Agenda item

To consider the 2024/25 Savings Tracker & 2025-29 Savings Tracker from the 2025/26 draft budget and MTFS papers. This item were deferred from the last meeting.

The Finance Update for Quarter 2 provided a comprehensive overview of the council’s financial position as of the end of September. Taryn Eves, Head of Finance and Councillor Carlin introduced the report for this item. Below are key points in regard to this:

The council was experiencing increasing financial pressures, particularly in adult social care and temporary accommodation. These pressures were consistent with trends observed in other London boroughs and across the country. The projected overspend had risen significantly, with service pressures increasing from £18 million to approximately £29.5 million. Additionally, non-deliverable savings have increased from £2 million to £7.5 million, contributing to the overall budget gap. While adult social care was under significant pressure, children’s services had remained relatively stable, which was a positive aspect of the financial update. The council had implemented initiatives to support residents, such as providing grants to low-income households previously entitled to winter fuel payments.

The capital program had experienced a high level of slippage, meaning that not all planned projects were progressing as expected. The council aimed to improve this situation by avoiding including projects in the capital program that could not be delivered. The report highlighted concerns about the trajectory of financial pressures and the need for careful monitoring. The council was committed to ongoing monthly monitoring of high-risk budgets and would use this information to inform future budget-setting processes. The report indicated a significant budget gap projected for future years, emphasizing the need for strategic planning and potential adjustments to services and spending.

The following was noted in response to questions from the committee:

• The council was conducting monthly monitoring of high-risk budgets and was working to tighten financial controls. There was a focus on accurate forecasting and identifying any potential risks early to mitigate overspending.

• The non-delivery of savings would increase the budget gap on a pound-for-pound basis. The council was actively reviewing savings proposals and was committed to ensuring that any savings that cannot be delivered are accounted for in future budget planning.

• While it was difficult to guarantee absolute accuracy, the council had worked to ensure that the forecasts were based on tangible assumptions and data. The focus was on realistic projections, and the council would continue to monitor the situation closely.

• The council was taking into account various external factors, including inflation and market conditions, which could affect service delivery costs. These factors were included in the financial planning process to ensure that the budget reflects the current economic environment.

• The Audit Committee discussed the challenges related to the council’s historical audits and the need for transparency in financial reporting. There was a disclaimer on previous accounts due to the lack of audits, but the focus is now on ensuring that future audits are completed in a timely manner.

• The council had set aside contingency reserves to manage unexpected financial pressures. Additionally, there were ongoing reviews of spending to identify areas where costs can be reduced without compromising service delivery.

• The council was developing a medium-term financial strategy that included identifying new savings, enhancing income generation, and exploring “invest to save” opportunities. The aim was to create a sustainable financial plan that addressed both current and future challenges.

The plan for finance in Quarter 2 focused on several key areas to address the council’s financial challenges and ensure effective management of resources.

The council committed to conducting monthly monitoring of high-risk budgets to track spending and identify any potential overspending early. This proactive approach aimed to ensure that any financial issues could be addressed promptly. Efforts were made to identify and implement savings across various departments. This included reviewing existing budgets, contracts, and operational efficiencies to find areas where costs could be reduced without compromising service delivery. The council planned to consider external factors such as inflation and rising costs in its financial planning. This included assessing how these factors could impact service delivery and budget requirements. The council intended to engage with the community to gather feedback on proposed budget reductions and savings. This was part of a transparent approach to decision-making and aimed to ensure that residents’ voices were heard. The council aimed to develop a medium-term financial strategy that would outline its financial framework for the coming years. This strategy was intended to provide a roadmap for achieving financial sustainability and addressing the projected budget gaps. The plan included a careful assessment of reserves to ensure that they were used effectively to manage short-term financial pressures while maintaining a prudent level of reserves for future needs.

Concerns were raised regarding the number of voids within the borough. It was explained that properties could become void for various reasons, including tenant turnover, property repairs, or renovations. In some cases, properties may be left vacant due to issues such as damage or the need for significant repairs. High levels of voids could significantly impact a housing authority’s or landlord’s finances. Each vacant unit represented lost rental income, which could affect overall budget and cash flow.Effective void management strategies were essential to minimize the duration that properties remain vacant. This could include:

Housing authorities often tracked voids closely to identify trends and address issues that could lead to prolonged vacancies. Regular reporting on void levels could help in making informed decisions about property management. Understanding the financial implications of voids was important for budgeting and financial planning. Authorities may need to account for potential losses in their financial forecasts.

During the discussion about contingent liabilities in the Finance Update, the following key points were made. The council had some property-related contingent liabilities, which were associated with its commercial portfolio and operational estate. These liabilities may arise from leases or other agreements where the council could be responsible for repairs or other costs. The report highlighted that contingent liabilities represented a risk to the council’s financial position. If the likelihood of these liabilities materializing increased, they may need to be accounted for as provisions in the budget, which would require setting aside funds to cover potential costs. The council was committed to monitoring these contingent liabilities closely. The aim was to ensure that any significant risks are identified early and that appropriate measures are taken to manage them effectively. The presence of contingent liabilities could impact the council’s budgeting process. If certain liabilities become more likely to materialize, it could lead to increased costs and affect the overall financial stability of the council.

Actions from discussion:

• Officers to bring back examples of capital projects that had finished and demonstrate whether it was self-financing.
• On the capital forecast, members used to get tables that would tell us how much of the capital spend impacted on the revenue account, the committee would like figures on that.
• in the report housing benefit overspend in housing benefit administration, what has caused this?