Agenda item

The Quarter 2 Budget Monitoring Report as presented to Cabinet at its meeting on Tuesday 15 November is attached for the Committee to consider.

Contributors:

Councillor John Chilver, Cabinet Member for Accessible Housing and Resources

Dave Skinner, Service Director for Finance (Section 151 Officer)

The Chairman welcomed Councillor J Chilver, Cabinet Member for Accessible Housing and Resources, and the officers to the meeting.

In the Cabinet Member’s presentation, the following points were highlighted:

·       The forecast year-end revenue had reduced from £3.8m to £1.8m despite significant financial challenges including higher inflation, higher energy costs and increased demand on adults’ and children’s statutory services. The overall forecast deficit of £1.8m comprised an overspend in portfolio budgets of £15.7m, offset by £30.9m of corporate mitigations, including the use of reserves, contingencies, corporate funding and a one-off legal settlement of £4.4m. The main areas of overspend were £9.5m in education and children’s services due to a range of factors, including the rising cost of placements, the cost of agency staff and an increase in demand and complexity of cases, and an overspend of £4.7m in health and wellbeing. Higher energy costs and legal fees also resulted in £2.1m in overspend in accessible housing and resources. The increases were partially offset by a favourable variance of £3.3m in climate change and environment from the increase in electricity sales from the waste plant.

·       There was a forecast slippage of £13m, which equated to 8% of the budget, compared to the 10% target. There had been an underspend of £5.6m in education and children’s services, which related to savings against budget. This included over £1m of savings on the recently opened Kingsbrook school.

·       It was predicted that 98% of targeted savings would be delivered in the current financial year. Late payment performance had decreased over the quarter, though the causes had now been addressed.

The following points were noted during the Committee’s discussion:

·       Legal and democratic services had an expenditure overspend of about £0.3m variance to budget. The legal costs relating to adult and children's social had increased due to an increase in the number and complexity of cases.

·       The funding received for the Homes for Ukraine Scheme was used for staff dedicated to the project. The funds received could be utilised for different issues within the resettlement scheme, both for ongoing work and activity specifically required for that period.

·       The Council had received £4.4m following receipts of non-recurring income to support the overall forecast position. This was a one-off income due to a legal settlement and was transferred into a reserve and then transferred back to offset pressure on the budget. This had reduced the forecast deficit for the year.

·       The increase in late payments was 7% in August, compared to the targets of 5%, and increased to 11% in September. There were two specific reasons for this issue. The first related to a problem with utilities, which was resolved by changing to direct debit with monitoring arrangements. The second was new staff members joining the team, who had yet to receive training. It was expected that an improvement in those areas would be seen within the coming months, with an anticipation that the backlog would be cleared by the end of the quarter.

·       There had been an increase in electricity sales from the Energy from Waste plant. The Council would be liable to pay a tax for the electricity produced, and the budget projection had therefore been adjusted accordingly. It was anticipated that the charges would take effect from January 2023, however, more detailed information would need to be received by the treasury to confirm this. The increased revenue in quarter four outlined in the report might therefore not materialise.

·       There had been an increase in legal costs in children’s services due to additional complexity and volume of cases going to court. It would be confirmed whether these costs were routine or litigation.

Action:  D Skinner

·       Funding for grid reinforcement was received from the government. These funds were recyclable, meaning that they could be recovered from developers and spent on alternative uses.

·       The overspend in education and children’s services was due to pressures related to both volume of cases and higher inflation. The market was also particularly challenging in the children’s service sector due to insufficient capacity, which was noted to be a national issue. It was expected that the increased spend would persist in the medium term.

·       Council staff facing financial difficulty were able to access financial assistance through a grant administered confidentially through Heart of Bucks.

·       There was no single reason for slippage as these varied between projects (e.g. planning delays, difficulty sourcing building materials and negotiations). However, this was only a small percentage of the overall capital budget and in preparation for next year’s budget, slippage would be reviewed and funding from the following year would be used to cover any projected overspends. It was also noted that property services had recently had a service review and were now in the process of recruiting additional staff to meet the agreed service review outcomes. Two staff members had recently been appointed to the construction team within capital projects. Further detail on this would be circulated to the Committee.

Action: J Reed

The Chairman thanked the Cabinet Member for the report.