Budget monitoring report for quarterly scrutiny.

Scrutiny of the Month 7 Budget Monitoring Report and the draft Capital and Revenue proposals for 2020-21 within the context of the four-year Medium Term Financial Plan

The has discussed in its pre-meeting that it would like to attend the Economy and Development Select Committee on 30^th January as there were issues of interest and relevance to this committee on the agenda of that meeting. Members asked whether it would be possible to convene a joint meeting of the committees which would enable Strong Communities Select Committee members to have an equal contribution and voting rights on the subject matter.  It was confirmed by our Monitoring Officer that this could be scheduled. Members were asked to diarise the meeting.   

The committee agreed to discuss the Month 7 Budget Monitoring report in conjunction with the draft Capital and Revenue proposals for 2020-21 and the budget monitoring report provided the wider context for the challenges being faced in the current year and moving forward.

Members heard that at month 7, the council is facing significant challenges, with the level of service overspends being very significant and extraordinary compared to recent years. Officers explained that in previous years, we have had an exemplary track record of managing overspends so that at the point of budget outturn, we are usually breaking even or returning a small surplus and that continues to be our attempt.

Paragraph 3.2 provides a table which shows a net council surplus of £4 million.  In terms of context, these are driven from 3 areas:

·         Children’s services and looked after children pressures

·         Pressures in adult social care

·         Support for children with additional learning needs

In terms of matters concerning the operations directorate, which we will consider more fully at next week’s Economy and Development Select Committee, pressures are being contained around car parking, passenger transport and planning income. And these are placing significant strain on the revenue budget.  

We haven’t got significant levels of reserves, so we have had to put recovery plans in place and react and respond to the situation we are in. Recovery plans are to curb all non-essential expenditure and where possible, to look to generate further savings whilst arresting the current position.

If you refer to 3.10 of report, this shows position we are currently in and details our plan of action.  We are forecasting a deficit of £3.987m and we were fortunate we were able to make the teachers’ pay awards in the current year, £310k being provided by Welsh Government WG.  The £1.9m VAT recovery due to the Ealing ruling around leisure services income also will assist the position.  Consultants were appointed to work with us on securing this recovery and we have a strong case pending. The final aspect to brief the committee upon is the work we have been doing with Welsh Government which offers us the flexibility to use capital receipts to funds costs associated with service reform.  This has been helpful to us. Previously, permission was needed but now in line with Welsh Government guidance, the council can make that decision. Furthermore, we have been interrogating our spend to identify costs associated with service reform and over £2m reform costs could actually be addressed through the use of capital receipts.

Winter pressures could still be risk areas in terms of the budget and also the volatile service areas that are pressure points, notably children’s services, however, we are looking at where we stand with that long before the outturn budgetary position.  This has hopefully provided useful context in terms of the revenue account.

In terms of the capital position, there is a small level of underspend in relation to 21^st Century Schools. Capital receipts are shown in the report and these have been impacted by the decision to make flexible use of capital receipts.  That will have an impact for this year and next year, but we have to balance the revenue account pressures with the capital.   In terms of month 7, the report provides the detail on overspends and underspends specific to the committees remit together with directors’ commentary.

We’ve mentioned the capitalisation directive already and we have transferred £500k expenditure across to the capital budget.  In terms of savings, if you refer to paragraph 3.11, you will see that of the £6.446 million built into this year’s budget, we’ve found 86%. The rest of those savings are either delayed or unachievable and greater detail ion tis is provided in the report, with the detail for this committee’s portfolio provided in the appendix.

Challenge:

·         Can you explain the issues in relation to solar farming and sale of electricity to the national grid?

Just to clarify that the overspend detailed within the report on the solar farm was in relation to monitoring systems and we had a shortfall of income as a result, but this has now been rectified and shouldn’t pose that problem into 2021.  In terms of your questions, the issue with solar farm is grid restraints and it is not easily overcome. This is an issue for the national grid and providers to resolve and Cardiff Capital Region City Deal are attempting to resolve this through their conversations at a national level.