Agenda item

[Report of the director for  Finance. To be introduced by  the Cabinet Member for Finance]

To provide Cabinet with an update on budget performance for the year to date and likely financial outturn position for 2018/19.Consideration of any proposed budget virements as at the end of quarter 2.

The Cabinet Member for Finance introduced this report which set out budget variances, including those arising as a result of the forecast non-achievement of Cabinet approved MTFS savings.

The Cabinet Member outlined that the budget was a projection of the Council’s finances for the end of 2018/19. It was projected there would be an overspend of £9.3m which was mainly due to the non-delivery of previously agreed savings in the Adults and Children services. This was also after applying use of the Council’s reserves within the year to account for £7m of overspend. The Cabinet Member noted the difficulty delivering savings on necessary services and that savings should now be written off as the demand and cost of services meant these savings could not be delivered. The Cabinet Member noted the demoralising effect on officers/staff delivering a service with the pressures of saving money. Attempting to make savings in areas such as the Adults and Children services was not realistic as the Council could not turn away from the most vulnerable and high need members of society.

Following questions from Cllr Blake, Cllr Das Neves and Cllr Morris, the following was noted:

·         There was no update from the central government on the funding for local authorities, following events at Westminster on 11 December 2018. This was now due to be provided before 25 December.

·         The Cabinet Member acknowledged that writing off those previously agreed savings was about accepting the reality of the situation. More money was due to be provided to Adults and Children services for 2019 and 2020. This would require reviewing the budget and identifying areas where it was possible to raise income or change service delivery to save on costs.

·         The Cabinet Member noted it was absolutely the intention, in line with legal requirements, for the Council to deliver a balanced budget in 2019 and 2020.

·         Regarding changes to the previous administrations commitments, the Cabinet Member noted the change in the commercial portfolio, such as the ending of the Haringey Development Vehicle. The Council also now had rental income from commercial assets it owned for which it was seeking to maximise the income for the Council. Where possible, services that the Council felt it could better deliver in-house and save on costs were being explored.

·         Regarding how long the Council would be able to maintain a budget gap, the Cabinet Member responded that many councils were in the same position and this would depend on reserves available to Councils which was likely to be only a few years.

·         Regarding the frequency of the monitoring reports to Cabinet, Officers noted that the quarterly reports were in line with the practice of most local authorities. Additionally, the corporate process of the Council had a regular internal budget review. This review outside of Cabinet allowed for constant monitoring of the budget through reports. Officers stressed there was a balance that needed to be made between the formulation of reports and the action time needed to address the issues within them. The Cabinet Member for Finance was also meeting with Adults and Children’s services on a fortnightly basis to monitor and discuss the budget overspend.

• The Cabinet Member would provide a written answer to the question on which previous commitments of the last administration that the current administration no longer wished to pursue.

RESOLVED

1. To note the forecast revenue outturn for the General Fund (GF), including corporate items, of £9.3m overspend post mitigations of £6.4m and the need for remedial actions to be implemented to bring closer to the approved budget (Section 6, Table 1, and Appendix 1).

2. To note the HRA forecast of £3.6m underspend. (Section 6, Table 2, and Appendix 2).

3. To note the net DSG in-year forecast of £3.0m overspend and projected DSG Reserve deficit of £2.1m and the actions being taken to seek to address this. (Section 7 and Table 3).
4. To agree the permanent £9.82m downwards adjustment of the agreed 2018/19 MTFS savings post Qtr2 and note that the impact of this on the 19/20+ budget is being addressed in the financial planning report also on this agenda. (Section 8, Table 4 and Appendix 4).

5. To note the latest capital forecast expenditure of £174.0m in 2018/19 which equates to 76% of the approved budget. (Section 9, and Table 5).

6. To endorse the measures in place to reduce overspend in service areas; and

7. To approve the budget virements as set out in Appendix 3.

Reason for Decision

A strong financial management framework, including oversight by Members and senior management, is an essential part of delivering the council’s priorities and statutory duties.

Alternative Options Considered

The report of the management of the Council’s financial resources is a duty of the Interim Director of Finance (Section 151 Officer), helping members to exercise their role and no other options have therefore been considered.