Agenda item

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

Officer: Interim Corporate Director of Resources (Section 151) and Deputy Chief Executive, Richard Ennis

Key decision: no

RESOLVED: To

1. Note the General Fund is projecting a net favourable movement of £0.378m from Period 4. Service departments are indicating a £3.365m overspend (Month 4 £3.742m) with this being netted of as in the past four 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 the report. Should these risks materialise or the mitigations not be effective the Council could overspend by £7.814m (Month 4 £11.664m);

3. Note the Housing Revenue Account (HRA) is projecting a £0.742m (Month 4 £0.696m) overspend for 2021/22. If no further mitigations are found to reduce this overspend the HRA will need to drawdown reserves from HRA balances which at the moment there are sufficient balances to cover this;

4. Note the capital spend to date for the General Fund of £8.235m (against a budget of £138.688m) and for the HRA of £5.713m (against a budget of £183.209m), with a projected forecast variance of £36.899m on the general fund against budget and nil forecast variance against budget for the general fund;

5. Note, the above figures are predicated on forecasts from Month 5 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;

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; and

7. Note that due to no Cabinet Meeting in September 2021 Period 4 has not been presented to Cabinet. Period 4 position has been provided for as Appendix 3 of the report to ensure there is a clear audit trail for Members between Period 5 and Period 4; and

8. Note that the Council has received a one off financial support of £2.3m from Government to help cover he pressures within Unaccompanied Asylum seeking Children (UASC), which means the Council still funds £2.20m of pressures.

The Cabinet Member for Croydon Renewal (Councillor Stuart King) introduced the report and noted that at Quarter 1 the council was forecasting a balanced budget for the 2021/22 financial year and period 5 report (August 2021) continued to forecast a balanced budget. It was noted that this was due to a good response from departments to the challenges faced by the council and ensuring they lived within the budgets set. In particular, the Cabinet Member highlighted that Children’s, Adult’s and Resources were all forecasting underspends.

Members were informed that risk mitigations had been identified to the value of £11.4 million, which it was noted was an indication of departments responding to the challenge and identifying mitigations which could be used against any overspends over the cause of the year.

In comparison, the Cabinet Member noted that at the same point in 2020/21 the council was reporting an overspend of £49 million which he felt was an indication of the work undertaken by the Administration to fix the finances and ensuring vital public services continued to serve the people of Croydon.

The Cabinet Member highlighted to officers and elected Members that whilst there were budgets, they did not have to be spent and he hoped that message was feeding through the organisation.

Whilst the Cabinet Member noted the progress which had been made, he stated that it would be wrong to consider that the financial challenge had been resolved. It was stressed that there was lot still to be done, not just in the current financial year but also in developing proposals for the 2022/23 budget; as such ensuring there were risk mitigations in place was imperative should risks arise.

The Cabinet Member for Homes (Councillor Patricia Hay-Justice) noted that concerns remained within the Housing Revenue Account (HRA) and the overspend which was being projected. In light of this, it was stated that a great deal of work had been underway to manage the spend. The Cabinet Member for Homes highlighted that some savings forecasted for 2022/23 would be in place by the end of 2021/22 which would assist in mitigating the HRA expenditure. Furthermore, the Cabinet Member for Homes welcomed the Gateway team into the Homelessness team which it was felt would supplement the preventative work which was being undertaken by the council which would reduce the need for temporary and emergency accommodation.

The Cabinet Member for Sustainable Croydon (Councillor Muhammad Ali) noted that risk still remained and queried what efforts had been made to ensure risks were understood and quantified.

In response, the Cabinet Member for Croydon Renewal confirmed there remained an overspend within the HRA but that there had been some positive movement as a result of actions taken by the department and Cabinet Member. In terms of temporary and emergency accommodation, the Cabinet Member noted that this was an issue that was faced by a number of London councils as there was an issue of rising costs due to a shortage of appropriate accommodation.

In terms of identifying and quantifying risks, the Cabinet Member stated that it was an important task and that he felt one of the strengths in the way the council had approached the financial reporting in 2021/22 had been to identify quantifiable and unquantifiable risks. He stated that he was pleased that £11.4 million of mitigations had been identified which would support responding to any of the risks, should they arise.

The Cabinet Member for Families, Health & Social Care (Councillor Janet Campbell) noted that underspend with Adults Social Care had reduced in period 5 by £35,000 due to an increase in the number of people supported by the mental health service; however it was highlighted that the service remained on track to underspend. It was noted by the Cabinet Member that at the time the report was written it was not known if the NHS funding for hospital discharge would continue after 30 September 2021, however Members were informed that this had since been confirmed and would be reflected in the period 6 report.

The Shadow Cabinet Member for Croydon Renewal (Councillor Jason Cummings) broadly welcomed the financial performance indicated within the report but highlighted that it was performance against a budget which had received £50 million of capitalisation direction funding. As such, it was noted that the real challenges would be seen in the years to come when the capitalisation direction was not available. In terms of the HRA budget, the Shadow Cabinet Member queried whether the intention was for the HRA reserves to be used or for the budget to brought to a balanced position before the year end. In response, the Cabinet Member for Croydon Renewal acknowledged that the budget was balanced in part due to the capitalisation direction, but stressed that the position was also due to work to tackle overspends and hard decisions made by the Administration.

In terms of the HRA, the Cabinet Member for Homes confirmed that she and officers were working to ensure that the overspend was contained so that the reserves were not required, but stated that the economic environment may impact that ambition.

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