Agenda item

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

Officer: Interim Director of Finance, Investment & Risk, Chris Buss

Key decision: no

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

RESOLVED: To

1. Note the General Fund is projecting a net adverse movement of £0.583m from Period 1. Service departments are indicating a £4.034m overspend with this being netted of against £3.451m release of a one off Covid Grant confirmed to Croydon Council for 21/22 by MHCLG as part of the Local Government Finance Settlement;

2. Note that a further number of risks and compensating opportunities may materialise which would see the forecast year-end variance change and these are reported within Section 3 of this report. Should these risks materialise or the mitigations not be effective the Council could overspend by £3.676m;

3. Note the Housing Revenue Account (HRA) is projecting a £1.595m overspend for 2021/22. If no further mitigations are found to reduce this overspend the HRA will need to drawdown reserves from HRA balances;

4. Note the capital spend to date for the General Fund of £3.071m (against a budget of £176.005m) and for the HRA of £5.701m (against a budget of £127.412m);

5. Note, the above figures are predicated on forecasts from Month 2 to the year end and therefore could be subject to change as forecasts are refined and new and updated information is provided on a monthly basis. Forecasts are made based on the best available information at this time; and

6. Note that whilst the Section 114 notice has formally been lifted, the internal controls established as part of the S114, such as the Spend Control Panel remain. However, restrictions have been lifted for ring-fenced accounts such as the Pensions Fund, Housing Revenue Account and Coroner’s Costs as these do not impact on the financial position of the General Fund. The Spending Control Panel which was set up at the beginning of November 2020 continues to meet on a twice daily basis.

The Cabinet Member for Croydon Renewal (Councillor Stuart King) advised Cabinet that the report sets out the council’s General Fund position at Month 2 (May 2021). The Cabinet Member highlighted that the in-year departmental budget overspend has risen by approximately £600,000 to £4m, principally as a result of a £3m adverse movement within the Place Department. Additionally the identified risks had risen slightly by approximately £200,000, to sit at £11.8m. The Cabinet Member noted that £10m of that were new risks and were not linked to Medium Terms Financial Strategy savings. The Cabinet Member also noted that the report identified potential saving opportunities of £8.8m to mitigate those overspends.

The Cabinet Member acknowledged that the council was not where the Administration had hoped to be in month 2, but that the report demonstrated the continued need for the spend controls to be in place. The Cabinet Member also noted that the council continued to make difficult decisions to address the challenges, and noted that there had been positive change across the departments. The Cabinet Member highlighted that the Health, Wellbeing and Adults department was underspent and that the Resources department was operating within budget. The Cabinet Member noted that the Housing Revenue Account position had improved from the previous month.

The Leader of the Council (Councillor Hamida Ali) noted that there had been positive effects across the organisation.

The Cabinet Member for Resources & Financial Governance (Councillor Callton Young) welcomed paragraph 2.2 of the report that stated, “it is expected and required that services formulate plans to address these overspends over the coming month.” Additionally the Cabinet Member welcomed paragraph 3.10, particularly the statement, “Directorates are working up proposals to bring these savings at risk back on track.” The Cabinet Member summarised that these statements applied pressure to ensure spending remained on track, and noted his confidence that this would continue throughout the year.

The Cabinet Member requested that the Section 151 Officer elaborate on the work that was being undertaken to keep things on track. In response, the Interim Director of Finance, Investment & Risk and Section 151 Officer (Chris Buss) confirmed that the council was taking a proactive approach as forecasts were received, by challenged council spend and undertook comprehensive comparative work with previous months to ensure reporting was robust. The Interim Director confirmed that there work was planned going forward to robustly challenge savings proposals across the council.

The Shadow Cabinet Member for Croydon Renewal (Councillor Jason Cummings) noted the council’s shortfalls in the past and challenged whether the current performance was good enough. The Cabinet Member for Croydon Renewal clarified that the council continued to work towards delivering services within budget and advised that he took solace in that there were signs that behavioural change was bedding in.

The Shadow Cabinet Member for Resources & Financial Governance (Councillor Simon Hoar) noted that table 3 of the report showed significant sums of risk mitigation through staff reductions and questioned what the estimate was for further staff reductions and therefore costs and spending in the coming months. The Cabinet Member for Croydon Renewal clarified that table 3 identified staffing underspend, linked to reductions that had already taken place. Furthermore, the Interim Director confirmed that at the time, there were no other staffing reductions planned.