Agenda item

The Committee received a budget monitoring report which covered the position at Quarter 3 (period 9) of the 2018/19 financial year. The report was introduced by Jon Warlow, Director of Finance as set out in the report pack at pages 77-98. The following arose from the discussion of the report:

a.    The Committee noted that as at Quarter 3, the forecast continued to show a significant projected overspend, albeit with a slightly  improving position of £9.3m to £9m for Quarters two to three, on the General Fund. There was a worsening position of around £1.4m in Children’s Services which was predominantly due to the cost of external Looked After Children placements and the cost of care packages. Some of these costs had been offset by an improving position with Adults due to the receipt of a winter grant from government. The forecast for the HRA was an improving position  with a £4.4m surplus projected, up from £3.6m in Quarter 2.

b.    Officers commented that the Council was approaching a deficit balance position of £2.6m within the Dedicated Schools Grant which would trigger a threshold for a recovery plan to be drawn up. Officers were beginning the process of drafting and implementing this plan.

c.    In response to issues raised by the Chair during report clearing, officers set out that Haringey’s LAC overspend was 3%, which was significantly below many of its statistical neighbours. The Committee’s attention was also drawn to the fact that NRPF accounted for around 9% of the total overspend in Children’s Services. Furthermore, Haringey’s share of Brexit funding from the MHCLG equated to £210k over two years.

d.    The Chair emphasised that the Committee was keen for Scrutiny to be involved early on in the process of budget setting and requested that information to be properly scrutinised by the individual panels. In response, officers emphasised that any requests for further information could be added to the finance briefings. Officers requested that questions be asked in advance of the meeting in writing. It was commented that budget reports were always published well in advance of OSC meetings. Officers also set out that they were happy to organise a package of training for Members, to coincide with the new planning year for the MTFS.

e.    Officers suggested that they were committed to supporting Scrutiny but were unable to offer a dedicated resource in that respect. However, the Director of Finance committed to ensuring that Business Partners were available to attend panel meetings to respond to queries and concerns. The Director of Finance requested that issues be flagged up in advance to accommodate this. The Chair acknowledged the Director of Finance’s comments and highlighted that further discussions on this would form part of the scrutiny stocktake process. (Action: Chair).

f.     In response to a query around the comparative data for LAC overspend, the Director of Finance acknowledged that benchmarking could be deceptive and agreed to provide further information on Haringey’s relative position in relation to some of our statistical neighbours. (Action: Jon Warlow).

g.    The Director of Finance agreed to come back to the Chair of the Children’s Panel with further details on the nature of the £400k overspend identified in misplaced care packages. (Action: Jon Warlow).

h.    In response to a query around the relative health of the Council’s overall budget position, officers acknowledged that there would be some testing delivery issues involved with the budget given the level of savings required in the forthcoming year. However, it was expected that the budget would be deliverable. Officers advised that budget holders would be expected to provide signed written assurance on their ability to keep within allocated budgets to ensure ongoing sustainability. There was also some resilience built into the balance sheet around the deliverability of savings as part of the budget resilience fund.

i.      In response to a further question around the achievability of savings and the extent to which the Council would be carrying forward a number of budget pressures into next year, officers advised that sizable redress had been identified in response to the issues identified and the pressure on budgets from undelivered savings. Officers reassured the Committee that an exercise had been undertaken to ensure that budgets reflected the known costs of a service and to better understand where that budget should sit within a particular service. The budget monitoring arrangements for 2019/20 would involve a live budgeting process which would come back to the relevant committees to report significant cost pressures.

j.      In response to concerns about the setting of undeliverable income targets for children’s centres, officers acknowledged that there would be issues that emerged but requested that scrutiny panels flagged up emerging issues to Finance and Finance would then be in a position to provide support to the individual panels and drill down on those issues.

k.    The Committee sought clarification about the DSG budget position and raised concerns that the council had seemingly transferred money away from Early Years funding to the high needs block.  In response, officers acknowledged that this was the case and set out that there was a limited amount on inter-fund transfer permitted, which had been agreed by the Schools Forum. Officers recognised that this reduced the amount of money available to Early Years but advised that this was deemed prudent. Officers cautioned that this only partially mitigated the risk and that going forward a more permanent solution was needed.

l.      The Committee suggested that further emphasis needed to be given to investment in the commercial portfolio. In response, officers acknowledged the fact that the Council needed to get better at generating income through its commercial portfolio and further acknowledged that where the Council could improve its commerciality it reduced adverse impacts in other services.

m.  The Committee requested that a more detailed line-by-line financial breakdown of the priority areas be provided to OSC and the Panels. The Director of Finance advised that there was a current year breakdown online and that he would email members with a fuller breakdown of the new year’s budget. (Action: Jon Warlow).

RESOLVED

That the following be noted:

1. The forecast revenue outturn for the General Fund (GF), including corporate items, of £9.1m overspend post mitigations of £6.4m and the need for remedial actions to be implemented to bring closer to the approved budget;
2. The HRA forecast of £4.4m underspend;
3. The net DSG in-year forecast of £3.5m overspend and projected year end DSG Reserve deficit of £2.6m and the actions being taken to seek to address this;
4. The latest capital forecast expenditure of £172.4m in 2018/19 which equated to 75% of the approved budget;
5. The forecast delivery of savings in 2018/19 (Section 8, Table 4 and Appendix 4 of the report); and
6. The budget virements as set out in Appendix 3 of the report.