Agenda item

Financial Monitoring

To receive an update on high level financial performance for the service and scrutinise how this meets organisational priorities.



Josephine Lyseight, Head of Finance (People), reported on the current budgetary position of the Children’s Service.  There was currently a projected overspend of £5.82 million.  £3 million of this was related to Covid expenditure.  The key areas where pressures were being felt were Safeguarding and Social Care, which had an overspend of £4.1 million, and Prevention and Early Help, which had an overspend of £1.5 million. 


The pressures in Safeguarding and Social Care were due to the increased number of placements and placement complexity, resulting in higher unit costs of care and increased staffing and legal costs.   The pressures in Early Help and Prevention were due to Special Educational Needs (SEN) transport and anticipated income pressures in Nursery and Children’s centres. 


Work was taking place with the Commissioning Service to mitigate the rising costs of placements, which reflected a national supply and demand issue.  Action included developing relationships with new providers and working to increase the capacity of the brokerage service to secure and negotiate placements at the best possible price. 


In respect of SEN transport, the pressures arose from an increase in demand of 10%.  In response to this, routes had been re-procured and this had reduced costs by 10%.  There was also new route mapping software and action was being undertaken to reduce the number of costly out-of-borough placements. 


In respect of the savings that were approved as part of the Medium Term Financial Strategy (MTFS), all of these were currently forecast to be delivered.   Mitigations would be put in place and replacement savings found in the event of this position changing.  


As in Period 3, the Dedicated Schools Grant (DSG) budget was forecasting an in-year overspend of £6.58m.  All of this originated from the High Needs Block (HNB) and the main reason for this remained the increasing number of Education, Health and Care Plans (EHCP).  Approximately 25% of looked after children now had an EHCP.  A DSG Management Plan was being produced with various stakeholders and would also be shared with the DfE.  Whilst Council actions would mitigate the level of overspend, it would not still not be sufficient to bring annual spend within allocated budgets.  This was due to the significant difference between government funding and demand for services within the HNB.


John O’Keefe, Head of Finance (Capital, Place and Regeneration) reported that the Capital Programme had been reviewed and re-profiled so that the funds were still available for works to be carried out in future years.  The funding for primary school repairs and maintenance had not been re-profiled though as the work that this covered was highly reactive in nature.   The funding for this had been kept in the current budget so that the Corporate Landlord function could respond to demands as and when they arose. Secondary School modernisation and enhancement programme had also not been re-profiled due to uncertainty regarding the works that needed to be done.  Funds for this had been retained in the budget so Project Managers could deliver on schemes as they became available.  £5.1 million had been re-profiled into future years, leaving a revised budget of £41.3 million.  It was currently anticipated that £37.1 million of this would be spent but it was possible that external factors, such as supply of labour and materials, could affect spending on the modernisation and enhancement programme for primary schools.


In answer to a question, Ms Lyseight reported that the overspend in the General Fund was forecast to be £5.8 million.  The deficit to the DSG was separate to this and outside of the balance sheet. 


Panel Members noted that the current overspend was not just due to Covid expenditure and requested confirmation that factors behind the overspend would not be recurring and that current funding levels were sustainable.  Ms Lyseight reported that Covid had impacted on all Council services.  Some interim funding had been provided by the government to cover the additional costs but this had not been enough.  It was unclear whether the additional demands for on the service would continue.  Assumptions had been made within the budget projections in the MTFS and requests for growth had been made to mitigate overspends though.  The Council wanted the government to fully fund the additional spending that had been required. It was hoped that the forthcoming spending review would provide fairer funding to cover the impact of Covid.  


Ms Graham commented that the service had a “needs led” budget.  When requests for support were made, the service was under an obligation to respond positively to them.   In addition, unit costs had increased year-on-year.  The service was therefore not in a position to control many of its costs.  Placements in secure residential units could be particularly expensive, with the Council paying £16,000 per week for some of these.  Although there were only small numbers of these, any increase could lead to significant budget pressures.  The number of young people in residential accommodation had increased from 28 in 2017 to 55 this year.  The budget pressures therefore came from both the number of placements and the unit costs.


In answer to a question, Ms Graham reported residential care homes had previously often been small family businesses but the market had become increasingly dominated by big companies, including private equity.  In response to the increased unit costs, the Council was trying to establish its own facilities and working with housing services and other north central London boroughs to achieve this.  In addition, the DfE was considering providing capital funding.  However, this was a long term strategy.   She stated that the secure estate had reduced in size to enable more care to take place in the community.  There had been an increase in extra familial harm and children were presenting with increasingly complex needs. 


In answer to another question regarding trends or patterns in respect of young people requiring residential care, Ms Graham stated that there were now more older young people and many of these had been subject to harm in the community.  In addition, stresses within families and economic pressures were also a factor.


Councillor Brabazon, Cabinet Member for Early Years, Children and Families, reported that the current administration had been of the view that budgets for Children’s and Adult’s Services should reflect the reality of the financial demands placed upon them.  As a result of this, the Children’s Service had benefitted from a cash injection of £7 million in 2019 and this had helped to stabilise the service.  The service was required to put the needs of children first and ensure that they were safe and in the right setting.  The market for residential care was now dominated by large private companies.  She hoped that there would be an opportunity to discuss collaboration with other boroughs through London Councils.  The number of children requiring residential care was relatively small and the most cost effective solution would be to develop an effective consortium with other boroughs.  In the meantime, housing officers had been asked to identify suitable properties in the borough.  An additional budgetary pressure had been caused by the government outsourcing the costs of secure accommodation from the Ministry of Justice to local authorities.  Such placements could be extremely expensive and the Council had no control over the cost.  In respect of the DSG, the Council’s position was no different to other local authorities.  This has been exacerbated by the additional need to now fund some young people with special needs up to the age of 25 without any additional government funding.


Ms Graham commented that the issues relating to the HNB were of a national nature.  A lot of work had been undertaken by the Council with other local authorities as well as individually to make the case to government regarding it but there had not been a positive response to it so far, although it had been indicated that it may be addressed in the forthcoming Spending Review.   A “Safety Valve” had been introduced by the government for some local authorities but Haringey was not a recipient.  Its position was not an outlier and the deficit was not as large as many other local authorities.   Ms Lyseight stated that the “Safety Valve” carried a number of conditions so would not necessarily be of benefit.  The Council was considering what could be done to mitigate the overspend but it was recognised that it would not be possible to keep within the current budget.  The Cabinet Member commented that the Society of Local Government Treasurers had also raised their concerns regarding the issue with the government.


The Panel noted that where savings proposals were marked as “amber”, this indicated that it was considered that there might be an element of risk in the delivery of the proposed saving.









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