Agenda item

Marcus Briginshaw, Finance Manager, and Graham Young, Lead Finance Business Partner, introduced the 2021/22 Budget Planning Report for services within the remit of the Residents, Education and Environmental Services Policy Overview Committee.

Key points from the report were highlighted. The budget gap, and therefore the savings requirements for the next two financial years, was calculated at £19,987k, (roughly 9% of the current Council budget of £234M), after allowing for an assumed 3.8% increase in Council Tax.

Detail of the budget gap was summarised as:

·         £8.1m as ‘business as usual’ inflation and demand led pressures offset by increased funding;

·         £5.5m as Capital Financing costs and other investment decisions; and

·         £6.33m as unwinding prior use of balances to balance the previous budget.

The concluding calculation was confirmed to give the Savings Target requirement needed to achieve a balanced budget, without further recourse to General Fund Balances, as £10.6m in 21/22 and £9.3m in 22/23, for a total of £19.9m.

The impact of the Covid-19 pandemic had been significant, with General Fund pressures totalling £25.182m. To help, the Council had so far received two tranches of  additional grants, totalling £15.6m, with £1.964 applied in 2019/20. A further £8.5m was expected, which would be used to support up to 75% of the loss of income during the pandemic, with additional resources totalling £9.1m.

Other funds were detailed as part of a corporate overview. The Housing Revenue Account (HRA) was a ring-fenced account with £57.8m of rental income, supporting the tenancy management functions. This was then reinvested in maintenance of stock and investment in the HRA Capital programme, which was funding 495 new units, mitigating the anticipated loss of 280 units due to the Right To Buy scheme. The financial standing of the HRA remained sound, with the 30 Year Business Plan supporting sustainability over the long term.

The Dedicated Schools Grant (DSG) was another ring-fenced account, though the funding shortfall that began after the Children’s and Families Act 2014, in conjunction with the growing demand on High Needs services, had led to an expected deficit of £7.1m in 20/21, with a cumulative figure of £20.8m. The Council had submitted a disapplication request to the Secretary of State in February 2020 with a request to transfer 3.1% of individual schools budgets to the Higher Needs – this was rejected, with the implication that any deficit can only be covered by the General Fund. 

2019/20 outturn and monitoring were both showing increased pressures with  the former (outturn) being £1.35m lower than forecast, and monitoring showing a £1.15m increase on the expected £7.1m pressure, giving a deficit of £23.3m by the end of March 2021.

Regarding strategies to deal with the budget gap, the Committee was informed that there were some overarching uncertainties, including the delay of the Spending review; the delay of the review of the Business Rates Retention policy; and pressures and risks as a result of Covid-19. However, as in previous years, the Council was taking a thematic approach, with the following themes continuing to form the basis of savings proposals for future years:

1. Service Transformation
2. Savings from Zero Based Budgeting
3. Procurement Savings
4. Preventing Demand
5. Income generation and commercialisation
6. Changes of responsibilities and new funding streams that are associated.

Members sought clarity on a number of points, including:

High Needs spend had consistently been under forecast. What had been done to ensure accuracy of forecasting moving forward?

Forecasts had been reviewed and re-aligned with demand growth, allowing officers to move forward with confidence. A recovery plan was in place, with Finance officers working to reduced costs in the relevant areas.

Five schools were shown to be operating at a deficit. What was the Council doing to increase resources or control costs at these schools?

The Council had provided additional officers to work with the schools to control costs moving forward.

The report made reference to a savings programme of £6.8m being hindered by Covid-19. Were the savings of £6.8m deliverable?

Savings for the current year had been impacted by Covid-19. Grants from central Government would be utilised within the current financial year, with some delayed savings to start later this year or early next year.

Was the use of reserves impacted due to some reserves being unavailable?

The Council held a number of earmarked reserves, some of which were created following underspend in previous financial years. Some of these reserves were subsequently to be used in specific service areas where costs had increased due to Covid-19.  It was expected that such expenditure would be recovered from central Government.

How was the Council dealing with a reduction in funding from central Government?

Senior officers and Council leadership were regularly reviewing all potential savings, such as reviewing the capital programme.

What percentage of savings would come from zero based reviews, versus efficiencies?

Zero based reviews were not anticipated to form a large percentage of future savings. Such reviews had been used to make savings in previous years, but moving forward, it was more difficult to remove money from base budgets. However, all budgets would be reviewed to determine their accuracy.

The DSG budget showed a potential deficit of circa £23m. The 1986 Local Government Act required Councils to cover such deficits. Was this figure a concern?

It was considered that the deficit was a large figure, though conversations with central Government had helped to allay such concerns. Further information could be forwarded to the Committee following the meeting.

RESOLVED:  That the report be noted.