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Agenda item

Month 11 Financial Performance Monitoring Report

The Scrutiny & Overview Committee is asked to: -

1.   Review the information provided in the report on the Month 11 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 .

 

Minutes:

The Committee considered a report that provided an overview of the latest budget position up to the end of Period 11. This report was included on the agenda to give the Committee the opportunity to scrutinise the delivery of 2022-23 budget.

The Cabinet Member for Finance, Councillor Jason Cummings, and members of the Corporate Management Team were in attendance at the meeting for this item.

At the start of the item, the Chair noted the Committee’s support and appreciation for the earlier publication of Financial Monitoring Reports, but shared concerns that the reports were still not as clear or as timely as they could be. The Chair asked if there was scope to bring forward the publication of the Financial Monitoring Reports or to change the composition of the data in future papers. The Director of Finance explained that time was required for individual departments to conduct their own forecasting, for this to be challenged by Finance, and for commentary and narration on the figures to be added. Members heard that because of this, there would always be some lead-time between the publication of the report and the period it concerned.The Director of Finance highlighted that these reports would now be published as soon as they were ready, instead of following the Cabinet publication schedule, and would be available on a dedicated page on the Council’s website.

The Deputy-Chair asked if reports were still being collated by spreadsheet, or if specialised software was now being used. Members heard that Oracle software was being used to input departmental forecasting, and this data was extracted from Oracle to include in the reports with narration; other specialised software was also used, such as for social care placements, as these required substantial modelling in order to be accurate. The Corporate Director of Resources & Section 151 Officer explained that the Oracle project was still at the scoping stage, and a timetable for this project would likely be reported to Cabinet in July 2023. Members heard that forecasting and getting better reporting from the system directly would be a high priority in terms of improving how budget holders were working with the Finance team.

The Chair explained that timely reports were important to catch issues as soon as they became apparent, and noted that this had been the motivation in moving from quarterly to monthly reporting. The Cabinet Member for Finance explained that Financial Monitoring Reports still required oversight from the Executive, but accepted that this did add some degree of delay. The Deputy-Chair queried whether the publication timeline was in line with best practice and the Corporate Director of Resources & Section 151 Officer explained that Croydon compared favourably in publishing monthly reports, but accepted that the manual nature of producing reports could mean these were slower to finalise than at other authorities. The Cabinet Member for Finance explained that the reports had incorporated previous feedback from scrutiny, and that iterative improvements had been made over the period monthly reports had been produced.

The Chair asked if there would be any changes to the reporting as a result of the increased oversight of the Improvement and Assurance Panel and heard that this would not be the case. The Chair commented on the possible need for further training to better understand and analyse these reports. The Cabinet Member for Finance offered to sit down with any Members to discuss financial reporting. It was also agreed that the Member Learning and Development Panel would be asked to consider the possible need for training on interpreting the Financial Performance reporting for all Members.

The Chair asked if any of the risks outlined in the report were likely to continue into 2023/24. The Director of Finance explained that there were pressures on services and contracted spend, but that there were underspends across staffing areas due to periods of vacancy. There were some areas that had been difficult to recruit into, such as social work and planning, and this was a trend that was likely to continue into 2023/24; pressures would also likely continue on Temporary Accommodation, Social Care Placements and some income areas that had not fully recovered since the pandemic. The Chair asked what the likely impacts of vacancies would be, and heard that statutory functions would need to be prioritised which could pose a risk to planned transformation and improvement work. The Director of Finance explained that agency and project staff would be used to try to relieve these pressures where possible.

The Cabinet Member for Finance highlighted that delays with the Automatic Number Plate Recognition (ANPR) contract for parking enforcement would have an overrun into 2023/24. The Chair queried whether there was a timeline for ANPR cameras to be operational and collecting income. The Corporate Director for Sustainable Communities, Regeneration & Economic Recovery (SCRER) acknowledged the delays and explained that contractual negotiations with the contractor were ongoing to resolve this; until these were concluded, it would not be possible to provide a timeline, which was why the risk had been highlighted in the report. The Deputy-Chair asked how this delay was affecting 2023/24 income targets, and heard that improved modelling on traffic income had made the impact easier to estimate and that remedies in the contract would be used to cover losses where possible. The Corporate Director of SCRER explained that there was a risk to the income budget from the delays for ANPR, but that contractual negotiations would need to be concluded before this could be fully quantified, and that this risk was separate to modelling and the previous budget correction.

The Vice-Chair asked about the timeline for improvements within the Temporary and Emergency Accommodation service and heard from the Corporate Director of Resources & Section 151 Officer that she would ask the Corporate Director of Housing to write to the Committee. The Chair suggested that this could be addressed through the new Homes Sub-Committee that would be set up at the Scrutiny & Overview Committee meeting in June 2023.

Members asked about progress on the Transformation Programme and heard that this would be included in future Financial Monitoring reports to provide a monthly update on progress. The Corporate Director of Resources & Section 151 Officer explained that the Transformation team was being established, with an acting Director of Transformation whilst the permanent role was out to recruitment. The Transformation Programme was being reshaped to ensure that this was more targeted, with all the project plans being uploaded into ‘Verto’ for monitoring. The number of transformation projects had been pared down to ensure that these were more manageable and easier to track. The Corporate Director of Resources & Section 151 Officer explained that a number of projects were already underway and beginning to identify savings. The Committee were reminded that the majority of Transformation Programme savings were due to be delivered in 2024/25, not 2023/24, and heard that projects were making good progress. Members heard that the Transformation Board was meeting monthly, and that projects were being reviewed at the Mayor’s Advisory Board. The Committee asked if it would be possible to see copies of Transformation Board agendas, or to do a deep dive on transformation governance structures; the Corporate Director of Resources & Section 151 Officer agreed that a deep dive on this would be valuable to the Committee and suggested that this included a demonstration of the Verto software.

The Deputy-Chair asked about the knock on effect of not being able to put the anticipated contribution into the Council’s reserves. The Cabinet Member for Finance explained that this had been the position since the autumn, and would not have a knock on effect for the 2023/24 budget. It was highlighted that this decision had been taken due to the unexpected inflationary pressures felt during 2022/23, and it had not been seen as appropriate to increase borrowing, but to instead not contribute additional funds to the reserves. The Corporate Director of Resources & Section 151 Officer agreed and explained that reserve levels were adequate and there were no plans to increase reserves in the current financial year. The Deputy-Chair commented on past low reserve levels and the contribution that this had made to the financial difficulties of the Council. The Chair highlighted that some of the planned savings for 2022/23 had not been made, and asked if the Council was sufficiently resilient should that be the case in 2023/24. The Corporate Director of Resources & Section 151 Officer explained that inflationary pressures and non-delivery of savings were well provided for in the base 2023/24 budget, and that reserves were only used in a worst-case scenario. The Director of Finance explained that significant allowances had been made in the budget for budgetary pressures, inflation and tomography. The Cabinet Member for Finance explained that previously this had not been the case, alongside lower reserves, and that now this was in place the Council was in a stronger position to deal with future challenges. It was highlighted that no reserves had been used during 2022/23 to cover the non-delivery of savings.

The Chair asked about the three years of outstanding accounts. The Corporate Director of Resources & Section 151 Officer explained that the current timeline saw them signing off the 2019/20 accounts in June 2023, pending adjustments relating to account for the treatment of Croydon Affordable Homes and infrastructure assets. These would then need to be signed off by the Council’s external auditor, and it was expected that they would be received by the Audit Committee in July 2023. Members heard that the timeline for the 2020/21 accounts to be signed off was October 2023, and March 2024 for the 21/22 accounts. It was expected that accounts for 2022/23 would be signed off in June 2024.

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 a deep dive is arranged for the members of the Scrutiny & Overview Committee on the governance arrangements of the Council’s transformation programme (add verto).

2.    The Streets & Environment Sub-Committee will be asked to review the progress made with acquiring new ANPR cameras and the financial impact from the delay in acquiring the equipment needed for enforcement.

3.    The Homes Sub-Committee will be asked to review the Council’s persistence overspends for emergency and temporary accomodation.

4.    Social Care related sub-committees to explore the impact of high vacancy rates on services, staff workload, transformation and agency costs.

5.    A briefing will be arranged for the Scrutiny & Overview Committee on the Oracle Project.

6.    A meeting would be arranged for members of the Scrutiny & Overview Committee with the Cabinet Member for Finance, to discuss the format of the Financial Performance Monitoring reports.

7.    A recommendation be made to the Member Learning and Development Panel to provide financial performance monitoring training for all Members.

Conclusions

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

1.    The Committee welcomed the streamlined process for publishing Financial Performance Monitoring reports, as well as providing a dedicated page on the Council’s websites for the reports, as it would help to improve transparency.

2.    The Committee was concerned that given the precarious nature of the Council’s finances, the three month delay between month end and publishing financial performance monitoring report would make it challenging to identify issues affecting budget delivery at an early enough stage. However, it was noted that the current timeframe for financial reporting was not out of keeping with other local authorities.

3.    The Committee raised its concern about the accessibility of the financial performance monitoring reports and welcomed the invitation of the Cabinet Member of Finance to meet to discuss the report.

Recommendations

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

1.    Given the precarious nature of the Council’s finances, the Committee recommends that the process for publishing monthly Financial Performance Monitoring report is sped up, with the aim of achieving a maximum turnaround of eight week to finalise checks and go through the sign-off process before publication. 

 

Supporting documents: