Agenda item

That the following be noted:

1.  The Council’s forecast overspend at the end of Quarter 2 is £8.2m, up considerably from £5.3m at the end of Quarter 1.  The risk is therefore high that without significant reductions in spend over the remainder of the financial year, the Council will be unable to balance its budget within the Capitalisation Direction.

2.  Service revenue budgets are forecast to overspend by £15.6m in 2023/24.  There are Corporate underspends in respect of interest costs and receipts (£5.7m) and the Corporate Contingency budget (£5.4m) totalling £11.1m.  However, the Minimum Revenue Provision (MRP) is showing an overspend of £3.7m.  Service and Corporate budgets combined are showing an overspend of £8.2m. 

3.  If drastic reductions are not made in the remainder of the financial year, the Council will be unable to balance its budget within the current capitalisation direction.

4.  Medium Term Financial Strategy Savings (MTFS) of £20.5m are expected to be delivered in 2023/24 against planned savings of £22.4m.

5.  That the Capital programme is forecast to underspend in 2023/24 by £25.5m. Requests for slippage would require separate authorisation and are assumed here for the sake of clarity.  A formal request for approval will form part of the Q3 Budget Management report to Cabinet in February.

The Lead Member for Finance, Council Assets, Procurement and Revenue & Benefits introduced a report that set out the forecast position of the Council for the 2023/24 financial year as at the end of the second quarter to 30^th September 2023.

The forecast overspend at the end of the second quarter was £8.2m, which was a significant increase from the £5.3m at the end of quarter one.  The Lead Member stated that whilst the current administration had not set the budget for 2023/24 the Cabinet was committed to owning it and a significant amount of work was taking place to deliver the savings programme.  The legacy of poor record keeping, delays in closing prior years accounts and the historic failure to fully utilise the accounting system meant that it remained challenging to present reliable financial information.  However, the work being undertaken to address these issues was summarised as was the process of ‘Star Chambers’ to seek to identify further in-year savings.

Two of the main areas of overspend were in adult social care and temporary accommodation, both of which had been reviewed at the end of November by the Corporate Improvement Scrutiny Committee.  It was noted that many other local authorities faced pressures in these areas.  The Lead Member commented that the budget inherited for temporary accommodation had been totally inadequate.  The Cabinet discussed the reasons for the overspend, including significant demand and cost pressures given the current housing market conditions, and the measures being taken to address the overspend.  Assurance was sought that the use of hotels for temporary accommodation was minimised and the Executive Director responsible for housing confirmed that it was only used as emergency accommodation in very specific circumstances, for example families with young children.

At the conclusion of the discussion the report was noted.

Resolved –  That the following be noted:

(a)  The Council’s forecast overspend at the end of Quarter 2 was £8.2m, up considerably from £5.3m at the end of Quarter 1.  The risk was therefore high that without significant reductions in spend over the remainder of the financial year, the Council would be unable to balance its budget within the Capitalisation Direction.

(b)  Service revenue budgets were forecast to overspend by £15.6m in 2023/24.  There were Corporate underspends in respect of interest costs and receipts (£5.7m) and the Corporate Contingency budget (£5.4m) totalling £11.1m.  However, the Minimum Revenue Provision (MRP) was showing an overspend of £3.7m.  Service and Corporate budgets combined were showing an overspend of £8.2m.

(c)  If drastic reductions were not made in the remainder of the financial year, the Council would be unable to balance its budget within the current Capitalisation Direction.

(d)  Medium Term Financial Strategy Savings (MTFS) of £20.5m were expected to be delivered in 2023/24 against planned savings of £22.4m.

(e)  That the Capital programme was forecast to underspend in 2023/24 by £25.5m. Requests for slippage would require separate authorisation and are assumed here for the sake of clarity.  A formal request for approval would form part of the Q3 Budget Management report to Cabinet in February.