Agenda item

Purpose: to report on the financial performance of the Council’s revenue budgets and provide a year-end forecast. This report is Quarter One 2022/23.

Resolved that Executive:

·         Note the forecast £4.6m over spend, after taking account of provision that was made in reserves for specific risks at the time of budget setting. Without this provision, the forecast would be an over spend of £8.1m.

·         Review the amendments totalling £1.5m and suggested mitigations totalling £1m which would reduce the overspend to £2.1m and agree what actions can be implemented.

·         Discuss what further actions could be taken to restrict expenditure.

This decision is eligible to be ‘called-in’.  However, if the decision has not been ‘called-in’ by 5.00pm on 29 September 2022, then it will be implemented.

Councillor Ross Mackinnon presented the report (Agenda Item 7), detailing the financial performance of the Council’s revenue budget.

Councillor Mackinnon commented that the Quarter 1 forecast outturn at the end of the year was an overspend of £2.1 million which was due predominantly to higher than expected inflation.

It was noted that Adult Social Care services were £2.8 million overspent due to higher client numbers than modelled and inflationary increases. Further, Councillor Mackinnon noted that Children and Family Services had a forecast overspend of £2.5 million due to the increased cost of providing placements for those children with complex needs, and pressures arising from increased agency costs.

Councillor Mackinnon reported that measures continued to be explored to reduce the forecast overspend but that no cuts to services were currently envisaged.

Councillor Jeff Brooks acknowledged external factors such as interest rates and energy costs but suggested, that if after one quarter the budget had an overspend forecast of £8.1 million then it appeared to have imploded within thirteen weeks. Councillor Brooks suggested that the report indicated that whilst inflation was anticipated, there was a reliance on the use of reserves. 

Councillor Mackinnon commented that if the actual spend did not match a model or budget, it did not mean that the model or budget was flawed. Any budget was dependent on its inputs which in turn were dependent on assumptions and knowns at the time of formulation. 

Councillor Brooks queried the level of reserve positions and requested examples of mitigating factors that had been taken. Councillor Mackinnon referred Councillor Brooks to sections 5.9 and 5.10 of the report. Councillor Mackinnon commented that there was no question of the general reserve being depleted below the minimum level as recommended by the Section 151 Officer.

Councillor Lee Dillon highlighted the mitigation proposals for Adult Social Care which indicated a £50,000 saving related to domiciliary care stopping. Councillor Dillon suggested that this implied a reduction in services. Councillor Mackinnon said his understanding of the domiciliary care figure was that it was not a mitigation that had been identified as a result of the overspend but was an underspend that had happened because it had been budgeted for but was not required. Councillor Dillon requested that the table of mitigation be re-circulated to clarify whether any factors related to service cuts. Councillor Mackinnon said this would be possible but reiterated that there were no cuts to services envisaged. Councillor Lynne Doherty requested that the Quarter Two update include further detail relating to the proposed amendments.

Councillor Dillon queried whether there had been an under-estimation with regard to the bounce-back from the pandemic in relation to Adult Social Care and whether there was a bigger concern in relation to children’s wellbeing after the pandemic which resulted in more placements. Andy Sharp, Executive Director (People), commented that it was the cost of the placements that had increased rather than the number of placements.  There was a lack of capacity in the market nationally and the cost of the market had increased exponentially. Councillor Dillon queried whether the Council was investigating in-house solutions to reduce costs, or looking at longer-term contracts to reduce the margin of profit made by care providers. Andy Sharp commented that a number of options were being explored, including in-house solutions, although these were not currently viable. 

Councillor Dominic Boeck noted that there was a relatively small number of children in placements but that some of those children required substantial sums of money to pay for their placements which made modelling difficult. 

Councillor Alan Macro referred to section 5.19 of the report which forecast an overspend of £0.8m in the Council’s care homes due to being unable to admit new clients to some homes. Councillor Macro requested an explanation as to the reason for this and what was being done to address it. Councillor Mackinnon said his understanding was that some clients with particularly complex needs were not able to be looked after in the Council’s care homes. Andy Sharp said there were issues with staffing levels across the market and a reliance on the use of agency staff as well as the inability of the care homes to manage those with complex needs leading to the necessity to place within the external market. 

Councillor Doherty commented that when setting the budget the right guidance and support had been provided by the Section 151 Officer in relation to inflation setting. In line with all local authorities, difficult times were predicted with regard to inflationary pressure. Councillor Doherty recognised West Berkshire as being a financially astute organisation for many years, particularly in comparison to neighbouring authorities, and acknowledged the mitigations being made which were a direct result of the financial management of the Council. 

Councillor Doherty thanked Councillor Mackinnon and Joseph Holmes, Executive Director (Resources), for the report and assured residents that the Executive would continue to manage the finances of the local authority astutely and would robustly lobby Central Government for the right level of funding to enable the front line, key services that residents relied upon.

RESOLVED that: Executive

·         Note the forecast £4.6m over spend, after taking account of provision that was made in reserves for specific risks at the time of budget setting. Without this provision, the forecast would be an over spend of £8.1m.

·         Review the amendments totalling £1.5m and suggested mitigations totalling £1m which would reduce the overspend to £2.1m and agree what actions can be implemented.

·         Discuss what further actions could be taken to restrict expenditure.