Agenda item

[Report  of the Chief Operating Officer. To be introduced by the Cabinet Member for Resources and Culture.]Monitoring report on forecast spend against budget and consideration of any proposed budget virements

The Cabinet Member for Resources and Culture introduced the report which set out the range of indicators relevant to the Council’s overall financial health. These included the forecast financial revenue and capital outturns for 2015/16 based on actual performance to 31 August 2015.

Cabinet were further asked to consider the proposed management actions set out in this report and approve the budget adjustments (virements) in Appendix 1 as required by Financial Regulations.

The current budget overspend reflected the current increased demand for services, against a decrease in the budget base of the Council. The Cabinet Member for Resources and Culture continued to be concerned about the overspend in Children’s and Adults. In terms of housing spend, it was evident that nationally, as well as locally, there was not enough housing available, increasing the cost of temporary accommodation.

 In terms of the recent announcements about the devolution of business rate income to local Councils, the Council were wanting to see more equalisation and will endeavour to maximise the opportunities provided by devolution of this budget.

The Cabinet Member set out the measures being taken forward to deal with the overspending areas in the budget. This would include carefully exploring the overspending areas according to Council Priority to understand whether: the overall savings trajectory is likely to be met, whether savings will be met next year, or if the savings plans in place need more acceleration. The Cabinet Member would be leading a series of Star Chamber meetings with head of budgets to take this analysis forward.

The Cabinet Member for Resources and Culture  would also be bringing forward an Budget Monitoring report to the November Cabinet to keep  Cabinet fully abreast  of the  impact of   actions, changes being made to the budget, and  progress  to reduce the overspend. It was important to note that, due to the sensible reserves budgeting policy, the Council were in a better position to meet the anticipated increased demands for services. However there would continue to be more focus on bringing the overspend down.

Cllr Engert questioned the ongoing required Adult and Children’s services budget savings, and the risk of depleting reserves, if these savings cannot be met. The Cabinet Member explained that there had been a lot of work to explore the issues in these two services including: if there were legitimate issues with meeting timelines for savings targets, the impact of the financial models being used by the service areas, considering social care packages in place.

Overall, the Cabinet Member for Resources and Culture would be considering the Council’s savings trajectory for the next year and how it will be achieved and also having conversations with Cabinet Members on their priority areas.

There was a separate risk reserves in place and the Council were required by its external auditors to have £15 to £20m in reserves.

The Leader provided a further context to the budget pressures being seen, by explaining that virtually all London boroughs were experiencing a demand pressures for Adults and housing service. The Council had been criticised for previously boosting reserves but service changes would take time to deliver and the increased reserves provided the support to make the transformational service changes needed whilst dealing with peaks in service demand.

The Cabinet and Liberal Democrat Group further placed on record their thanks and appreciation to Kevin Bartle, The Assistant Director for finance, who was leaving the Council in November. Mr Bartle was commented to be an exemplary local government servant, providing expertise and support to all Councillors.

RESOLVED

1. To note the report and the progress being made against the Council’s 2015/16 budget in respect of net revenue and capital expenditure;
2. To approve the budget changes (virements) as set out in Appendix 1;
3. To note the use of the Strategic Risk Reserve to mitigate the Council’s overall revenue position as set out in Section 7 to the report;
4. To note the range of strategies to bring the current year’s budget into balance, including challenge meetings (Star Chamber) as described at paragraph 16.2 to this report; and,
5. To maintain under review the key risks and issues identified in this report alongside the adequacy of the Council’s reserves.

Alternative options considered

The report proposed that the Cabinet considers the financial position for 2015/16 in line with existing procedures. However, it also includes enhanced financial information to give the Cabinet a more rounded view of the Council’s financial position.

A risk based approach to budget monitoring has been developed in order to manage the Council’s finances at a time of economic and financial uncertainty including additional benchmarking information.

Cabinet could choose to adopt a less rigorous regime and examine the financial position at a later stage. Projections could be marginally more accurate if a delayed approach was adopted, but there would be less time for robust development and consideration of management action and virements

Reasons for Decisions

Members’ involvement in financial monitoring is an essential part of delivering the Council’s priorities.

The constitution requires Members to approve certain financial transactions such as virements according to approved limits.