Agenda item

The Committee received a budget monitoring report which set out the financial position at Quarter 1. The report was introduced by the Interim Chief Finance Officer & Section 151 Officer, Jon Warlow. The Committee noted that the forecast revenue outturn for the General Fund was a £5.9m overspend, post mitigations. The Interim Chief Finance Officer reassured the Committee that officers would build in the non-deliverable savings, as set out in the report, into the MTFS at an early stage of the financial planning process. The future programme of savings would incorporate non-deliverable savings and it was hoped that this would ensure a robust starting position for the MTFS.

The following arose from the discussion of the report:

a.    In response to a question, the Committee was advised that a significant proportion of the base budget pressures related to demand-led services. The challenge was to build future financial models that recognised this and with a degree of flexibility to respond.

b.    In response to a question, the Interim Chief Finance Officer reassured the Committee that the five year financial planning window for the MTFS was an appropriate timeframe, particularly as transformational projects usually had a multi-year profile. Taking a five year approach to financial planning also emphasised the impact of savings on the years ahead.

c.    In response to further questions around demand pressures and the feasibility of drawing down on reserves to mitigate undeliverable savings, officers emphasised the fact that the authority’s budget had  structural funding challenges. Officers acknowledged that the budget overspend could be mitigated to an extent, as per last year, but advocated that the structural deficit needed to be addressed as well. Officers advised that around two-thirds of the budget was spent on care services and that there was no way to produce an MTFS within the available funding envelope without looking at how the Council could provide those services differently.

d.    The Committee sought assurances around the Council’s ability to make projections in relation to demand and the confidence that officers had in those projections. In response, officers acknowledged that making projections was difficult. Part of the process involved ensuring that forecasting systems were aligned and were used as effectively as possible. Officers assured the Committee that senior officers responsible for the provision of care services were involved in budget forecasting and the budget setting process.

e.    Officers advised the Committee that there were significant elements of risk to the future funding envelope for local government. These included an upcoming Government Spending Review, a local authority Funding Review and a Business Rates review, as well as the potential impact on funding from the UK’s exit from the European Union. These pressures were not unique to Haringey but it was anticipated that the funding period of 2021 onwards could be the most challenging period yet faced by local authorities.

f.     In response to a question around the Dedicated Schools Grant, officers advised that there was a forecast closing position of a £4.3m shortfall and that most of this was in relation to the high needs block. Officers have challenged those funding calculations and are due to meet with representatives from the DfE and the Education Funding Authority to discuss this further.

g.    The Committee requested that the Quarter 2 Budget Monitoring report include some more information around the feasibility of savings and the risks involved if they are not delivered. (Action: Jon Warlow).

RESOLVED

That the Committee:

     I.        Noted the forecast revenue outturn for the General Fund (GF), including corporate items, of £5.9m overspend post mitigations of £7.5m and consider what remedial actions need to be implemented to bring closer to the approved budget (Section 6, Table 1, and Appendix 1 of the report).

    II.        Noted that the final 2017/18 general fund outturn, post completion of the external audit, was an increased overspend of £0.404m compared to the £0.019m reported in the outturn which has been offset against the GF reserve.  The 2018/19 brought forward GF reserve balance is now £15.5m still in line with the level proposed in the budget paper approved by Full Council in February 2018. 

  III.        Noted the net HRA forecast of £0.2m overspend. (Section 6, Table 2, and Appendix 2 of the report).

  IV.        Noted the net DSG forecast of £2.59m overspend, the actions being taken to seek to address this and the potential implications for the GF. (Section 7 and Table 3 of the report).

   V.        Noted the latest MTFS savings position in 2018/19 which indicates that only 33% (£5.2m) will be achieved.  To consider what remedial action is required to improve this position. (Section 8, Table 4 of the report).

  VI.        Noted the latest capital forecast expenditure of £192.8m in 2018/19 which equates to 84% of the approved budget. To also consider & approve the proposed changes to the approved budget (Section 9, and Table 5 of the report).

VII.        Noted the measures in place to reduce overspend in service areas; and

VIII.        Noted the budget virements as set out in Appendix 3 of the report.