Agenda item

(CSP: MEC & MEC1)

Purpose: To inform Members of the provisional revenue outturn for 2017/18.

Resolved that:

·         The financial performance of the Council be noted.

·         The provisional outturn report be approved.

·         The paper would be referred to the Budget Scrutiny Task Group for further review.

This decision is not subject to call in as:

·      Report is to note only

therefore it will be implemented immediately.

The Executive considered a report (Agenda Item 6) which informed Members of the provisional revenue outturn for 2017/18, sought approval of the provisional outturn report and sought approval to refer the paper to the Budget Scrutiny Task Group for further review.

Councillor Graham Jones, in presenting the report, advised that the provisional outturn was an overspend of £276k against a net revenue budget of £117.4m (which was 0.23% of the net budget and therefore close to being on budget).

He reported underspends in both the Resources Directorate and the Economy and Environment Directorate. These helped to offset the overspend in the Communities Directorate.

The report also detailed the reasons for making use of the risk reserves for Adult Social Care (ASC) and Children and Families. A significant proportion of the ASC Risk Reserve was used to help meet inflationary pressures in that service.

Councillor Jones reiterated that the Council had been close to balancing its budget and was managing well when considering the pressures being faced by the authority. Difficult decisions had needed to be made by the Council to reach this year-end position, however very difficult alternative measures would have become necessary if this had not been the case. This was particularly true when considering the reductions to the Council’s budgets over recent years. The Council’s annual budget had reduced by £7.5m since 2015/16 and Central Government support (Revenue Support Grant (RSG)) had decreased from £25m to zero. As a result the Administration had been forced to increase Council Tax.

A high proportion of the Council’s expenditure was on care, Adult Social Care and for Children and Family Services. Councillor Jones advised that around 60% of the Council’s resources were spent on 3% of the population. He acknowledged that this was a startling statistic.

Volatility would continue moving forward. A particular concern was the potential for negative RSG and the Government was being lobbied on this point. While West Berkshire, together with all local authorities across Berkshire, was able to retain its business rates income as part of a pilot project, this held no certainty into the future.

Councillor Graham Bridgman continued to emphasise the financial challenges that the Council had faced over recent years. At his request and to aid comparisons, Accountancy had investigated the funding level that would have been required in 2017/18 to maintain service provision as per the 2013/14 funding level (if this had continued). This took into account issues such as inflationary rises and there was a stark difference. Councillor Bridgman informed the Executive that funding would need to have been £153m in 2017/18 when it reality the budget was £117m. Therefore a real term reduction in expenditure of £35m. This illustrated the difficulties faced by the Council in setting its budgets.

Councillor Jones also drew Members’ attention to the 2017/18 Savings and Income Generation Programme and highlighted the high success rate of achieving savings and income targets.

Councillor Lee Dillon gave his support to lobbying government to prevent negative RSG. He hoped it would prove successful.

Councillor Dillon referred to Councillor Bridgman’s point on the £35m reduction in funding. He noted that this reduction came from a Conservative Government and Councillor Dillon felt that West Berkshire’s Conservative Administration should have done more to hold MPs and the Government to greater account on this.

Councillor Dillon then noted that the outturn position for the Dedicated Schools Grant (DSG) was an overspend of £14k. This was an improvement from the planned overspend of £844k when the budget was set. However, Councillor Dillon questioned the cost to children’s education from this improved position. Councillor Lynne Doherty responded on this point by firstly stating that 95% of West Berkshire’s schools were rated Good or Outstanding by Ofsted. Much of this success was testament to sound financial management with schools able to balance their budgets. In cases where schools encountered difficulties with managing their finances, the Council was able to offer support.

However, Councillor Doherty acknowledged that there was a serious issue to manage in terms of the High Needs Block which had overspent. Funding concerns in this area were consistently highlighted, and MPs and in turn Government Ministers were lobbied. It was important to ensure that the funding for pupils in this Block was sufficient.

Councillor Dillon then made the point that the decision had consistently been made to draw down funding from the ASC Risk Fund. He felt that this sum should either have been highlighted as part of the budget or an overspend figure reported before the Risk Fund was taken into account.

Councillor Alan Macro made the point that the provisional £276k overspend had been achieved post deployment of risk funds. Without this, the overspend would have been closer to £1.75m. Councillor Jones responded to this point by stating that he had made clear in presenting the report that risk funds had been utilised.

Councillor Jeff Brooks felt that the continuing financial pressures facing ASC had not been properly recognised by successive national governments. This needed recognising by central government and was a point on which to lobby. Adequate provision was needed for the ageing population.

Councillor Jones confirmed that lobbying was taking place on the funding difficulties faced, primarily funding care. He also added the point that a coalition government was in place until recently and there needed to be responsibility for the decisions made at that time by the coalition government and their impact.

Councillor Jones then explained that trigger points had been set for when funds could be released from the ASC Risk Fund. This flexibility in the budget had been created to allow funds to be deployed when necessary. He agreed that mature conversation was needed as a nation for funding care in the long term.

Councillor Bridgman gave his agreement to the points made in relation to the ageing population and the need for a national conversation moving forward. He then made the point that the risk reserves had been established for a purpose and were created using funding set aside from the budget. A primary reason for establishing the ASC risk reserve was the fact that there was not clarity at the start of financial years on issues including contractual inflation and the living wage. This could be predicted to a point, but there could not be certainty. This was a reserve which could be bid for and its use was closely critiqued to ensure it was spent appropriately.

Councillor James Fredrickson agreed with the need for the national conversation on the costs of care, as did Richard Benyon MP. He highlighted concerns relating to demographic changes, currently four people in work would pay for one person in care, this was expected to move over time to two people in work paying for one person in care.

Councillor Brooks then made the point that for many years the Resources Directorate had been able to come to the rescue in the final quarter of the financial year in order to achieve an improved financial position. Paragraph 5.4 of the summary report stated that the Resources Directorate outturn was a £575k underspend which was an increase of £357k from that reported at Quarter Three. He felt this constituted over budgeting and was a continuing issue.

In response to this point, Councillor Jones explained that many elements of the Communities Directorate were demand led, whereas the Resources Directorate and the Economy and Environment Directorate were less so and therefore more straight forward to manage.

RESOLVED that:

·         The financial performance of the Council be noted.

·         The provisional outturn report be approved.

·         The paper would be referred to the Budget Scrutiny Task Group for further review.

Other options considered: n/a – factual report for information.