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Agenda item

2022-23 Budget and Three Year Medium Term Financial Strategy

The Scrutiny and Overview Committee is asked to:-

1.     Note the contents of the Cabinet report on 2022-23 Budget and Three Year Medium Term Financial Strategy.

2.     Review the information provided with a view to, as part of the wider budget scrutiny process, forming conclusions on the deliverability and sustainability of the 2022-23 budget, as well as ensuring there is an understanding of the key risks.

3.     Considered whether there are any specific budget proposals that should be tested in further detail by either the Committee or one of its Sub-Committees in January 2022.

Minutes:

The Committee considered a report set out on pages 49 to 88 of the agenda which provided an update on the delivery of the 2022-23 Budget and the Three Year Medium Term Financial Strategy. The report had been considered by the Cabinet at its meeting the previous evening, 6 December 2021. The report was included on the agenda as part of the budget scrutiny process which would culminate in a report to Council during its consideration of the budget on 28 February 2022.

The report was introduced by the Council’s Interim Corporate Director of Resources & Section 151 Officer, Richard Ennis, who advised that although significant progress had been made with setting the budget for 2022-23 work continued to close the gap, which currently stood at £13m. There was also a need to look at the longer term budget strategy including reducing the level of debt held by the Council through the use of capital receipts. The report outlined potential risks including the ongoing negotiation with the NHS about funding for services and the ongoing underfunding by the Government of the Council’s support provided by to UASC.

It was encouraging to note that the budget setting process had placed an emphasis upon requiring evidence to validate that savings were achievable, but further explanation was request to explain how deliverability was being demonstrated. It was confirmed that the aim was to bring the cost for social care service to a level that was more in line with the London average. The Council had been working with the Local Government Association (LGA) and other local authorities to manage this reduction in spend safely.

It was questioned how the Cabinet and Corporate Management Team reassured themselves that vulnerable adults and children were not being placed under increased risk as a result of the savings in social care. It was acknowledged that this was an important point and it was confirmed that the relevant statutory officers had been robustly questioned during the Star Chamber process about the safety of their proposals. The suggestion of including a statement in the final budget report from the Council’s other statutory officers to confirm that the proposals did not undermine the Council’s duties to children and adults was welcomed by the Committee.

As well as the using the Star Chamber process to obtain assurance on the safety of the savings within social care, further assurance had been sought from other sources such as the Department for Education, Ofsted and the Children’s Improvement Board. Work had also been undertaken to ensure that the benchmarking process with other local authorities was sufficiently robust to identify different ways of delivering services safely.

In response to a question about whether external assurance would be sought from either the LGA or CIPFA on the budget proposals as had happened last year it was highlighted that any such reviews would be an unbudgeted cost. The MTFS had recently been reviewed as part of the non-statutory review, with no issues being raised.

It was questioned whether account had been taken of the view of front line staff in developing budget proposals. From a Cabinet perspective, feedback had been sought through the interaction of individual Cabinet Members with officers in their respective services. The Leader and the Chief Executive had also been holding regular staff briefings which provided an indication of staff opinion. Senior management had been open with staff in those services most at risk of change about the possible outcome and given staff the opportunity to highlight potential risks, while also being clear that the service will change.

In light of concerns about the standard of customer service offered by the Council, it was questioned how this was being addressed in the budget. Although it was highlighted that given it was only six months before the next election and as such not the time to revisit the Council’s priorities, it was accepted there should be a focus on putting customers first. Growth had been added to the budget to improve customer service through investment in services such as Croydon Digital Service. Overall there was a focus on providing the best possible customer service the Council could afford, with it acknowledged that a lot could be achieved without the need for significant investment.

It was confirmed that the key aim for the budget was to ensure that it was balanced, as without being able to demonstrate this, it was unlikely the Government would permit the capitalisation direction. It was highlighted that the Council was on an improvement journey and it was important to have a balanced budget as a solid foundation for this improvement. However, the budget should not be expected to be covering everything and work did not stop once the budget was agreed.

Although the proposed rebuilding of the Council’s earmarked reserves was welcomed, the importance of having the right processes in place to guide the use of these fund was highlighted. Of particular concern was the need to prevent the use of earmarked reserves as a contingency to prop up other parts of the budget. It was agreed that the financial culture of the Council was vitally important and needed to be guided by a set of robust processes.

There was concern that Services had been allowed to identify their own growth pressures, with it questioned how these assumptions had been tested. It was confirmed that a 3% increase in costs had been included as a corporate provision in the budget to account for inflation. Services had to submit separate bids for any growth above the 3%, which was then reviewed as part of the Star Chamber process.

Given there had been a recent census, it was questioned whether there would be an impact upon the budget once the data was released. It was advised that it was known that the population in Croydon was growing, which would be likely to increase the pressure on Adult Social Care services. There was limited capacity within the Council to bid for external funding, but it was acknowledged that where funding was available that aligned with the Council’s own objectives then a bid should be made.

As the Leader had announced at the Cabinet meeting the previous evening that provision for using Community Infrastructure Levy (CIL) funding for the Community Fund would be included in the budget, the Committee wanted further reassurance that this met the criteria for the use of CIL funds. It was agreed that a report providing an overview of the proposal would be prepared for the next meeting of the Committee on 20 January 2022.

At the end of this item, the Chair thanked the officers and the Cabinet Members in attendance at the meeting for their engagement with the questions of the Committee.

Conclusions

Following its discussion on the 2022-23 Budget and Three Year Medium Term Financial Strategy report, the Scrutiny and Overview Committee reached the following conclusions:-

1.    It was recognised that the budget would continue to be finalised ahead of the Budget Council meeting at the end of February 2022, but at this stage it was acknowledged that good progress had been made in closing the funding gap.

2.    From the responses given to the questions of the Committee, it was accepted that the budget setting process, using a Star Chamber approach, had provided a greater level of rigour than may have been the case in previous years. However, in order to provide an additional level of reassurance, members of the Committee would explore the Star Chamber process and in particular making a growth bid outside of the meeting, before reporting back any findings to the next meeting on 20 January 2022.

3.    It was recognised that it was difficult to provide the level of reassurance sought to judge whether the Council’s financial monitoring systems were robust enough to deliver the budget within a Committee setting, As such before the next meeting of the Committee, the Deputy and Vice-Chair were tasked with seeking further reassurance from officers. The results of which would be fed back to the next Committee meeting.

4.    The was a concern held by some Members of the Committee about whether the Council had the capacity or the structure in place to oversee the delivery of the savings proposals outlined in the report. As such before the next meeting of the Committee, the Chair, Deputy and Vice-Chair were tasked with seeking further reassurance from officers. The results of which would also be fed back at the next Committee meeting.

5.    Although delivering a balanced budget was important, it was also essential that any savings could be delivered without compromising the safety of the many vulnerable children and adults supported by the Council. It was agreed that consideration of the budget by the Children & Young People and the Health and Social Care Sub-Committees at their meetings in January should include a focus on maintaining the safety of the vulnerable in the borough, as well as budget deliverability.

6.    The Committee suggested it would be helpful for all Members when considering the budget at the Council meeting on 28 February if additional context could be added to the final budget report to outline the priorities it was being delivered against and how the budget would support the delivery of both these priorities and the Renewal Plan.

7.    Given the issues earlier in the year relating to council housing on Regina Road, it was also suggested that the final version of the report should reference how the budget would help to address some of the issues raised such a customer service.

8.    As the use of Community Infrastructure Levy funds to provide grants to the voluntary sector had been introduced as a late addition to the report, it was agreed that a further report, providing more detail would be requested for the next meeting of the Committee on 20 January 2022.

9.    Although it was reassuring to hear that frontline staff have been involved in the budget setting process, the Committee agreed that it would seek further evidence of this through questioning during the remaining budget scrutiny meetings to establish whether it was a systematic approach across the Council.

 

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