Agenda item

To report on the financial performance of the Council’s revenue budgets. This report is Quarter Four, the provisional outturn for the 2024/25 financial year. The report highlights the financial position at outturn and the impact on the Council’s General Fund position. This allows the Executive and Revenue and Place Scrutiny Committee to consider the implications of the outturn on the 2025/26 financial year.

The Committee considered the provisional revenue outturn for the 2024/25 financial year (Agenda Item 8).

Councillor Iain Cottingham, the Portfolio Holder for Finance and Resources, presented the report which outlined the increasing financial pressures that were felt during 2024/25. This had resulted in the Exceptional Financial Support (EFS) being applied for and provisionally approved by Central Government. The allocation of £13m would be fully deployed to mitigate the Council’s outturn position and rebuild the Council’s General Fund to the minimum balance required to support the 2025/26 Revenue Budget.

Councillor Cottingham provided an update to paragraph 4.1 of the report:

‘The provisional outturn position for 2024/25 is £181.2m of net expenditure against a net budget of £164.6m.’

He reported that costs had significantly increased in Children’s Services and these pressures included:

·       An increase in the number of children in social care;

·       A rise in unit costs, i.e. care homes;

·       Increased costs for home to school transport; and

·       Agency costs for the employment of Educational Psychologists.

There was an additional pressure of £654k which was as a result of an adjustment made in the processing of housing benefit payments. Some residents had been overpaid but this was unlikely to be recovered as it concerned vulnerable residents.

(Post meeting note: a statement was subsequently issued by the Council which clarified that there had been no overpayment to residents claiming housing benefit and there was therefore no need for any repayment. There had been no financial cash loss to either residents or the Council. The full statement can be viewed from this link: https://www.westberks.gov.uk/article/44805/No-taxpayers-public-money-has-been-lost-in-housing-revenue-reconciliation)

A level of agency/consultancy support had been necessary to cover vacant senior finance roles.

Councillor Cottingham concluded his presentation of the report by reiterating the point made under the capital item about the high costs of SEND provision. It was absolutely the case that the Council wanted the best for all its residents, but these costs were very concerning. Efforts were being made to manage costs, including as part of commissioning, to achieve the best value possible.

A number of points were raised and questions asked during the debate, as follows:

A typographical error was noted in paragraph 1.4 of the report: ‘Central Government have provisionally agreed to a maximum EFS package of £13m for financial year 2024/25 (with a further £3m in 2025/26).’

The report made reference to the outturn resulting in negative reserves without the EFS. It was suggested that this was in fact an overspend as opposed to a negative reserve.

A lengthy discussion took place in relation to the loss of £477k of income as a result of the sale of a commercial property, the income from which had been included in the budget. The property disposal occurred at the conclusion of the 2023/24 financial year, but it had not been budgeted for due to uncertainty over the disposal and its timing. The loss of income became apparent when the property was disposed of.

Members were concerned at the timing of this transaction and whether it would have been more appropriate to consider disposal within 2024/25. The point at which there was knowledge of the disposal was queried. The view was expressed that full consideration needed to be given to the full cost implications of a sale, beyond the capital receipt.

Councillor Cottingham advised that the capital receipt enabled the allocation of transformation funding and the timeframe was therefore preferable. His understanding was that there were no further negative implications beyond the loss of income. Councillor Cottingham highlighted that a reduction in the cost of borrowing was achieved. He also referred Members to paragraph 7.8 of the report which explained the role of the Property Investment Board in considering the balance between a one-off capital receipt that could be utilised in the short-term vs the loss of long-term revenue streams.

Councillor Cottingham held the view that a significant amount of time and resource was invested by Officers and Members in achieving an income benefit of approximately £1m through commercial property investment. Income levels were not guaranteed and not within the Council’s control.

Councillor Cottingham confirmed his understanding that it was the intention to sell the Council’s commercial properties and a programme of disposal was in place over the next three to four years.

Questions were then asked in reference to the table within paragraph 4.3 of the report. Explanations were requested for the budget variance for the budget lines of Executive Director – Place, Executive Director – Resources and for the Chief Executive. The point was made, in relation to the Executive Director – Resources budget, that the External Audit fee had more than doubled causing a significant pressure.

Overspends were also highlighted against the budgets for Transformation and for Finance, Property and Procurement.

Councillor Cottingham explained that he would endeavour to provide updates on these points at the Executive.

Commissioning in relation to SEND provision was returned to and Councillor Cottingham agreed to provide the invest to save business case to Councillor Antony Amirtharaj to provide a fuller explanation of the work that was involved.

Returning to EFS funding, the £13m was subject to independent external audit before being finalised. A further £3m had been requested for 2025/26 and this was provisionally agreed. The forecast pressures for 2025/26 in terms of Children’s Services and Adult Social Care meant it would remain challenging to balance the budget regardless of EFS.

There was scope for capital receipts to be used as transformation funding and Councillor Culver requested that information on the use of this funding form part of the item on Transformation at the next Scrutiny Committee on 16 September 2025.

A number of different boards were referenced in paragraph 7.3 of the report that supported the Council’s financial governance. Councillor Culver asked for a diagram to be provided to help understand how these groups interlinked. Sarah Clarke commented that with the receipt of EFS, the need to review and enhance financial governance would become increasingly important.

Councillor Cottingham felt that some economies of scale could be achieved from Local Government Reorganisation as well as in increase in resilience. Being part of a larger local authority could benefit contract negotiations and the reduction of unit costs. There were however unknown factors, such as the pressures already referred to within Children’s Services which could increase as a result of combining with Oxfordshire districts.

A concern was raised that future Public Health grant funding could reduce when taking into account the underspends against this funding in previous years and the amount held within the Public Health reserve. Councillor Cottingham acknowledged there was a level of risk on this point. Sarah Clarke explained that efforts were being made to fully utilise this funding in other areas where work linked to health and wellbeing.

Actions:

·       Additional information would be provided at the Executive on 3 July 2025 to explain:

o   The budget variance for the budget lines of Executive Director – Place, Executive Director – Resources and for the Chief Executive.

o   The overspends against the budgets for Transformation and for Finance, Property and Procurement.

·       Councillor Iain Cottingham to provide the invest to save business case to Councillor Antony Amirtharaj to provide a fuller explanation of the commissioning work that was involved with procuring SEND provision.

·       Information was requested on the use of capital receipts for transformation activity as part of the item on Transformation at the next Scrutiny Committee on 16 September 2025.

·       A diagram to be provided to help understand how financial governance groups interlinked.

RESOLVED that the report be noted.