Decision:
Cabinet RESOLVED;
2.1 To note the General Fund revenue budget outturn is forecast to overspend at financial year end by £20.6m at Period 4, after the budgeted utilisation of £38m capitalisation directions requested from the Ministry of Housing, Communities and Local Government (MHCLG), utilisation of the £5.0m risk contingency budget and utilisation of £13.0m corporate earmarked reserves.
2.2 To note that all service directorates have been asked to reduce their net expenditure so that the annual budget can be balanced at the end of the year. It should not be underestimated what a challenge this will be against the background of increased demand pressures which are continuing to build across local government and increased market prices. Forecast overspend pressures are also demonstrated in the Month 2 and Quarter 1 reports published by other London councils. However, the Council will still strive to bring its 2024-25 budget into balance including through the in-year Financial Recovery Plan as set out from para 4.8.
2.3 To approve the budget movement between directorates to match the movement of the Bereavement and Registrars service from Assistant Chief Executive (ACE) Directorate to Sustainable Communities, Regeneration & Economic Development (SCRER) Directorate (£1.081m).
2.4 To approve the budget movement from Resources Directorate to Adult Social Care and Health (ASCH) Directorate to set up the premises cost recharge budget for the Community Equipment Service (£0.502m) as set out in para 4.11.
2.5 To note the progress in Medium Term Financial Strategy (MTFS) savings achievement of £20.8m (75.1%) against the total savings target of £27.7m as set out in paragraph 4.125.
2.6 To note the work that is continuing on the Council’s Transformation Programme as set out from paragraph 4.123.
2.7 To note the Housing Revenue Account (HRA) revenue budget outturn is forecast to overspend by £2.0m.
2.8 To note the General Fund capital programme 2024-25 forecast underspend of £7.6m against the revised capital budget of £118.5m.
2.9 To note the HRA capital programme 2024-25 forecast underspend of £8.1m against the revised capital budget of £57.2m.
2.10 To note the Council’s historic borrowing and subsequent debt burden continues to be critical to the non-sustainability of the Council’s revenue budget as set out from para 4.144. Dialogue with MHCLG continues around options of further financial support from Government in regard to the level of structural indebtedness to ensure the Council can deliver sustainable Local Government services.
2.11 To note that the Council continues to operate Spend Control Panels, and tightened the criteria from July 2024, to ensure that stringent financial control and assurance oversight are maintained.
2.12 To note that current forecasts are based on the best available information at the time and will be subject to review and change during the financial year.
Minutes:
The Executive Mayor introduced the report which outlined the council's financial position as of July 2024. The council was forecasting at year end, a General Fund overspend of £20.6 million, down from £23.9 million last month. This reflected ongoing pressures which many other Councils were facing, particularly in areas such as children’s social care, homelessness, and SEND transport.The administration was focused on managing finances responsibly and whilst the projected overspend was a concern, several recovery strategies had been implemented. These included rigorous controls on spending, a review of high-cost areas such as children’s placements and further efficiency measures across all service areas. There were early signs of progress in these efforts and there was confidence that the budget would be brought back in line.
Cabinet Member for Finance, Councillor Jason Cummings noted the £3 million improvement since Period 3, split between £1.3 million of directorate performance improvements and a £2 million corporate adjustment on transformation spend. All previously planned transformation activity was still going ahead. Last year council’s forecasting had typically seen a worsening position as the year went on and therefore it was encouraging to see the improvement to the position in Period 4.
Deputy Leader of the Opposition Councillor Callton Young noted the report warned readers not to underestimate the challenge to service directorates to reduce their expenditure. With overspend being largely due to price pressures on children's placements and market pressures on temporary accommodation where demand was set to exceed supply, they asked how confident the Mayor was of the recovery plan and asked if there was a ‘Plan B’ to balance the budget should the recovery plan fall short.
The Executive Mayor responded that there were a number of areas causing financial pressure for local authorities across London boroughs. There was confidence that the measures would deliver results but there was always a ‘Plan B’ and contingences. The council was monitoring and challenging everything.
Cabinet Member for Finance, Councillor Jason Cummings reiterated confidence in the recovery plans and advised the council was acting as a whole to rectify the position. There remained several variables and more would be known following the government's budget statements such as the impact of any increase to employer NI contributions.
Section 151 Officer and Corporate Director of Resources Jane West emphasised this was seen as a corporate issue and no stone was being left unturned across the council.
The Executive Mayor advised whilst the financial pressures were significant, the necessary steps to mitigate the challenges and continue the journey toward financial recovery were being taken. A commitment to responsible financial management remained and decisive action was being taken to ensure a sustainable future for the Council and its residents.
Cabinet RESOLVED;
2.1 To note the General Fund revenue budget outturn is forecast to overspend at financial year end by £20.6m at Period 4, after the budgeted utilisation of £38m capitalisation directions requested from the Ministry of Housing, Communities and Local Government (MHCLG), utilisation of the £5.0m risk contingency budget and utilisation of £13.0m corporate earmarked reserves.
2.2 To note that all service directorates have been asked to reduce their net expenditure so that the annual budget can be balanced at the end of the year. It should not be underestimated what a challenge this will be against the background of increased demand pressures which are continuing to build across local government and increased market prices. Forecast overspend pressures are also demonstrated in the Month 2 and Quarter 1 reports published by other London councils. However, the Council will still strive to bring its 2024-25 budget into balance including through the in-year Financial Recovery Plan as set out from para 4.8.
2.3 To approve the budget movement between directorates to match the movement of the Bereavement and Registrars service from Assistant Chief Executive (ACE) Directorate to Sustainable Communities, Regeneration & Economic Development (SCRER) Directorate (£1.081m).
2.4 To approve the budget movement from Resources Directorate to Adult Social Care and Health (ASCH) Directorate to set up the premises cost recharge budget for the Community Equipment Service (£0.502m) as set out in para 4.11.
2.5 To note the progress in Medium Term Financial Strategy (MTFS) savings achievement of £20.8m (75.1%) against the total savings target of £27.7m as set out in paragraph 4.125.
2.6 To note the work that is continuing on the Council’s Transformation Programme as set out from paragraph 4.123.
2.7 To note the Housing Revenue Account (HRA) revenue budget outturn is forecast to overspend by £2.0m.
2.8 To note the General Fund capital programme 2024-25 forecast underspend of £7.6m against the revised capital budget of £118.5m.
2.9 To note the HRA capital programme 2024-25 forecast underspend of £8.1m against the revised capital budget of £57.2m.
2.10 To note the Council’s historic borrowing and subsequent debt burden continues to be critical to the non-sustainability of the Council’s revenue budget as set out from para 4.144. Dialogue with MHCLG continues around options of further financial support from Government in regard to the level of structural indebtedness to ensure the Council can deliver sustainable Local Government services.
2.11 To note that the Council continues to operate Spend Control Panels, and tightened the criteria from July 2024, to ensure that stringent financial control and assurance oversight are maintained.
2.12 To note that current forecasts are based on the best available information at the time and will be subject to review and change during the financial year.
Supporting documents: