Agenda item

The Scrutiny & Overview Committee is presented with the most recent Financial Performance report for its scrutiny.

The Committee is asked to: -

1.               Review the information provided in the report on the Month 9 Financial Performance Report, and

2.               Consider its conclusions on the latest budget position for 2022-23

3.               Consider whether there are any recommendations to bring to the attention of the Mayor.

The Committee considered a report set out on pages 101 to 140 of the agenda, which presented the most recent financial monitoring report for review. The Committee was also provided a presentation on the status of the Council’s various transformation projects and further information on the role of the Improvement and Assurance Panel following the recent letter from Government.

Councillor Jason Cummings, Chief Executive, and Corporate Director for Resources & Section 151 Officer, Jane West attended the meeting for this item.

During the introduction to the report, it was highlighted that the budget was still showing a balanced year-end prediction. There were two changes from the previous monthly report, with the Housing Revenue Account year-end position improving due to the review of recharges made from the General Fund. There had also been a change in the capital programme as a result of the approval of the capitalisation request. It was advised that the Council meeting on 29 March 2023 would be receiving a report outlining the response to the recommendations made in the recent Section 24 report from Grant Thornton. This included financial monitoring reports being presented to each Scrutiny & Overview Committee meeting, with the most recent report to be included even it was before its consideration by the Cabinet. The Committee welcomed this move.

An update was provided on the Council’s transformation projects, with a copy of a presentation available on the following link: -

https://democracy.croydon.gov.uk/documents/s46310/Supplement%20Transformation%20Presentation.pdf

Following the introduction, the Committee was provided the opportunity to ask questions on the information provided. Members asked whether the transformation projects were being driven by the need to make savings or to fix issues that were identified to improve services. In response, it was advised that the key driver was to improve services to ensure that the Council was doing things more efficiently, which would in turn drive savings. It was agreed that further consideration was needed on how the transformation projects were listed and it was explained that not all of them were about delivering savings. It was suggested that any reporting on transformation should include the current cost of delivering a service to ensure a comparison could be made on the financial benefits.

The matrix approach to delivering transformation was welcomed, although it was highlighted that this should be reflected in any report, as the projects were currently grouped by directorate. It was also suggested that consideration should be given to quantifying the potential benefit for residents from the transformation workstreams. It was advised that the introduction of new project management software would help to improve reporting processes. The Council was in the process of advertising for a new Transformation Manager who would be responsible for overseeing transformation across the organisation, including managing crosscutting projects and synergies. It was acknowledged that the Council had been on a journey to build its capacity in terms of delivering transformation and to enable staff to start thinking in terms of a project approach.

The Committee was heartened by the confirmation that resourcing for transformation was a priority, as building capacity would be essential to increasing the speed of delivery. Having more people involved with transformation projects would also help to change the culture of the organisation.

It was confirmed that there were specific workstreams within the Housing Transformation Programme that would cut across both the Housing Revenue Account and the General Fund. It was agreed that reporting on transformation should include any such projects involving the Council, including those delivered in partnership with others such as local health providers, and not be restricted to those projects falling with the General Fund. 

It was advised that there was a separate resourcing element included within the transformation project that would be resourced from the £10m allocated for transformation in the 2023-24 Budget. The level of resource allocated would vary depending on the size and scope of the project, and would be monitored by an internal control board.  At present there had been no prioritisation applied to the various projects, with all currently due to be delivered and in the process of being set up. It was highlighted that the programme was intended to be dynamic and if a project turned out to not be deliverable, it would be stopped.

As the new Administration had recently completed its first budget setting process, it was questioned whether there were any key lessons learnt which would inform the process going forward. It was advised that the budget setting process had been fraught due to external factors such as waiting for government guidance both nationally and locally. Given these challenges, the assumptions made in the initial report in November 2022 had proven to be fairly accurate and were reflected in the final Budget report. Ideally, the initial budget report would have been produced earlier, but it had been delayed due to having to wait for the Chancellors statement. Having the previous three years accounts still to be signed off by the external auditor remained a concern, but it was hoped that the work on the Opening the Books review had identified the majority of potential issues that were outstanding.

In response to a question about the process for setting next year’s budget, it was advised that individual departments should be looking at the Medium Term Financial Strategy (MTFS) and using this as a basis to plan the level of savings required. There would be an increased use of data to inform the MTFS, by looking at where Council services sat within London averages and then learning from best practice used by other authorities. It was highlighted that due to the financial challenges facing the Council, the aim should be for service costs to be near the cheapest in London, rather than around the average cost.

A key risk to the delivery of the in-year budget was homelessness and housing costs, with a big increase in rental costs across London due to the use of accommodation by the Home Office, who paid higher rates. The potential risk of a significant change to budget for other services such as Children and Adult Social Care had been minimised by robust monitoring. There were some quantifiable opportunities for savings in the in-year budget that may come through as the budget progressed to close down.

At the conclusion of this item, the Chair thanked those present for their attendance at the meeting and their engagement with the questions of the Committee.

Actions arising from the meeting

Following the discussion of the item at the meeting, the Committee agreed the following actions that would be followed up after the meeting.

1. That the new Transformation Director will be invited to meet with the members of the Scrutiny & Overview Committee once appointed.
2. To provide reassurance on governance processes of the Council, the Committee requests a copy of the terms of reference Transformation Internal Control Board.
3. To provide reassurance that the transformation projects are being fully scoped  and resourced before commencing, that Committee would request to be provided with copies of the individual Project Briefs/Scoping documents.
4. That a briefing is provided for the members of the Scrutiny & Overview Committee on the new project management software, Verto, to understand the benefits it will deliver to the organisation.
5. That regular reviews of transformation projects will be scheduled during into the 2023-24 Scrutiny Work Programme to ensure there is regular scrutiny of the progress made.
6. That scrutiny of the work to improve both the financial and wider culture of the Council will also form a key part of the Scrutiny Work Programme for 2023-24.
7. That the Committee is provided with a briefing on the Oracle Project so it is able to understand the intended benefits, cope of work, resource required and project timelines.
8. That a briefing is provided for the Scrutiny & Overview Committee to explain the outcomes from the review of historic recharging to the Housing Revenue Account.

Conclusions

Following its discussion of the report, the Scrutiny & Overview Committee reached the following conclusions: -

1. The Scrutiny & Overview Committee welcomed the possibility of reviewing the transformation programme structure to bring it more in to line with a matrix approach, cutting across services, rather than the current alignment based around existing directorates.
2. The Scrutiny & Overview Committee welcomed confirmation that the in-year 2022-23 budget was projecting to be balanced budget despite the not insufficient challenges faced during the year.

Recommendations

Following its discussion of the report, the Scrutiny & Overview Committee reached the following recommendation: -

1. To ensure both clarity and transparency, the Scrutiny & Overview Committee recommends that reporting on the Transformation Programme should: -