Agenda item

Cabinet Member: Cabinet Member for Croydon Renewal, Councillor Stuart King and Cabinet Member for Resources and Financial Governance, Councillor Callton Young

Officer: Executive Director Resources, Jacqueline Harris Baker

Key decision: no

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

RESOLVED: To note

1.     The net projected general fund financial overspend of £30.2m for the full year as at the end of month 6 quarter 2, September 2020 which includes all COVID-19 related expenditure and corporately held income of £38.0m received to date or anticipated from the government.

2.     A number of risks could materialise which would see the variance increase. These include dividends and interest receivable from Brick By Brick (both historic accrued and in-year expectations) of £31m, and pending external audit verification of assumptions around 2019/20 accounting treatment of MRP and Transformation funding that could impact by £5.8m. Should all these risks which total £36.8m materialise, the impact on the current forecast overspend of £30.2m is an increased overspend to £67m, with general fund reserves of just £7.4m.

3.     The above figures are predicated on forecasts from month six to the year end and therefore could be subject to change. Forecasts are made based on the best available information at the time of calculating.

4.     That due to the timing of this report and the reports that have been issued to Council Members as part of the recent S114 notice this report is a shorter report than the usual monitoring report as the information contained in the quarter 2 financial monitoring has already been reported.

The Cabinet Member for Croydon Renewal introduced the report, which set out the council’s current revenue budget projected outturn for month 6, Quarter 2, September 2020. The figures, which had featured in other reports relating to the council’s financial situation, demonstrated the challenging nature of the in-year position. The positon was clear that the council could not realistically balance the budget without a capitalisation direction. He stated there were two points on the paper to highlight as questions to the Director of Finance, Investment & Risk and Section 151 Officer, firstly, in relation to Item 4.5, Table 3 – Delivery of In-Year Savings Initiatives, he asked for an update on the progress of delivery, for clarification if those were correct assessments when originally identified and asked if there were any particular concerns. Secondly, he asked for a summary on how Quarter 3 was looking.

The Director of Finance, Investment & Risk and Section 151 Officer stated that the report represented Q2 budget monitoring until the end of September 2020.  As the council had moved in to the S114 notice and introduced Spending Control Panels (SCP) it was too early to comment on Q3, which would run until the end of December 2020, however they were able to confirm that the situation was not showing to worsen, nor massive improvements to be seen at this stage. Until purchase orders stopped being raised in arrears, it would be difficult to track the real time progress. The potential risks which were not forecasted in month 6 was London moving into Tier 3 lockdown.

In relation to Table 3 of the report, the Director of Finance, Investment & Risk and Section 151 Officer confirmed that most of the rates were moving in the right direction. This included the introduction of charging for bulky waste collection, work in children’s services to reduce costs and changes to SEN transport – under 5’s (all currently presented as Red on Table 3).  An increased rate of risk was identified in potential further lockdowns caused by a decrease in parking income for the council (currently presented as amber on Table 3). She stated that Health funding was on track with positive ongoing conversations and funding agreements (presented as Green on Table 3), Staff savings was ongoing (presented as amber on Table 3) and Non-essential expenditure was improving due to the SCP (presented as amber on Table 3).

The Cabinet Member for Economic Recovery & Skills stated that it was reassuring the numbers were becoming familiar across meetings, which pointed toward stability and the council moving in the right direction. She asked for more detail on the spending figures and implemented savings mechanisms for children’s services and adult social care.

In response, the Director of Finance, Investment & Risk and Section 151 Officer stated that there was a lot of challenges at the moment to those services. The council was working with the London Borough of Camden children’s services and the Local Government Association (LGA) to learn good practice for both children’s and adult social care and compare and challenge Croydon’s expenditure. Both adults and children’s departments had established panels to challenge their own costs and to ensure they were delivering services to the right users, for the right price and for the right period of time. They were reviewing care packages to ensure they were the right choice for Croydon in the longer term, rather than agreeing the packages and not revisiting their specs.

The Interim Executive Director of Children, Families & Education assured that mechanisms had been installed to robustly monitor spending in children’s services in addition to the SCP. Most of the spends were relating to looked after children in the care system and over the past year they had seen a reduction in the number of children coming into care and therefore a reduction in the costs associated. They were on track for the projected savings, however this was a challenge particularly with increased pressures of the pandemic on families.

The Executive Director of Health, Wellbeing & Adults stated that his division had introduced spending panel geared towards minimum strategy spend, in additional to the SCP. They were also in conversations to recover claim back funds for Covid health services. Regarding forecasts, they included spending which had not been allocated to Covid costs into the budget. As a result, it must be taken into account that not all cost in the division were related to packages but services related to Covid which had to be provided.

The Shadow Cabinet Member for Finance & Resources noted that Item 4.8 of the report stated that the cost for each capitalisation of £10 million would cost the council £785,000 per year, therefore a £150 million capitalisation would look to be an annual cost of £12 million. He asked if that figure was included in the Croydon Renewal Improvement Plan update report, and if not, how were those payments going to be met. In response, the Director of Finance, Investment & Risk and Section 151 Officer confirmed they were included in the MTFS.

The Shadow Cabinet Member for Families, Health & Social Care raised concern over the cumulative impact of the cuts on the elderly, vulnerable and disabled residents in the borough who would be effected by a combination of reduction in face-to-face contact, community assets and the voluntary sector. The poor decisions from the Administration would adversely affect the elderly, which could be seen in the report on Table 3.5, Table 2 – Forecast Outturn 2020/21, and the Croydon Renewal Plan. The Administration had planned for care packages to be reduced in line with other London boroughs, however the vulnerable users had in the past received careful, detailed analysis and assessments for those packages to be put in place - therefore it was worrying how those could be so significantly reduced and safely delivered. As well as financial risks, there were safeguarding risks. The Shadow Cabinet Member for Families, Health & Social Care asked how the council would balance the cumulative risks of the cuts and reduction of care packages to vulnerable people.

The Leader highlighted the importance of the Administration’s standpoint on safeguarding, supporting communities and vulnerable residents which was framed by their priorities and principles in the Croydon Renewal Improvement Plan and approach to the MTFS. In terms of setting the care package spending in line with other London boroughs, it was right that the council ensured money was being spent in the in the best possible way to achieve the desired outcomes and it was known this was currently not always the case.  The council was working to properly understand how they were spending the resource and ultimately supporting vulnerable members of the community.

The Shadow Cabinet Member for Culture, Leisure & Sport (Job Share), Councillor Vidhi Mohan, referred to Item 4.5 in the report, Table 3 – Delivery of In-Year Savings Initiatives and requested more information on the amber and red savings initiatives. He asked how many jobs would be cut as a result of the £2 million staff savings, how the most vulnerable would be affected by the £1.1 million cut to children’s services and how the Administration could guarantee that fly tipping would not increase following recycling centre closure and discontinuing free bulky waste collection.

In response, the Cabinet Member for Croydon Renewal stated Members should refer to the Croydon Renewal Plan update papers reported to 28 September 2020 Extraordinary meeting of the Council to answer his various points raised. In terms of bulky waste collection, the service continued and the charge introduced was based on the actual cost to the council. In response to fly tipping, the Cabinet Member for Sustainable Croydon stated that he explained in detail on the 1 December 2020 Extraordinary meeting of the Council that residents who practiced taking their waste to recycling centre were not of the same cohort who fly tipped and there was no correlation of data to suggest otherwise. He added that fly tipping should be reported to the council and would subsequently be managed effectively by council officers and Veolia.

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

RESOLVED: To note

1.    The net projected general fund financial overspend of £30.2m for the full year as at the end of month 6 quarter 2, September 2020 which includes all COVID-19 related expenditure and corporately held income of £38.0m received to date or anticipated from the government.

2.    A number of risks could materialise which would see the variance increase. These include dividends and interest receivable from Brick By Brick (both historic accrued and in-year expectations) of £31m, and pending external audit verification of assumptions around 2019/20 accounting treatment of MRP and Transformation funding that could impact by £5.8m. Should all these risks which total £36.8m materialise, the impact on the current forecast overspend of £30.2m is an increased overspend to £67m, with general fund reserves of just £7.4m.

3.    The above figures are predicated on forecasts from month six to the year end and therefore could be subject to change. Forecasts are made based on the best available information at the time of calculating.

4.    That due to the timing of this report and the reports that have been issued to Council Members as part of the recent S114 notice this report is a shorter report than the usual monitoring report as the information contained in the quarter 2 financial monitoring has already been reported.