Agenda item

To review the Quarter One budget monitoring forecast for revenue for the financial year 2024/25. To be considered by Cabinet on 17 September 2024.

Please note that this report will follow as a later supplement.

The Chairman noted that in agenda supplement 1, was a report setting out the first quarterly revenue budget monitoring forecast for the financial year 2024/25 based on the position at the end of June 2024. The report also provided an update on the Medium-Term Financial Strategy (MTFS) and budget gap for the financial year 2024/25 and beyond. The report was considered by Financial Planning Task Group on 8th September and would be considered by Cabinet on 17th September. A summary of the Task Group’s discussions was provided in a report in the agenda pack.

Cllr Nick Botterill, Cabinet Member for Finance, Development Management and Strategic Planning stated that the quarter one position forecasted a net overspend for the year of £8.242million. It was stated that the Council had previously been in a similar position having predicted an overspend in the People area, which then had a favourable outturn in the end. It was also emphasised that though this projected overspend was not a desired outcome, management actions would be sought to close the overspend rather than using reserves.

Lizzie Watkin, Section 151 Officer stated that the within the report, paragraphs 126 onwards presented a Section 151 Officer commentary and set out positions of concern and risk. Further emphasis was made that the overspend was not a tolerable or acceptable position and meetings were set to take place with senior leadership to consider remedial actions, such as holding vacancies and recruitment freezes. Concern was also raised regarding the Dedicated Schools Grant Area with further reporting set to take place on Safety Valve submissions.

The following comments were received by Members of the Committee including concern regarding the overspend, with questions asked as to whether the Leader and Chief Executive had questioned Adult Services regarding the overspend as well as how it was important for areas to run their own respective budgets. Assurance was provided that funding was not being taken from one area to fund another and that the Cabinet had been rigorous in investigating the budget. The need to understand the issue behind the overspend was stressed with further resource to be spend on diagnostics. The importance of questioning the assumptions within the base budget was also stressed as well as the need to understand the cause of different variances.

Further assurance was also provided by the Deputy Chief Executive and Corporate Director of Resources that a One Council approach was being taken to balance the budget whilst acknowledging that each area of the organisation needed to play their part and manage costs and controls in year.

Clarity was sought regarding who had the authority to make decisions regarding mitigations for the overspend, to which it was stated that this was dependent on each decision, with policy changes having to be taken to Cabinet whilst operational decisions could be made by Head of Services and Directors.

Concern was raised regarding holding vacancies, particularly in adult social care due to the inflated cost of bringing in support from the market to which assurance was given that there would be some exceptional areas for recruitment freezes dependent on context.

A discussion took place regarding the role and responsibility of the Financial Planning Task Group, as well as the balance between Select Committees and the Overview and Scrutiny Management Committee. It was suggested that a meeting with the Select Committee Chairmen, the Overview and Scrutiny Management Committee Chairman and Financial Planning Group Chairman take place. The Section 151 Officer also provided further guidance as to the opportunities for scrutiny during the budget setting process.

At the conclusion of discussion, it was,

Resolved:

The Overview and Scrutiny Management Committee agreed:

a)    The proposed transfer of £2.237m to a new High Needs Sustainability Activity reserve.

b)    The current revenue budget is forecast to overspend by £8.284m by the end of the financial year.

c)    The current forecast savings delivery performance for the year.

d)    The forecast overspend on the HRA of £1.042m and the impact on the HRA reserve.

e)    The forecast overspend against Dedicated Schools Grant (DSG) budgets of £9.893m and the impact on the cumulative DSG deficit.

f)     The reported transfers from earmarked reserves.