Budget Monitoring - Update Report
[Report of the Chief Operating Officer. To be introduced by the Cabinet Member for Resources and Culture.]Monitoring report on forecast spend against the budget.
The Cabinet Member for Resources and Culture introduced the report which provided an update on the Council’s budget position since the previous monitoring report considered at the October meeting. The overspend had increased from £14.3m to £14.8m due to increasing costs for temporary accommodation.
The report further set out the budget reduction strategy was being taken forward, use of reserves , together with the actions being undertaken to reduce the overspend and longer term savings plans. There would be £2.9m released from treasury management activities to tackle the overspend and a further £5m was earmarked to be drawn down to respond to the overspend. This action highlighted that reserves were not enough to support services to deal with changes in demographics and rising demand.
In response to Cllr Engert's question about the increase in the overspend and expected use of reserves until the end of the financial year, it was noted that the £6.9m overspend was a challenge but all officers were working hard to reduce the deficit to deter further use of the reserves.
There were specific star chamber meetings to analyse and compile actions for overspending areas. A meeting had been held with Adults and Children’s service and there would be activities going forward to get grip on overspending Children’s budget and a review of care packages which would have an impact of the spend currently.
The Leader remarked on the how this report illustrated the difficult financial context which the Council was working in, entailing difficult decisions to limit calls on reserves. Further reductions to local government finance were still expected with the government announcement this week of a 30% cut to the DCLG budget, of which a percentage would inevitably be passed on to local government. Cllr Arthur informed Cabinet that there was also a 6.2% cut to the Public Health grant which would see a £1.2m in year cut to the Council’s health budget.
The Cabinet Member for Economy, Sustainability, and Social inclusion highlighted the high level risk to reserves if the Council continued to spend at current levels.
To note the updated budget management position and the proposed actions to address the 2015/16 position.
Alternative options considered
In addition to the approach set out in this paper there are a number of alternatives that could be taken. A passive approach could be adopted with the position being dealt with at the end of the financial year; in that event, and to the extent that there remained an overspend position; there would be a call on the Council’s reserves.
The option of requiring alternative or additional budget savings has also been considered however at this stage it has been discounted as the evidence suggests that the approved savings should continue to be delivered albeit that slippage is occurring. In addition there are no indications that any alternative savings have a greater chance of success; this is particularly true given the time that would be needed to develop, approve and implement them.
Further, more aggressive management action could be taken to limit spending above those already being pursued in the Deficit Recovery Plan: for example all vacancies could be ‘frozen’, or there could be embargoes on spending. In practice these require significant management attention which at this stages it is considered would detract from the key task of implementing the approved savings proposals. Instead a recruitment panel of senior offices considers the business case for all vacancy and temporary staffing requests and relevant spending trends are closely monitored.
None of these options have been discounted lightly and they are all available should they become necessary later; it is therefore important that members understand the alternative actions and keep the Council’s financial position under close review.
Reasons for decision
Members set the approved budget in February 2015 alongside the three year Medium Term Financial Strategy (MTFS). The overspend position apparent at this stage of the 2015/16 financial year requires members to consider the options for bringing the budget back into balance over the remainder of the financial year.