Agenda item

Mid-Year Budget/ Budget Planning Report


Officers presented the mid-year budget/ budget planning report for items within the remit of the Children, Families and Education Select Committee.


It was noted that this was the first appearance at the Select Committee for the new budget cycle. The consultation budget would be presented to Cabinet in December 2023, and would come back to the Select Committee as part of the consultation in January 2024, before being fed back to Cabinet in February 2024.


For 2023/24, the Council was forecasting a net underspend of £23k, with the services with the remit of the Children, Families and Education Select Committee underspending by £174k. This was being driven by a reduction in for Looked After Children through an improved mix of service delivery alongside staffing underspends.


There were £1.4M of savings to be delivered in 2023/24. £774k of this was designated as ‘Amber II – potential problems in delivery’:

£229k for SEND Transport Management;

£130k for Early Years Centres; and

£415k related to Fees and Charges uplifts.

Most of these were recorded at Amber II due to the difference between the financial year and the academic year.


The school’s budget was forecast to overspend by £4.5M, with this being wholly driven by the high needs block where funding had not kept pace with inflation and demand.  


On the Medium-Term Financial Forecast (MTFF), in February 2023, the Council’s saving requirement up to 2027/28 was estimated to be £55.4M, with the single largest factor being exceptional inflation, with this adding £60M to the budget gap. Within the remit of this Select Committee, the main inflation drivers were contracted spend for care provision and SEND Transport, with these two areas accounting for £7.8M of the £60M requirement.


Service pressures were forecast to be £23M, up to 2027/28, predominantly driven by demographic growth within the Borough, with £7.7M of this related to services within the remit of this Committee:

£3.7M for demand for Looked After Children;

£3.2M for SEND Transport;

£0.6M for Asylum Services; and

£0.2M for Children with Disabilities


In terms of the Council’s wider budget strategy, Corporate Items were adding just under £12M to the Council’s savings requirement, with £6.5M of this related to the Capital Programme and £4.1M related to Transport for London Concessionary Fares which was related to the recovery from the COVID-19 pandemic.


Officers were going to continue to assess the budget gap prior to December Cabinet, with inflation remaining high, and the demand for Council services being linked to the cost-of-living crisis. Officers will also be looking for ways to reduce Council expenditure through efficiency gains while protecting front-line services.


Members referenced the new and emerging risks and noted that the Committee’s current major review was looking at the Stronger Families Hub, during which witnesses had expressed the need for more resources. With this in mind, Members asked whether this had been taken into account within the current budget setting. Officers noted that as part of analysis of the budget gap, officers looked at the three main drivers:


Demand-led growth; and

Corporate Items

Within the demand-led growth, officers considered demographics, including population projections and demand for services. Wider ONS projections were also considered, as well as local knowledge and performance management information. Officers also worked with services areas, and throughout the Autumn, MTFF strategy workshops would be run with Directors and Heads of Service.


On vacancies, Members asked about vacancy capacity, and whether unfilled posts may be deleted. Officers noted that the Council set a managed vacancy factor within its budget establishment. The Council’s approach was to look at where services can have a level of vacancy and attach the managed vacancy factor to those services. This was monitored throughout the year. On front line services, there was no such target. In 2022/23, the managed vacancy factor was roughly £4M, and the underspend against staffing was £8M, and therefore an overachievement of the target. Officers would not look to remove posts if there was a need for such posts.


On SEND Transport, Members asked if cost pressures were due to contractors charging over and above petrol costs, and whether there were any volume drivers in terms of take-up. Officers noted that within the Council’s budget strategy, there was a demand-led growth element and also savings which were used to bridge the gap. SEND Transport was reported in both areas. Within the Council’s capital programme, there was also an increase in the number of SEND provision that officers were looking to increase within the Borough. It was not as straightforward as to say it was down to demand. Transport routes, for example, also needed to be considered.


Members noted that the demand of high needs was increasing and that it would therefore be difficult to achieve the savings on the transport side. Members asked if increased capacity was restraining growth rather than preventing growth. Officers noted that this was one of the reasons why SEND Transport was at Amber II at the moment. It was difficult to say until the academic year had started. Officers were looking at historic trends and working with the service. Officers also noted the budget monitoring process.


Members referenced the budget gap strategy and asked how developed the Council’s thinking was on this, and how officers were going about it. Officers noted that the budget strategy that was presented in February 23 had a £10 million saving requirement for 2024/25 and it had a savings programme of equal value. Within the savings program there was an element which related to ongoing Fees and Charges uplifts. Within future years the budget gap started to open up. 2024/25 had a largely balanced budget. There were some further bid savings still to be identified, but most savings to address the gap had been identified. Horizon scanning was ongoing, and in the Autumn, officers would reassess the budget gap in terms of latest intelligence on demand/ inflation. These workshops would look at how to shape the savings programme to maximise transformation opportunities, increase efficiency and protect frontline services. The proposals would be presented to Cabinet in December and brough back to the Committee in January 2024.


Members asked about the legacy element of the pandemic-driven demand for services. Officers noted that there had been increased demand for services during the pandemic for both adult’s and children’s social care. There was also a particularly high demand relating to mental health. Officers were working across service areas to see where they could help to support residents and manage that demand. There were still high numbers within the adult’s mental health services, and so officers were looking at how to deliver an outcome that helps to support the residents and also reduce costs. For children’s social care, the increase in demand was starting to level off. There was an underspend for Looked After Children in 2023/24 but this was not related to a reduction in the number of children being supported and was to do with having a better mix of service provision. During the pandemic there were issues with courts which made it harder to move children onto more suitable placements. There was a backlog so as time goes on that backlog reduced which enabled officers to bring the demand levels down. Additional demand on homelessness was related to the cost of living.


Members referenced the underspend of £174k with the remit of this Committee, and noted that this was unusual, and asked how these resources would be reallocated. Officers confirmed that it was unusual for children’s social care and services to underspend. Officers noted that there was not a reduction in the numbers of children being supported. Some of it was related to the court backlog, there were fewer children in residential placements and the supported living unit costs had also come down.


Members noted that DfE had approved a disapplication to allow Hillingdon to take money from the school’s budget to help reduce the high needs budget and asked why the Council had opted for this course of action. Officers noted that the current position on the high needs block was that the Dedicated Schools Grant (DSG) had been underfunded, going back to around 2015/16 which was why there was the accumulated deficit. This underfunding required an additional contribution from schools. It was proposed to transfer 0.5% of the school’s block to the high needs block to contribute to the additional cost of high needs placements. The schools Forum did not agree to that request and so the Council put in a disapplication request to which the DfE agreed. The primary drivers for the increasing costs in the high needs block was on independent placements and out-of-Borough placements.


Members noted that the DfE had required some Councils to cut EHCP funding by 20% and asked whether Hillingdon had been required to do so. Officers noted that there was no specific number in terms of reducing funding on EHCPs. There was a programme of works to reduce the spend in the high needs block, and there was a number of different schemes including reviewing the banding model. Officers were working within the safety valve agreement and with the DfE.


Members noted the forecast increase in the cost of care provision and SEND Transport asked if officers believed that the Council was at its peak economically at the moment. Officers noted that the Government did publish its forecast as part of the OBR (Office of Budget Responsibility), and within this was an inflation forecast. The forecast on inflation was 7% for 2023 falling to 3% for 2024 and 2% thereafter, with 2% being the Bank of England target rate. On the projections, the upper and lower limits of these were stark, but the Council adopted a low-risk strategy. For example, the £60million inflation requirement was part of a low-risk strategy to ensure that there was enough money if lower projections materialised.


Members referenced the contracted spend for SEND Transport and asked if this was outsourced. Officers confirmed that the service was currently outsourced and there would always be a discussion of in-house versus outsourced. This could vary on many factors such as demand as well as economic circumstances. With inflation remaining high, the pay award was coming out above the budgeted position and so this put pressure on in-house services. On SEND Transport, a holistic view was needed, to also consider route planning, the right number of buses, and the right number of transport assistants. The current way of working was probably the most efficient but this would always be monitored.


Members referenced the 200+ independent/ out-of-borough placements. Given that there was not the intention to build a new secondary school, Members asked what solutions there could be for this. Officers noted that the DfE were providing additional capital funding to increase the provision for special resource provision in secondary schools. Officers were also reviewing the need and requirement of EHCPs.


Members noted that another Local Authority had received additional funding, as a port authority, for their unaccompanied asylum-seeking children (UASC), and asked whether Hillingdon, as another port authority, were going to receive similar additional funding. Officers noted that they were always on the lookout for further funding. Home Office funding had not risen with inflation. Services for asylum seekers should be funded through the Home Office and so Hillingdon did end up incurring some costs. This was why there was a £600k pressure within the budget. Some asylum seekers may not quality for funding. Hillingdon was not seeing any additional funding for inflation pressures.


RESOLVED: That the Committee noted the financial context in which the 2024/25 budget setting process will take place in advance of detailed savings proposals being developed and approved at Cabinet in December 2023.


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