Agenda item

Mid-Year Budget Update


In relation to the Mid-Year Budget and the Council's revenue monitoring position, an underspend of £23,000 was forecasted, with the services within the remit of the Committee underspending by £900,000 owing to £600,000 within the Finance portfolio. This was driven by a reduction in the Council's energy requirement. A further underspend of £300,000 within Corporate Services had been driven by several minor staffing underspends and additional income across the portfolio. Within those Services, there were £1.6 million worth of savings to be delivered in 2023-24 but the majority of this was recorded as either banks or in progress.


The £595k savings which were recorded at Amber included £356k being driven by the business service review, where a zero-based review had been undertaken and a new operational model was currently in discussion. A further £171k related to additional income which was being reported at Amber whilst officers monitored the impacts of the uplifts on demand and the recovery from the pandemic on the income streams for the Council.


In terms of the medium-term financial forecast in February 2023, officers noted the council saving requirement 2027-28 was estimated to be £55.4 million, with the single largest driving force behind this being the exceptionally high inflation that had been observed at both a global and national level. This added £60 million to the budget gap. Within the remit of the Committee £5 million of that amount was driven by energy and fuel with other areas including workforce and contracted inflation.


Service pressures were forecasted to add £23 million which was predominantly from the impact of demographic growth across the Borough. £90k of that amount rested within the remit of the Committee, which related to the Council looking towards boosting cyber security.


Officers noted corporate items added just under £12 million of the budget gap, with £6.5 million of that amount being driven by the Council's borrowing requirement for the capital program, which was an element that sat within the remit of the Committee. The remaining balance was predominantly TfL concessionary fares, which related to the recovery from the pandemic due to travel numbers for the over 65s.


Officers were to continue working on assessing the budget gap, with inflation remaining stubbornly high and demand pressures linked to the cost-of-living crisis impacting on the Council. In addition, officers were to explore ways to reduce the Council's expenditure, looking towards driving efficiency gains whilst protecting frontline services and using the Council's transformation process to formulate budget proposals that would be presented back to the Committee in January 2024.


The government settlement had not been reopened so there was no offer of additional grant funding to compensate the Council for the additional inflation that the Council had to pay out over the last few years. The government settlement currently ran at the end of 2024-25, so from 2025-26 onwards it was still unclear as to how much funding the Council would be likely to receive. This was a position across all local authorities nationally and was one of the key risk areas that had been flagged within the Council's MTFF report that came to Cabinet in February 2023.


Some local authorities were struggling, and officers reported there was an estimated £5 billion gap across the sector over the medium term. The focus for the Council in the short to medium term, considering high inflation and additional costs for the Borough such as unfunded pay awards, was to ensure that the MTFF and budget strategy was a low-risk strategy so that inflation and demographic growth assumptions could be built into the strategy to know what funds could be afforded going forward.


Other officers added that the demand lead pressures within the Adult Services and Children's Services portfolios were attributable to inflation, which was the single largest pressure in the MTFF.


Questions were asked about the increasing cost for the provision of services. Officers were challenging the increasing cost for the provision of services in a robust process by challenging requests from providers of an inflationary uplift. With longer term contracts and where there were fixed costs, the Council was protected marginally from inflationary uplifts. In several contracts and placements spend, the Council built in inflationary uplifts as part of the contract which were effectively unfunded.


The Chairman commented that there was a vicious circle as the inputs of pay requirements or pay inflation was increasing and trying to balance that set against the spend proved to be complex.


Members stressed there was a desperate need to see more local government funding, and also wished to catch sight of a general picture of the departments that were overspending and those that were under spending in significant ways with explanations beyond a table illustration in order to understand what the impact could be on the wider Council's finances, and the Council’s approach to succeed in obtaining a balanced budget. Concerns were raised about the savings gap with many unidentified savings. Members also wished to hear about how the government was being lobbied in a non-political sense in terms of what departments were pushing for certain grants because this demonstrated a financial modelling that was income generating.


In terms of inflation, officers observed a various range of inflation forecasts and had their own treasury advisors. They also had access to external data from other partners they worked with in order to gain financial data. It was mentioned that budget gaps were assessed on a low-risk basis.


Members asked if there was an audit to assess how efficiency savings were affecting the delivery of services. Officers responded that technology was a good example of looking at ways of being more efficient, where technology could be maximized. In the finance department over the last few years, new financial systems were introduced to enable work to be more effective and therefore, drive efficiencies in processes. There was no audit currently that set out how efficiency savings were affecting the delivery of services.


The Corporate Director of Central Services added that the Council’s drive was on improving services to Borough residents, such as through the report aforementioned on compliments and complaints. The Council was also on a journey to continue to improve different ways of using technology, such as the transition from using email to the new Goss system, which was a more modern way of working. In relation to demand lead services, the emphasis was on applying a consistent model of prevention and early intervention throughout the Council’s services to avoid service users’ needs escalating which would therefore require a higher cost response.


Officers added that new AWS connect technology was explored to transform the Council’s initial point of contact. This had been applied to a whole gamut of different services, including Social Care, Waste Services, and the Housing Department. This new system had been embraced very positively by residents as a means for much more convenient communication.


RESOLVED: That the Finance and Corporate Services Select Committee noted the contents of the report and provided comments to officers as appropriate.

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