Agenda item

To scrutinise the revenue and capital proposals relating to the 2020/21 Draft Budget and the Medium Term Financial Strategy for 2020/21 to 2024/25.

Beverley Tarka, Director for Adults and Health, introduced the report for the 2020/21 draft budget and the Medium Term Financial Strategy (MTFS) for 2020/21 to 2024/25. The MTFS agreed in Feb 2019 had identified a budget gap of £13.1m for 2020/21 that would need to be addressed through further budget reductions. The recent spending review confirmed the social care funding at 2019/20 levels plus an additional £5m. The overall budget gap for 2020/21 has been reduced from £13.1m to £5.5m. Brian Smith, Business Partner, gave further detail on this saying that there was £5m of pre-agreed savings in the 2020/21 budget along with some additional savings to agree this year. The Council budget also has growth of £11.6m, comprising of just over £6m for the London Living Wage and demographic growth of £5.5m, and £9m of additional funding from the social care precept and the external social care grant. Cllr Connor queried why in that case, Appendix B to the report showed the Adults part of the budget as being £83.5m in 2019/20 but £76.1m in the draft budget for 2020/21, a reduction of over £7m. Brian Smith responded that the £83.5m figure may be incorrect and so the finance team would look into this send a corrected figure to the Panel (ACTION).

In response to further questions, Brian Smith clarified that the Adults budget is £4.4m higher in 2020/21 than in the previous financial year. The savings for 2020/21 that had already been agreed in previous years total £4.039m and the new savings relating to Osborne Grove are £1.034m amounting to overall savings in 2020/21 of £5.073m. Asked about the progress on the previously agreed savings, John Everson said that these were currently running slightly behind track but that the likelihood of delivering the savings is high.

Cllr White commented that it would be easier to scrutinise the budget if all of these figures had been included in the report to the Panel and that this ought to be provided in future budget scrutiny reports.

The Panel than moved on to scrutinise the two MTFS budget reduction proposals included in the agenda papers.

PE01 Public Health Lifestyles

Will Maimaris, Director for Public Health, set the context for this item by stating that the public health grant received by the Council had been reducing for several consecutive years, leading to reductions in services, but was expected to rise next year. There is a budget of £700k used to fund an integrated lifestyles service in areas such as smoking cessation, exercise and NHS Health Checks. The budget reduction proposal aims to make an additional saving of £60k, representing a cut of nearly 10% to the budget which could potentially be partly mitigated by seeking alternative funding from partners such as the CCG. There are a number of options for reducing this budget. Existing services could be targeted at people who need them most and the NHS Health Check offer could be reviewed, as there has been a lack of long-term evidence that they improves cardiovascular disease outcomes. Smoking cessation through GP surgeries could also be reviewed as this had not been shown to be particularly effective.

Asked whether the savings could be achieved without significantly impacting on residents, Will Maimaris said that services will change but the important point is outcomes that are achieved while the risks could be mitigated. Ideally, more money would be invested in services but other previous budget reductions, such as with sexual health services, have not led to a deterioration in outcomes as services have been delivered in different ways.

PE02 Osborne Grove redevelopment

Beverley Tarka introduced this proposal explaining to the Panel that Osborne Grove nursing home is expected to close in 2021 after which there will be full revenue cost savings totalling £1.034m per year. When Osborne Grove opens again in 2023/24 after the rebuilding, there will be revenue costs of £476k meaning that there will be net savings of £558k per year after that point compared to current costs. The new set up is expected to be more efficient, partly because there are only two residents at present so there is expected to be more revenue coming in from a larger number of residents from 2023/24.

The Panel asked a number of questions to officers:

• On whether the interest costs from the capital borrowing had been factored into the figures, John O’Keefe, Capital Accountant, explained that there is a separate corporate budget for this and that the business case for the rebuilding has to demonstrate that the interest and capital repayment costs can be met when the facility is open. After that has been taken into account, the saving amounts £558k per year.
• Asked whether there will be demand for the 70 beds and what the risk to the budget would be if the beds aren’t filled, Charlotte Pomery, AD for Commissioning, acknowledged that operating to capacity is a major issue but there had been a lot of work done on anticipating the likely demand. The long-term population projections show an increase in the older, frailer group, particularly those from more deprived backgrounds so an increase in demand is anticipated. People are living longer and so the amount of time in nursing care is expected to increase. The new nursing home is also designed to be as flexible and adaptable as possible for different uses.
• Asked about the Equalities Impact Assessment (EqIA) referred to in the report, Charlotte Pomery said that a paper on the closure of Osborne Grove nursing home would be submitted to Cabinet and an EqIA would be attached to that.
• On how redundancy costs had been factored in, Beverley Tarka said that these costs would be met corporately.

In considering the recommendations that the Panel could make about the budget and the savings proposals, Cllr Connor said that it had been difficult to scrutinise the budget given the lack of clarity about some of the figures. The Panel determined that it would not therefore make any recommendations at this stage and would instead wait for more detail from the finance officers over the next few days and then consider again what recommendations would be appropriate.

Capital proposals

John O’Keefe, Capital Accountant, and Charlotte Pomery informed the Panel about the four capital proposals outlined in the report:

• In relation to proposal 217, a Cabinet decision had been taken to acquire Burgoyne Road and the Council was currently in the process of exchanging contracts. A budget of £3m had been made available, including investment from the GLA, to refurbish or rebuild it but decisions on this have yet to be taken as a detailed feasibility study is to be carried out first. Burgoyne Road will be used as a refuge for families and the current refuges that they will be transferred from will be repurposed for general needs housing or supported living.
• Proposal 218 provides funding as an allowance for social, emotional and health (SEMH) provision within the borough. The funding allocated is a high-level estimate of potential costs as the requirements for this provision is not yet known.
• Proposal 219 provides a block allowance for Additional Supported Living to enable the Council to be more opportunistic in acquiring properties by having the funding quickly available.
• Proposal 220 provides the funding for the rebuilding of Osborne Grove as discussed earlier in the meeting under the budget reduction proposal PE02. The overall costs had increased significantly since the original budget proposal which had been a high level estimate based on the expected costs of a standard building. However, the current cost estimate includes the specialist construction and equipment that will be required and additional supporting living on the site. The business case makes clear that savings are expected to be made overall after paying back the debt.

Charlotte Pomery and John O’Keefe then responded to questions from the Panel as follows:

• The timeframes for the detailed business cases for each proposal (those that haven’t already had one) will differ and there are likely to be a number of different stages at which the Cabinet will need to make decisions.
• The interest costs for the schemes are taken into account in the Council’s corporate treasury budgets. Each scheme will have a number of gateway reviews to assess whether the business case still stacks up and whether the investment should proceed.
• The funding for proposal 217 (Burgoyne Road) comes from an existing capital budget from 2019/20. The property is just being acquired and then a feasibility study from architects and the subsequent review and report to Cabinet might take around six months. The Cabinet would then need to agree to the contract for the construction works. Further information on the scheme would therefore become publicly available through these Cabinet reports.
• On proposal 219 (Additional Supported Living), the unallocated budget of £6.42m described in the report is a balance left over from the supported living budget set in 2019/20 after the costs for Linden House had been allocated. It is therefore possible to reallocate this leftover balance to fund additional supported living.

Panel Members acknowledged that though some of the information about the capital budget is still high level as some schemes are at an early stage, the information that the Panel had received was more detailed than in previous years which was welcome. The Panel agreed to note the information received on the capital budget.