Agenda item

(CSP: MEC & MEC1)

Purpose: To inform Members of the latest revenue financial performance of the Council for 2018/19.

Resolved to note the report, in particular the continued challenge of managing pressures in Adult Social Care, which are shared nationally, and the mitigation that is proposed in year to reduce the current end of year projection.

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 8) which informed Members of the latest revenue financial performance for 2018/19.

Councillor Anthony Chadley advised that the current financial forecast was an overspend of £1.3m against a net revenue budget of £119.4m which equated to 1.1% of the net budget.

The forecast overspend took into account £2m of mitigating action to be delivered by services during the remainder of the current financial year. The implementation of this mitigating action would be monitored closely.

The main driver of the forecast overspend was the Communities Directorate which was forecasting an overspend of £2.8m. £2.1m of this sum related to Adult Social Care (ASC) which was facing increasing financial pressures on demand led, externally commissioned, placement budgets over and above the modelled assumption that formed the basis of budget setting. In addition, a number of risks, provided for in the service specific risk reserve had materialised. Local authorities nationally were facing significant financial challenges relating to the funding of ASC budgets, including increasing demand on services and rising costs of commissioning care. This had been recognised by the Government and additional winter funding had been announced.

Councillor Chadley also reported that £1.3m of service specific risk reserves could be used to mitigate further the forecast overspend. This had yet to be deployed and was not included in the forecast. There was also an additional £768k risk management budget which could be utilised to help mitigate further the current forecast overspend. Councillor Chadley was therefore confident that the budget would be brought on target despite the significant financial pressures being faced. The Council had an excellent record in managing its finances.

Councillor Lee Dillon commented that the Council’s finances were in a similar position to the previous year with an overspend being consistently predicted. He therefore felt the budget setting process needed to be examined and he would welcome a cross party solution to this. The budget needed to adequately reflect pressures. Councillor Dillon noted that risk reserves could be deployed, i.e. to meet contract inflation pressures, but he felt it should be possible for these pressures to be tracked and identified in the budget setting.

Councillor Dillon felt that it would be beneficial to understand in more detail the availability of other earmarked reserves and their total sum. He asked that the use of these/their purpose be reviewed, he hoped this was an area the Administration would also be wanting to review.

Councillor Dillon also raised the importance of learning lessons from savings and income generation targets that were at risk of/would not be met.

Councillor Jeff Brooks noted that the Resources Directorate were reporting an underspend of £667k. He felt this was another example of the Resources Directorate ‘riding to the rescue’. Councillor Brooks saw this as annual occurrence, with the Resources Directorate underspend accelerating through the year.

Nick Carter responded to this point. The report outlined the forecast outturn for the Directorate. He added that there had been a corporate response to the forecast overspend and each Head of Service had been tasked with slowing down expenditure. Nick Carter further added that he had no expectation of an increase to the underspend beyond what was being reported. However, it was more straight forward to slowdown expenditure in the Resources Directorate as it was less demand led.

Councillor Brooks understood those points, but allocated funds were not being spent year on year. Nick Carter advised that ideally this expenditure would take place, but difficult decisions had to be made when considering other priority areas at a time of significant financial pressure.

Councillor Graham Bridgman commented on pressures in ASC. These were demand led statutory services and needs had to be met. In terms of budget setting, Councillor Bridgman described a detailed ongoing piece of work to seek to address this for 2019/20. This was recognised as highly important and he applauded officers for their work on the budget modelling. Councillor Chadley added that many learning points had been taken on board as part of the budget setting process for 2019/20.

Councillor Chadley then commented that risk reserves would be deployed to meet contract inflation pressures, but the actual level of risk depended on whether there was a fixed or variable rate of inflation.

Other earmarked reserves formed part of the budget setting process and Councillor Chadley agreed to discuss with officers whether more detailed information could be released.

Lessons continued to be learnt from income generation work. Every effort was made to achieve income generation and savings targets, in some cases they would be achieved but on a delayed timescale.

Councillor Graham Jones commented that this was a dynamic situation with extensive pressure on care budgets. These budgets needed to continue to increase to meet demand. This would be an area for Overview and Scrutiny Management Commission review.

RESOLVED that the report be noted. In particular the continued challenge of managing pressures in Adult Social Care, which were shared nationally, and the mitigation proposed in year to reduce the current end of year projection.

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