inflation above budgeted levels.

The Council approved a budget increase for inflation of c£22m for 2022-23, to pay for a 2% pay award; the impact of National Insurance increases, National Living Wage increases, contract price inflation based on CPI inflation of 4% and Energy price inflation 5%.

The largest forecast overspend is c£33m in Children’s Services as a result of continuing increases in agency staffing costs and increased Child Looked After Placements, both of which have increased very significantly in recent years.

The Department of Place also has a number of pressures and is forecast to overspend by £8.9m, with the main issues being Street lighting energy costs (£3.7m), and a £2.4m forecast overspend in Waste Services due in part to higher waste tonnages and recycling income losses which were supported by Covid funding in 2021-22 that has now ceased (£1.2m), and inflationary cost increases above those budgeted (£1.2m). Additionally, there are undelivered savings in Sport and Culture, and on-going pressures in Housing and Markets amongst others.

During the discussion a number of questions were posed on the Quarter 1 position statement, the questions together with the responses are detailed below:

A Member stated that in terms of the budgetary pressures outlined in the report, what plan was the Council working to address these pressures.  In response it was stated that a review was already underway as mentioned in the previous report, to ensure we reassess spend and look at how savings can be made in the context of the current financial challenges facing the Council. 

In relation to the continuing and projected overspend in Children’s Services, it was explained that there had had been a 30-36% increase in the cost of placements and previous assumptions that demand for specialist placements would tail off had not materialised, as well as not being able to deliver on other savings; the continued reliance on agency staff remained and therefore the budget assumptions had changed significantly, since February 2022.

In response to the budgetary pressures facing Children’s Services, a Member suggested that preventative work with families may yield some positive results.  It was also stressed that in achieving savings across different service areas that conversations had to be had with the Trade Unions and front line staff in terms of the impacts on service delivery.

In relation to the overspend in waste services, inflationary pressures were driving up costs, as well as an increase in the amount of waste being collected had gone up since the pandemic, and the Council was actively looking at how this could be mitigated against.

Returning to the overspend in Children’s Services it was further stated that detailed work was ongoing to mitigate against the overspend, however pressures remained in terms of the number of children entering the care system.

In relation to the Hanson School deficit, it was stated that from the 1 July the school had achieved academy status and under the Dfe rules, the current deficit would remain with the Local Authority, however conversations were ongoing with the Dfe to seek clarifications around the deficit.

Resolved –

Members commented on the report and looked forward to receiving the Mid-Term Financial Position Statement.

ACTION: No Action