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 Officer), Richard Ennis

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 £1.020m from Period 6. Service directorates are indicating a £3.030m overspend (Month 6 £4.050m) with this being netted of as in the past six months against the release of a one off Covid Grant (£3.451m released = 31% of the grant) confirmed to Croydon Council for 21/22 by DLUHC 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 £11.356m (Month 6 £11.063m). However to note the Council does have the £7.799m of covid grant that can be used to offset such pressures.

3. Note the Housing Revenue Account (HRA) is projecting a £0.786m (Month 6 £0.733m) overspend for 2021/22. If no further mitigations are found to reduce this overspend the HRA will need to drawdown reserves from HRA balances. There are sufficient balances to cover this expenditure.

4. Note the capital spend to date for the General Fund of £13.593m (against a budget of £188.688m) and for the HRA of £9.915m (against a budget of £183.209m), with a projected forecast variance of £45.472m on the General Fund against budget and £7.184m forecast variance against budget for the Housing Revenue Account;

5. Note, the above figures are predicated on forecasts from Month 7 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 and Social Care Placement Panels remain. Restrictions have been lifted for ring-fenced accounts such as the Pension Fund, Housing Revenue Account and Coroner’s Expenditure as these are directly outside of the General Fund’s control. The Spending Control Panel which was set up at the beginning of November 2020 continues to meet on a twice daily basis.

7. Note that the Council has received a one off financial sum of £2.36m from the Government to help cover the pressures related to Unaccompanied Asylum Seeking Children (UASC) and care leavers which Croydon bears disproportionately to other local authorities due to the siting of the Home Office’s Lunar House. However this means the Council and Croydon tax payers still fund £1.615m of disproportionate costs in this financial year post the Grant support. These costs will continue throughout the MTFS for which the Government has not indicated any financial support to date.

8. Note that in addition to the UASC pressures, Croydon Borough has taken on c1000 asylum seekers who have been placed in eight hotels by the Home Office without consultation with the Council. The hotel costs are funded by the Home Office, however the Council is be responsible for further ancillary services particularly around safeguarding, public health, children & youth provision and broader community support. These additional costs, which are currently being calculated have been flagged within the unquantified risks section of this report, and could clearly result in further financial pressures for the Council.

Cabinet considered a report which set out the Council’s current General Fund revenue budget projected outturn for the full financial year 2021-2022 as at Month 7, October 2021. The Cabinet Member for Croydon Renewal (Councillor Stuart King) provided Cabinet with an introduction which set out:

That he was pleased to report that the budget remained balanced with a net forecast underspend of just over £400,000;
The net departmental overspend was now at £3m, which was higher than he would like but was at the lowest level during the financial year. It was felt that this was a sign that department were responding positively to the need to control spend;
Quantified risks were greater than identified mitigations by around £0.5m which was in part due to the value of Medium Term Financial Strategy (MTFS) savings for the current year and the risk of non-delivery had risen. The principle cause being the parking account;
Spend against both the general fund and Housing Revenue Account (HRA) capital programmes continued to be slow;
That there could be no room for complacency as the state of economy was a concern and winter pressures would grow;
There were approximately 1,000 asylum seekers housed in hotels across the borough which had a financial implication on the council; and
At the equivalent point in 2020/21 the council was £30m overspent with a further £36m of identified risks which materialised.

During the consideration of the recommendations, the following points were made:

The Cabinet Member for Resources & Financial Governance (Councillor Callton Young) welcomed the favourable movement of £1m in the general fund budget but raised concerns that the capital budget remained underspent. Further questions were asked in relation to the steps being taken by the council to ensure it was properly funded for the asylum seekers placed in the borough and whether there had been any issues in relation to the grant conditions for the Contain Outbreak Management Fund.
- In response, the Interim Corporate Director Resources (Section 151 Officer) (Richard Ennis) advised Members that there had a huge focus on balancing the general fund budget, however it was recognised that the capital budget was underspent and a new Capital Board had been established. It was noted that underspending on capital would cause issues for the council in future years, as such star chamber exercises were also due to take place to look at the capital budget;
- In terms of asylum seekers; the Interim Corporate Director Resources advised the council welcomed the support provided for Unaccompanied Asylum Seeking Children from the Home Office but that officers were raising the pressures faced from those who were placed in hotels in the borough; and
- The Interim Corporate Director Resources advised that the wording on page 102 was not accurate. The council were ensuring it was following due process and utilised all of the funding provided.
The Shadow Cabinet Member for Croydon Renewal (Councillor Jason Cummings) welcomed the improvement on previous years but noted that the budget was balanced due to a loan from the government. Concerns were raised that the MTFS savings which were at risk of being delivered had increased from less than £1m to over £5m and queried how close those risks were to materialising and impacting the final year position
- In response, the Cabinet Member for Croydon Renewal noted that at the last Cabinet meeting he had requested the Chief Executive (Katherine Kerswell) to review the robustness of the MTFS savings and the outcome of that review was contained within the report. He further noted that the fees and charges review had been undertaken earlier in 2021 and queried why there was an identified risk in relation to this work in the report;
- The Interim Corporate Director Resources advised that a fees and charges report would be taken to Cabinet in January as part of the financial performance. The Interim Corporate Director Sustainable Communities, Regeneration & Economic Recovery advised that risks in her directorate were largely in relation to parking which had been impacted during the pandemic and the delay in introducing ANPR cameras. Members were advised that the risk set out in the report was at the upper end of the estimate and that once more work had been completed it was hoped that the figure would reduce. Additionally, it was highlighted that there was an identified risk in relation to SEND transport and Members were advised that significant work was underway to model the demand to right size the budget going forward.