Agenda item

Report covers the quarter two period 2023/24 (July – September 2024)

The Scrutiny Board received a report on Revenue Monitor and Capital Investment Programme 2023/24. The report provides the Governance, Strategy and Resources Scrutiny Board the opportunity to review the second budget monitoring report for the financial year 2023/24. It is therefore able to consider the key information relating to the forecast revenue budget position and the financial position of the capital programme at 30^th September 2023 (Quarter 2), together with the revised capital programme covering the period 2023/24 to 2027/28.

The report presents the current forecast revenue outturn position for 2023/24 at Quarter 2 together with the forecast outturn for the Dedicated Schools Grant (DSG), Housing Revenue Account (HRA) and Collection Fund. The report also outlines the most up to date capital spending forecasts for 2023/24 to 2027/28 for approved schemes. As this financial monitoring report reflects the financial position at Quarter 2, it can be regarded as an indicator of the likely year end position if continued corrective action is not successfully pursued. Every effort will be made to reduce the forecast variance by the year end to mitigate any potential impact on the 2024/25 budget. If expenditure cannot be controlled in year and there is a consequent increased budget reduction requirement for 2024/25, it is likely that further reserves will have to be used to balance the budget and this will have an impact on the financial resilience of the Council.

In terms of the Revenue Position, the forecast outturn position for 2023/24 was a projected deficit variance of £14.588m after allowing for approved and pending transfers to and from reserves. Unlike 2022/23, when £12.000m of corporate resources were held to offset costs arising from the legacy of the COVID-19 pandemic, the budget for 2023/24 has been prepared so that anticipated COVID legacy costs are consolidated within the mainstream budgets of Children’s Social Care and Community Health and Adult Social Care.

It is of concern that the overall financial position has worsened between quarters 1 and 2. In view of the projected adverse variance, it is important to ensure that measures are taken to address the overspending, namely; management actions across all service areas to review and challenge planned expenditure and to maximise income, processes to monitor the recruitment of staff to vacant posts and significant items of expenditure and ensuring non-essential expenditure is minimised.

Information on the Quarter 2 position of the Dedicated Schools Grant (DSG), Housing Revenue Account (HRA) and Collection Fund is also outlined in the report. The 2022/23 DSG outturn was a cumulative surplus of £0.899m; the first time that a surplus has been reported since 2016/17, representing the achievement of a major financial milestone for the Council. Future projections continue to improve with forecast surpluses of £3.193m and £4.025m in 2023/24 and 2024/25 respectively. Action will continue to be taken with the aim of mitigating cost pressures and delivering and maintaining the surplus position. There are currently no significant issues of concern in relation to the HRA.

The Collection Fund is forecasting a surplus with the Council’s proportion of this surplus being £1.054m. The Collection Fund is a particularly volatile area to forecast with many variables, including the impact of Government Business Rate reliefs, therefore, this area will be closely monitored over the remaining months. Information will be available later in the year to determine if / how a surplus or deficit on the Collection Fund will impact on the 2024/25 Council budget.

The report in detailing the Capital Position outlined the most up to date capital spending position for 2023/24 to 2027/28 for approved schemes. The revised capital programme budget for 2023/24 is £76.595m, a net decrease of £27.153m from the £103.748m reported at the close of Quarter 1 and a net decrease of £33.710m from the original budget approved at Council on 1 March 2023 of £110.305m. Actual expenditure to 30 September 2023 was £33.700m (44.0% of the forecast outturn). It is likely that the forecast position will continue to change throughout the year with additional re-profiling into future years.

The report was due to be presented to the Cabinet who were being asked to approve the:

1. Forecast revenue outturn for 2023/24 at Quarter 2 being a £14.588m adverse variance and action being taken to manage expenditure

2. Forecast positions for the Dedicated Schools Grant, Housing Revenue Account and Collection Fund 3. Revised capital programme for 2023/24 and the forecast for the financial years to 2027/28 as at Quarter 2.

The Scrutiny Board requested more detail on the actions being taken to address the overspend. Officers explained that the overspend was across many services but was particularly high in Children’s Services and these costs were essential. Due to the significant overspend, they are unable to offset it within the existing budget and they are unlikely to have a balanced budget at year end. However, steps are being taken to reduce spending across all services and the recruitment of new staff is taking place only where necessary.

Resolved:

That the Board noted the report and endorses the recommendations to Cabinet.