Agenda item

Cabinet Member: Cabinet Member for Croydon Renewal, Councillor Stuart King and Cabinet Member for Resources & Financial Governance, Councillor Callton Young

Officer: Interim Director of Finance, Investment & Risk, Chris Buss

Key decision: no

The Leader of the Council delegated authority to the Cabinet to make the following decisions:

RESOLVED: To

1. Note the General Fund is projecting a net favourable movement of £0.563m from Period 2. Service departments are indicating a £3.471m overspend (Month 2 £4.034m) with this being netted of as in the past two months against release of a one off Covid Grant (£3.451m) confirmed to Croydon Council for 21/22 by MHCLG as part of the Local Government Finance Settlement;

2. Note that a further number of risks and compensating opportunities may materialise which would see the forecast year-end variance change and these are reported within Section 3 of this report. Should these risks materialise or the mitigations not be effective the Council could overspend by £2.847m (Month 2 £3.676m);

3. Note the Housing Revenue Account (HRA) is projecting a £0.802m (Month 2 £1.595m) overspend for 2021/22. If no further mitigations are found to reduce this overspend the HRA will need to drawdown reserves from HRA balances;

4. Note the capital spend to date for the General Fund of £4.372m (against a budget of £138.688m) and for the HRA of £4.061m (against a budget of £183.209m);

5. Note, the above figures are predicated on forecasts from Month 3 to the year end and therefore could be subject to change as forecasts are refined and new and updated information is provided on a monthly basis. Forecasts are made based on the best available information at this time; and

6. Note that whilst the Section 114 notice has formally been lifted, the internal controls established as part of the S114, such as the Spend Control Panel remain. However, restrictions have been lifted for ring-fenced accounts such as the Pensions Fund, Housing Revenue Account and Coroner’s Costs as these do not directly impact on the financial position of the General Fund. The Spending Control Panel which was set up at the beginning of November 2020 continues to meet on a twice daily basis.

The Cabinet Member for Croydon Renewal (Councillor Stuart King) noted the report set out the council’s budget position at the end of month three (June 2021). It reported that there had been an overspend of just over £20,000 at the end of Q1; as such the Cabinet Member was pleased to announce the budget remained balanced following an improvement of almost £600,000 since month 2.

Departments, it was noted, were forecasting underspends and the Cabinet Member thanked them for their work. It was highlighted that the Place department continued to forecast an overspend, but that there had been a £500,000 improvement since the previous month.

The Cabinet Member brought to Members attention that in addition to improved financial management and governance arrangements, the council had begun to identify budget risks; such as those related to the end of support provided during the pandemic. It was noted that the report included the identified risks, mitigations and saving options which had been identified.

It was highlighted that at the equivalent point in 2020/21 the council was overspent by £49 million by Q1 and the Chief Executive (Katherine Kerswell) and her team were thanked for all the work which had been undertaken to get the council to a point of an overspend of £20,000 at Q1 in 2021/22. The Cabinet Member stated that this was in the face of the council’s core funding being cut by 76%, the impact of Covid-19 and an unfair funding formula.

Tribute was paid to the Interim Director of Finance, Investment & Risk (Chris Buss) by Cabinet for all of his work as the Interim Section 151 Officer in navigating the council through such a financially challenging period. The Deputy Section 151 Officer (Matthew Davis) was also thanked for his work in supporting the council to reach its position. Members were advised by the Chief Executive that the council had appointed a new Interim Director of Finance, Investment & Risk (Richard Ennis) who was due to begin on 23 August 2021.

The Cabinet Member for Resources & Financial Governance (Councillor Callton Young) highlighted that favourable movement had been seen in all departmental budgets, except for Housing & Gateway which was explained at paragraph 4.3 of the report as being due to increased demand in temporary and emergency accommodation.

Whilst it was still early days the shift was welcomed by the Leader of the Council (Councillor Hamida Ali). A real cultural change within the organisation had been required and it was hoped that the start of that change was being seen as it was noted that it was a challenge to set a balanced budget, but it was whole different challenge to deliver it.

The Shadow Cabinet Member for Croydon Renewal (Councillor Jason Cummings) echoed the thanks given to Chris Buss for his work at the council and noted that, having been on the recruitment panel, he was confident that the council had appointed someone comparable in Richard Ennis. In terms of the report, the Shadow Cabinet Member raised concerns that whilst there had been positive movement, it was important that the context was kept in mind that the budget was only balanced due to a £50 million loan from the government. As such, it was highlighted that there was a huge way to go before the council was able to fully balance a budget. Furthermore, concerns were raised in terms of the tone of Cabinet Members as it was suggested that they were blaming the government for the issues faced by the council.

The Shadow Cabinet Member noted there were £8.4million of risks identified in the report and £7.8 million of potential mitigations identified through Covid-19 funding. The Shadow Cabinet Member queried whether any internal risk mitigations were in place. In response, the Cabinet Member for Croydon Renewal stated that the quantified savings in the report were the ones which the council were confident in listing and that additional savings were being worked on and would be published when the council were confident on the figures.

Councillor Robert Ward noted that the Unaccompanied Asylum Seeker Children (UASC) costs were not the same as reflected in the UASC report considered by Cabinet earlier in the meeting. In response, the Cabinet Member for Croydon Renewal stated the discrepancy was due to timing of the report being written and committed that the month 4 would reflect the current position.