Agenda item

Context:

The purpose of the report was to provide Select Committee Members with information on the forecast revenue outturn position of the Authority at the end of reporting period 2 which represents month 6 financial information for the 2015/16 financial year.

The report was considered by Select Committees as part of the responsibility to,

• assess whether effective budget monitoring is taking place,

• monitor the extent to which budgets are spent in accordance with agreed budget and policy framework,

• challenge the reasonableness of projected over or underspends, and

• monitor the achievement of predicted efficiency gains or progress in relation to savings proposals.

Key issues:

Officers presented the Month 6 outturn report for Children and Young Peoples Select Committee and in doing so key issues were highlighted as:

·                     £1.066 million potential over spend, has continued to be mitigated significantly by anticipated net Council Tax receipts and favourable treasury considerations.  The net cost of pressure is £2,146,000, with the main overspending areas being:

Ø  Children’s social services (£1.1 million overspend),

Ø  Enterprise Directorate (£601K overspend), relating to markets, community education, community hubs, IT, Leisure and Museums

Ø  Operations Directorate (£339k overspend) relating to Home to School transport, and Property services

Ø  School balances at the beginning of the financial year £1,140,000.  The schools budgeted draw upon balances is forecasted to be £456,000 for 2015/16, therefore leaving £683,000 as forecasted closing reserve balances.  5 schools exhibited a deficit position, two have seen an increase in their deficit balance at month 6.

Member Scrutiny:

·         A member queried whether the cash injection of £400k was bringing the budget back in line.  The committee were informed that this was not the case as there had been an impact due to Looked After Children increased by 20.  In response to whether this was comparable with other authorities, officers advised that it was variable across areas.

·         Officers confirmed that the budget overspend of £190k was an improvement on the previous quarter, £300k allocated to schools to fund redundancies has been fully spent, and the overspend will be picked up by schools.  A small contingency of £20,000 has been and will be allocated at the end of the year if not fully used. The individual schools budget is over spent by £28k, majority relating to protection for staff.  ALN under spent by £102k through recoupment income, youth service had mandate and savings were reporting £137k overspend.

·         Officers continued and provided an overview of the schools position, 6 schools were in a deficit position and Overmonnow had gone into £8k deficit, work was being undertaken with the school on a recovery plan, there had been increased pupil numbers and additional teacher.  Chepstow school were still in deficit, which had increased at quarter 2, but had been reviewed with school and confident it would be recovered within the 3 year timeframe. A meeting would be held with the school to discuss. 

·         The Vice Chair requested clarification to the term fluctuating trend.  Officers confirmed that this related to the school balance increase and that schools in deficit have a recovery plan, which are being met (one school excepted).

·         In relation to scrutiny of Children’s services, members requested reassurance on how the position would be mitigated.  The Chief Officer highlighted two critical issues, one being the use of agency workforce, which required financial planning to ensure sustainable budget going forward.  The finance officer reiterated that sustainability was an important factor, as LAC numbers in the system and shifting of base budget, LAC could stabilise but finance could still go up, due to complication of cases 

·         The committee stressed the importance of scrutiny in understanding reports that were presented, officers confirmed that a key could be added into reports to ensure consistency and continuity.  We noted that report format had been changed and comments would be considered.

·         A member asked officers to identify areas of concern and were informed that ALN was an area of volatility as well as the significant deficit at Chepstow that would be closely monitored.

·         The Chief Officer reassured the committee that it was critical for plans to be in place, workforce in place and ensuring that services were in place. 

·         A service forward plan would be presented to the committee for future scrutiny.

Recommendations:

We resolved to agree recommendations within the report:

1.    That Members consider the position concerning the second period of revenue monitoring in 2015/16 (£1.066 million deficit) and seek a further report back to the next Cabinet outlining the Recovery Plans to be put in place to address the overspends in service areas.

2.    That Members note the forecast use of earmarked reserves and, in order to ensure adequacy of reserves for the MTFP, approve the following change in practice:

·         Increase workforce planning and redeployment to reduce the need for reserves to cover redundancies

·         Any request for reserve funding must first explore whether existing budgets, or external funding sources can be used for the proposal accepting this may require a change in priorities if existing budget are used

·         Use of reserves to implement budget savings must use the saving first to repay the reserve

·         IT investment bids will need to be considered in the core capital programme when the IT investment reserve is extinguished, this may necessitate displacing some of the core capital programme allocations depending on the priorities agreed

3.    Members consider the position concerning period 2 Capital Monitoring with a revised budget of £60.496 million for the 2015/16 financial year.