Agenda item

Officer: Lisa Taylor

Key decision: no

The Leader of the Council delegated authority to the Cabinet to make the following decisions:

 

RESOLVED: To

 

1.    Note the latest forecast revenue budget overspend of £50.3m detailed in section 3 of the report.

 

2.    Approve the savings options of £27.9m listed in section 5 of the report to reduce the forecast overspend this year, and amend the 2020/21 budget to include the additional in year savings.

 

3.    Agree that a formal approach is made to the Ministry of Housing, Communities and Local Government to seek a capitalisation direction to enable the 2020/21 budget to be balanced.

 

4.    Agree to the development of Croydon’s Renewal Plan, to deliver a sustainable balanced budget over the medium term, and to provide an update to Cabinet in November 2020.

 

5.    Note the in year review of the Capital Programme and agree that a review of the future Capital programme is undertaken and to provide an update to Cabinet in November 2020.

 

6.    Agree that a strategic review of the Council’s group of companies and entities is undertaken and to delegate to the Executive Director of Place the scope and terms of that review, and to provide an update to Cabinet in November 2020.

 

RESOLVED: To recommend to Council to

 

1.    Note the latest forecast revenue budget overspend of £50.3m detailed in section 3 of the report.

 

2.    Approve the savings options of £27.9m listed in section 5 of this report to reduce the forecast overspend this year, and amend the 2020/21 budget to include the additional in year savings.

 

3.    Agree that a formal approach is made to the Ministry of Housing, Communities and Local Government to seek a capitalisation direction to enable the 2020/21 budget to be balanced.

 

4.    Agree to the development of Croydon’s Renewal Plan, to deliver a sustainable balanced budget over the medium term, and to provide an update to Full Council in November 2020.

 

5.    Note the in year review of the Capital Programme and agree that a review of the future Capital programme is undertaken and to provide an update to Full Council in November 2020.

 

6.    Agree that a strategic review of the Council’s group of companies and entities is undertaken and to delegate to the Executive Director of Place the scope and terms of that review, and to provide an update to Council in November 2020.

The Leader of the Council stated that the report was the council’s immediate response to the Q1 outturn. He believed that tough decisions were required as the council needed a significant response to the financial position; with the first tranche of decisions set out in the report. Members were informed that the report represented only the first phase of the response to the situation with the option of a capitalisation direction from MHCLG being the preferred long-term solution.

 

The Cabinet Member for Finance & Resources informed Members that it was recognised that there were immediate financial pressures facing the council in April/May 2020 and the Finance Review Panel was convened to review the immediate measures programme. Despite this programme, it was recognised that changes were not taking place at the pace required and in recent weeks there had been a renewed drive to deliver change at pace.

 

A staffing review had taken place as part of the immediate measures which had resulted in the deletion of 400 posts. It was recognised by the Cabinet that this had been a particularly difficult time for staff; however, the Cabinet Member stated that there had been a full consultation and the result had been that the majority of posts deleted had been vacant posts.

 

The Cabinet Member noted the council had been able to use its relationship with the local NHS, had reviewed contracts and made savings where possible and had sought to reduce interest costs in relation to the General Fund capital programme. Members were assured that the council was continuing to review opportunities for in-year savings and had made the decision keep closed services which had not yet been reopened following lockdown. Additionally, it has been recognised that the council had a number of companies and other subsidiaries and that an independent review of all these would be undertaken.

 

The Cabinet meeting was advised that the council had been holding informal discussions with the MHCLG on financial support in the form of a capitalisation direction which it was hoped would give the council time to deliver a sustainable budget for the council. A formal submission for this support was due to be with the MHCLG in November 2020.

 

The Director of Finance, Investment and Risk informed Members that the report set out the General Fund position and the work required in year and in future years to enable the council to have a sustainable and balanced budget. It was recognised that local government had been at the forefront in responding to the pandemic and that while money had been received from government this had not been sufficient. However, the challenge of responding to the pandemic had not been unique to Croydon rather that the challenging in-year savings of £40m not being achieved had been a major factor in the position the council was facing.

 

Members were informed that it was the Director of Finance, Investment and Risk responsibility to ensure a balanced and deliverable budget was presented to Members for decision and implementation by the executive leadership team. When this was no longer possible it was her responsibility to take immediate steps to bring to Cabinet’s attention the need to make further savings or increase income to balance the budget in-year. In response to the current financial position facing the council, the Chief Executive, the Executive Directors and Cabinet were working together with the Finance Review Panel to review options. It was stated by the Director of Finance, Investment and Risk that if there came a point where it was clear that the council’s income could not cover its expenditure she would be required to serve a Section 114 notice and the Council would be forced to cease all expenditure and set an emergency budget within 21 days.

 

As noted in the report the council did not have sufficient income nor reserves to cover the overspend and anticipated costs and, as such, the report formally sought to request a capitalisation direction from MHCLG. MHCLG and H. M Treasury would require a robust and sustainable plan from the council as part of any agreement to provide this funding to the council which would be drawn up ahead of a submission in November. It was clarified that the capitalisation direction was not free money, it was a loan and would have to be paid back. However it would provide the council with an opportunity of three years in order to manage the significant financial savings required to operate within a sustainable and balanced budget going forward.

 

The Director of Finance, Investment and Risk clarified that the council was not bankrupt as it was formally seeking government financial support, however if MHCLG decided not to agree the loan then a S114 would need to be issued and immediate savings would need to be implemented. The council was not facing a shortfall in its cash flow as it had been able to reprofile expenditure, but this could change and it was important that there was timely budgeting taking place.

 

Members were assured that the council’s Chief Executive and Director of Finance, Investment and Risk were continuing its conversations with MHCLG and would also work on delivering the in-year savings, finding further savings and increasing income where possible.

 

The Executive Director of Resources and Monitoring Officer addressed the meeting and noted that this represented a critical time for the council to meet its financial challenges. It was stated that whilst it was the responsibility of the Director of Finance, Investment and Risk and Section 151 Officer to fulfil her statutory obligations to present and assure Members of the in-year delivery of a balanced budget, it was also for the Chief Executive, as Head of Paid Service, and herself as Monitoring Officer to ensure there were relevant processes in place to support this. Members were advised that it was important that there were regular updates on the financial position to both Cabinet and council meetings with clear and transparent reports. The importance of challenge and scrutiny at Cabinet and at the Scrutiny and Overview Committee and the General Purposes and Audit Committee were highlighted by the Monitoring Officer to support the council in delivering savings.

 

The plan to have an independent strategic review of the Council’s companies and other entities was highlighted by the Chief Executive as having been noted by the MHCLG as a positive step. It was further advised by the Chief Executive that in her first week she had seen a real interest from both staff and the community to contribute to the review which was welcomed.

 

The Opposition Leader stated that as an opposition they had taken their responsibility seriously and had challenged decisions in previous years and whilst it was recognised that Covid-19 had a significant impact on all of local government, it was stated that in his view there had been a history of financial mismanagement within the council. The Opposition Leader stated he believed that in the previous six years the Administration had doubled debt, reduced income and had continued to spend. Concerns were raised that while all Croydon residents would be impacted by the financial position of the council, it would be the most vulnerable residents which would be most impacted.

 

In response, the Leader stated that it was an important discussion and that the council remained committed to protecting the services which supported the most vulnerable residents. The Cabinet Member for Finance & Resources further noted that the Opposition had voted for the budget and that the debts which had been referred to were in relation to building schools and homes for residents.

 

The Chair of Scrutiny & Overview Committee highlighted the role of scrutiny as a cross party endeavour and on a cross party basis the Committee had called in the July Cabinet finance reports as it had not been convinced of the immediacy of the council’s response to the situation. It was stressed that it was the responsibility of all councillors to ensure the council delivered a balanced budget and in response to the situation it was noted that it was inevitable the council would be smaller. As such, it was also stressed that it was important that the council supported its staff to deliver with less.

 

It was recognised that the role of scrutiny, in holding Cabinet to account, was integral to the future of the council and as such it was the committee’s focus, along with the local response to the pandemic, for its coming meetings. Whilst it was felt that there was a renewed focus within Cabinet, Members were advised that scrutiny would hold them to account in the spirit of partnership to ensure the best outcome for the council, its staff and residents.

 

In response to Member questions, the Cabinet Member for Finance & Resources stated that Brick by Brick was required to repay loans following the completion of a site and confirmed that he believed all payments were up to date. He described that the recently published figures of Brick by Brick showed the company had made a profit in the previous year and would be bringing in capital receipts which had not been previously budgeted. The Leader stressed that everything, including Brick by Brick, would be reviewed independently to ensure that the council had a resilient and sustainable future.

 

Concerns were raised that the most vulnerable in society had been heavily impacted by Covid-19 and that the report included the option to reduce care packages by 20%. In response, the Leader stressed that the council was committed to protect the most vulnerable residents and the Cabinet Member for Finance & Resources confirmed that the savings were in relation to looking at alternative provision at reduced costs.

 

Cabinet Members stated that they were in no doubt of the savings and difficult decisions which were urgently required. It was recognised by all Cabinet Members that everyone needed to remain focussed on delivering the identified savings at pace and to demonstrate the commitment of the council to the MHCLG that it could deliver a robust, sustainable plan at pace. Cabinet Members highlighted the importance of utilising the council’s excellent partnerships with residents, staff and partners and ensuring they understood the position of the council to support the delivery of a sustainable future for the Borough.

 

In response to a question on how the council would look in future years, the Leader stated that the preferred option was a three-year plan, The Croydon Renewal Plan which would require financial support (the capitalisation direction) from MHCLG. This plan would require the council to discuss its future with the people of Croydon. It was recognised that it was important that a variety of tools of engagement were used to ensure that every household in the borough felt that it had had the opportunity to engage in the conversation about the future of the council.

 

The Cabinet Member for Children, Young People & Learning confirmed that caseloads of children’s social workers were still within manageable levels and were being reviewed regularly with the Director of Early Help and Children’s Social Care. It was stated that there was a national shortage of permanent social workers, however there had been a push to recruit permanent social workers in Croydon in the wake of the Ofsted findings in 2017, and that staff savings had been achieved through the deletion of vacant posts. The Cabinet Member stated that it was recognised that there was still work to do within children’s services and that senior officers were working with staff to ensure the impact of savings was manageable and the voice of social workers was still being heard.

 

Members were assured that the Community Fund was not due to be cut following the proposals set out in the report, rather that CIL monies would provide an alternative funding source from the general revenue budget to the Fund to ensure community funding was available.

 

The Chief Executive confirmed that the council was seeking performance data which would feed into future reviews of services and inform decisions going forward. The request to capitalise revenue funding in this way and at this scale was new territory for local government and so it was important to ensure the plan submitted to MHCLG was robust. Following the submission, the Chief Executive stated, the detail and work with partners in delivering the plan could begin in earnest.

 

In response to Member questions, the Cabinet Member for Environment, Transport & Regeneration (voting – Job Share) stated that the proposed changes to parking charges represented only £1m of the £28m savings identified. It was further noted that the council did not increase parking charges in isolation, rather that parking charges were a traffic management measure which contributed towards meeting the council’s road network duties under the Traffic Management Act 2004 and the Road Traffic Regulations Act 1984.

 

The Cabinet Member for Clean Green Croydon noted that the council was experiencing unprecedented times and that all discretionary services needed to be reviewed, including the free bulky waste collection. It was noted by the Cabinet Member that there had not been a correlation between reinstating the free service and any reduction in fly tipping. The proposed charges outlined within the report would make the service cost neutral as residents would only be charged what the council paid Veolia to collect the waste.

 

In response to questions, the Cabinet Member for Culture, Leisure & Sport advised Members that a decision had been made to not reopen facilities which were closed and, as such, Purley pool would remain closed. The Cabinet Member further confirmed that the library book fund had underspent that year due to closures and that the proposed savings in the book service were a contribution to the council’s savings. It was stated that it was important that all services contributed to the required savings.

 

The challenge from Members was welcomed by the Chief Executive as it was important that the report and proposals were fully scrutinised. Furthermore, it evidenced to the MHCLG how seriously the council took its current position and the commitment to develop a robust and sustainable new budget plan at pace. It was noted that both the Scrutiny and General Purposes & Audit Committees also had important roles in ensuring the plan was robust and delivered. The Leader confirmed that it was important that there was political challenge and scrutiny to ensure a sustainable budget for the future was delivered at pace and thanked all Members for their challenge and questions.

 

The Chief Executive noted that a second wave of Covid-19 was approaching and would further impact upon the council, but stated officers were committed to the delivery of the financial plan and responding to the pandemic.

 

The Leader of the Council delegated authority to the Cabinet to make the following decisions:

 

RESOLVED: To

 

1.     Note the latest forecast revenue budget overspend of £50.3m detailed in section 3 of the report.

 

2.     Approve the savings options of £27.9m listed in section 5 of the report to reduce the forecast overspend this year, and amend the 2020/21 budget to include the additional in year savings.

 

3.     Agree that a formal approach is made to the Ministry of Housing, Communities and Local Government to seek a capitalisation direction to enable the 2020/21 budget to be balanced.

 

4.     Agree to the development of Croydon’s Renewal Plan, to deliver a sustainable balanced budget over the medium term, and to provide an update to Cabinet in November 2020.

 

5.     Note the in-year review of the Capital Programme and agree that a review of the future Capital programme is undertaken and to provide an update to Cabinet in November 2020.

 

6.     Agree that a strategic review of the Council’s group of companies and entities is undertaken and to delegate to the Executive Director of Place the scope and terms of that review, and to provide an update to Cabinet in November 2020.

 

RESOLVED: To recommend to Council to

 

1.     Note the latest forecast revenue budget overspend of £50.3m detailed in section 3 of the report.

 

2.     Approve the savings options of £27.9m listed in section 5 of this report to reduce the forecast overspend this year, and amend the 2020/21 budget to include the additional in year savings.

 

3.     Agree that a formal approach is made to the Ministry of Housing, Communities and Local Government to seek a capitalisation direction to enable the 2020/21 budget to be balanced.

 

4.     Agree to the development of Croydon’s Renewal Plan, to deliver a sustainable balanced budget over the medium term, and to provide an update to Full Council in November 2020.

 

5.     Note the in-year review of the Capital Programme and agree that a review of the future Capital programme is undertaken and to provide an update to Full Council in November 2020.

 

6.     Agree that a strategic review of the Council’s group of companies and entities is undertaken and to delegate to the Executive Director of Place the scope and terms of that review, and to provide an update to Council in November 2020.