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Agenda item

Budget Monitoring 2019-20 - Quarter 3 Revenue Forecast

Minutes:

The Interim Head of Finance presented a report which updated Cabinet on the Council’s revenue financial position as at 31st December 2019.

 

She explained that on 20th February 2019, Council approved a net revenue budget of £270.809 million for 2019-2020. As part of the Performance Management Framework, budget projections are reviewed regularly and reported to Cabinet on a quarterly basis and the delivery of agreed budget reductions was also kept under review as part of the process.

 

The Interim Head of Finance summarised the comparison of budget against the projected outturn at 31st December 2019 which was detailed at Table 1 of the report. She elaborated on the underspend of £4.391 million stating the main reason for this was that Welsh Government advised Local Authorities of additional grant funding being made available to meet the increased cost of teachers pensions, fire service pensions as well as teachers pay increases. This totalled £2,006,096, £272,405 and £343,701, respectively.

 

The Interim Head of Finance explained that the Council received its provisional local government settlement for 2020-2021 from Welsh Government on the 16th December 2019. A report was presented to Cabinet on the 14th January 2020 on the draft Medium Term Financial Strategy 2020-21 to 2023-24, which set out the spending priorities of the Council, key investment objectives and budget areas targeted for necessary savings. The strategy includes a financial forecast for 2020-2024 and a detailed draft revenue budget for 2020-21.

 

She advised that there were no budget virements, but several technical adjustments between budgets since the quarter 2 forecast was reported to Cabinet on the 22nd October 2019. These were outlined in the table at 4.1.6 of the report.

 

The Interim Head of Finance explained that due to the increasing pressures on Welsh Councils over the life of the MTFS, there was a need to develop recurrent budget reduction proposals, based on the most likely scenario, amounting to £29.332 million over the next four years. This was evidenced by the prior year budget reductions that occurred in 2016-17 to 2018-19 where £2.342 million of budget reductions proposals were not met in full.

 

The Interim Head of Finance outlined the necessary budget reduction requirements for the Education and Family Support, Social Services and Wellbeing and Communities Directorates. These were detailed in Table 2 of the report.

 

The Interim Head of Finance stated that MTFS principle 7 stated “Savings proposals are fully developed and include realistic delivery timescales prior to inclusion in the annual budget. An MTFS Budget Reduction Contingency Reserve will be maintained to mitigate against unforeseen delays”. A Budget Reduction Contingency was established in 2016-17. This reserve has been used to meet specific budget reduction proposals in previous years on a one-off basis pending alternative measures. This was being used to mitigate the on-going shortfall on the budget reduction proposals, at 4.2.4 of the report.

 

She summarised the budget reduction proposals for each directorate which was at table 3 of the report and in further detail at appendix 2. A comparison of the RAG status position against Quarter 2 was provided at the table in 4.2.5 of the report.

 

The Interim Head of Finance explained the most significant budget reduction proposals unlikely to be achieved in full which included:

 

  • EFS1 Phased Implementation of Learner Transport Policy (£67,000) – no saving likely to be achieved in 2019-20
  • SSW22 – Further savings from library and cultural facilities (£60,000) – no saving likely to be achieved in 2019-20
  • COM52 – Reduction to the budget for the MREC (£1,300,000) - £650,000 likely to be achieved in 2019-20

 

She explained that Appendix 2 identified the projected amount of saving against these three proposals in detail and action to be taken by the Directorate to mitigate the shortfall. She added that the summary of the financial position for each main service area was attached at appendix 3 of the report.

 

The Interim Head of Finance explained to members the Earmarked Reserves for quarter 3 which was £4.391 million. This net addition had been funded form the projected underspend on non-Directorate budgets at the end of Quarter 3 as shown in table 1.

 

She explained that the main additions were:

  • the creation of a £2 million ‘Investing in Communities’ fund as referred to in section 4.3.5;
  • a £2 million addition to the unallocated capital reserve to be utilised against projected capital pressures;
  • a £500,000 increase to the Change Management Fund to support new applications to the fund and;
  • an increase of £335,000 to the earmarked reserve against the Innovation Centre to support the period of development for the Enterprise Hub project.

 

She added that the main reserves that have been unwound are in relation to the Extra Care capital scheme (£308,000), Major Claims Reserve (£248,000) and Community Safety Reserve (£100,000) following a review of likely spend in these areas.

 

The Interim Head of finance asked Members to note the projected outturn position for 2019-20.

 

The Deputy Leader thanked the Interim Head of Finance for the overview and stated that it was important that BCBC recognises the positive position it is in light of the receipt of late grants provided by Welsh Government. He added that it was still very challenging to set the budget without knowing what is needed to be spent each year and that the challenges are very real as was evident from the saving requirements each year.

 

The Leader asked the Corporate Director - Social Services and Wellbeing for clarification on the increase of Looked After Children (LAC) from 376 to 381 whether this was part of a trend or just a fluctuation.

 

The Corporate Director - Social Services and Wellbeing explained that the service had made some signification progress but it was still early days and needed time to embed properly.

 

The Leader asked for elaboration on the progress of Maple Tree House. The Corporate Director - Social Services and Wellbeing explained that Maple Tree House had opened a year ago and to date, the facility has 16 children to access the emergency unit and 6 children who have been into the assessment unit. This has been a positive outcome as these children would have had to go out of county for their care at a cost of around £4,000 a week. She added that the housing support grant has funded 7 units of 24 hour support and 4 places for step down accommodation. She added that there had been 2 specific cases within the last 6 months where provision had been provided for, as there is no placement available in England or Wales for these children, due to their particular individual needs.

 

The Corporate Director - Social Services and Wellbeing explained the situation on foster care recruitment and retention of carers. There were currently 62 independent foster care placements and 140 general placements. There were also 220 in house foster care placements which was a slight increase from 209 in the year 2018-19. She added that further avenues of support were being looked into, so she believed foster care support mechanisms were moving in the right direction with use also of the Integrated Care Fund, as well as practice support worker posts who work with foster families to tease out and resolve any problems. Additional support can also be offered to help with difficult teenagers as well as providing out of hours support if necessary, she added.

 

The Leader thanked the Corporate Director – Social Services and Wellbeing for the comprehensive response and thanked the team for their work particularly with the ongoing pressures.

 

The Cabinet Member – Social Services & Early Help explained that the work being doing by the social service team had been evident and the changes which had led to improvements in the service, were now coming into fruition.

 

The Leader stated that the budget presently was just a forecast, rather than being set in stone and therefore, that it could change as the year progresses for a variety of reasons, e.g. extra gritting vehicles in the winter. He asked if a report to update Cabinet could be received in 3 months, with any major developments before then to also be reported if necessary.

 

RESOLVED: That Cabinet:

 

  1. Noted the projected revenue outturn position for 2019-20

Requested an update report in 3 months and for any major developments to also be reported before then.

Supporting documents:

 

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