Agenda item

The Scrutiny and Overview Committee is asked to consider the information to be provided with a view to, as part of the wider budget scrutiny process, forming conclusions on the deliverability and sustainability of the 2022-23 budget, as well as ensuring there is an understanding of the key risks.

The Committee considered a report set out on pages 11 to 12 of the agenda, together with three Cabinet reports provided in the supplemental agenda. The three report provided were:-

-       Financial Performance Report – Month 8

-       Medium Term Financial Strategy 2022/23 to 2024/25 – Update on Position

-       Updated 2021/22 and

-       Forecast General Fund Capital Programme 2022/23 to 2024/25

These reports were due to be considered by the Cabinet on 24 January 2022 and had been provided for the Committee to inform the budget scrutiny process.

An introduction to the information provided was given by the Council’s Section 151 Officer, Richard Ennis, during which the following was noted:-

·         The Council continued to deliver this year’s budget. The Government had not yet provided confirmation on the £50m capitalisation direction, but feedback from the Improvement and Assurance Panel had been positive.

·         The level of capital spend against the budget was still low, with an in-depth review planned to test the year end position.

·         The Housing Revenue Account (HRA) continued to be overspent, which could mainly be attributed to pressures on maintenance.

·         Good progress had been made on the 2022/23 budget to ensure it was robust, deliverable and sustainable.

·         The grant settlement from Government had been better than expected, but it was important to continue with cross party lobbying for more support in light of the unique challenges Croydon faced.

·         The cost of the concessionary fares scheme had reduced by £4m, which helped to reduce the budget gap.

·         There was concern about the possible impact of inflation, with additional allowance added to the budget. The Council would take a robust position when dealing with contractors trying to pass the cost of inflation onto the Council.

·         There was currently a gap of £11m in the 2022/23 budget, with work continuing to identify options for closing this gap. There was confidence that a balanced budget would be delivered.

The Leader of the Council, Councillor Hamida Ali, also provided an introduction to this item, during which the following was highlighted:-

·         The Council was in a very different place to last year, which was the product of a lot of focussed work over the past 15 months on the Croydon Renewal Plan delivering improvements in the Council’s governance and culture.

·         Work continued on recruiting a new Corporate Management Team with Jane West being appointed as the new Corporate Director for Resources and Annette McPartland appointed as the permanent Corporate Director for Adult Social Care and Health.

·         There had been difficult choices made in the budget, but this reflected the determination of the Administration to get to grips with the challenging nature of the financial environment for local government.

·         Despite the scale of savings required, the Council still had approximately £300m in controllable spend. Choices made on this controllable spend had meant that the Council was able to maintain services for residents including fortnightly bin collections, keeping all libraries open, continuing community grants and maintaining the Domestic Abuse Centre.

Following the introduction to this item the Committee was given the opportunity to ask questions about the information provided in the three reports. The first question related to the overspend in the budget for temporary accommodation and whether there was a plan in place to contain the costs. It was confirmed that the Corporate Director for Housing had been reviewing the Council’s processes and procedures for temporary accommodation, including looking at other authorities. A report was due to come to the Cabinet in February on the outcome from this review.

Given that it had been highlighted that the Housing Revenue Account was overspent, it was questioned how this was being addressed. It was confirmed that the majority of the overspend related to repairs and claims against the Council for not processing repairs within the required timescale. The Directorate was aware of the issues and was in the process of identifying improvements for the repairs service.

Further information was sought about the fees and charges review included in the section of the report detailing the Medium Term Financial Strategy (MTFS) savings risks. It was advised that due to the difficulties in the economy the demand for income services needed to be reassessed, which was why it was shown as a risk. Further detailed work was underway to prepare an updated schedule with improved forecasting.

As approximately 1,000 asylum seekers had been placed in hotels in the borough by the Home Office, it was questioned whether a needs assessment had been undertaken on the level of support that may be required from the Council and how this will impact upon the budget. It was confirmed that this was being worked through and more detail would be included in the Month 9 – Finance Performance Report.

The Council was constantly working on the broader question of the cost of supporting unaccompanied asylum seeking children (UASC) and liaised closely with the Home Office to make the point about the pressure it placed on the Council’s resources. It was confirmed that going forward the cost would be held as a corporate item, as it should not be the responsibility of the service to fund the support. Although the Government had provided a one off payment this year to support the Council with the cost of supporting UASC, lobbying would continue for more sustainable funding.

Although there was cross party support for the Government funding the cost of support for UASC, it was highlighted that there was a risk that the £2.9m shortfall may not be funded, which would leave a gap in the budget for 2022/23. It was suggested that the Government should be approached again before the budget was finalised to try to gain some certainty on this amount.

In response to a question about when the Council would receive the funds for the sale of the College Green site and the Croydon Park Hotel, it was confirmed that the sales had been completed at the end of 2021. The Council had achieved a value of £24.9m for the hotel and £22m for the College Green site, which was felt to be a good return in the current market conditions. The Administration had set out how it wanted to use any capital receipts, with the first part being to fund transformational work and the second being to reduce the Council’s debt and to fund capitalisation.

The Committee was supportive of the need to start the budget setting process for 2023/24 as early in the new financial year as possible, but it was acknowledged that there was a risk that this would be impacted by the election of a new Mayor in May 2022 whose priorities would need to be taken into consideration. The Administration wanted to move away from using a salami slicing approach to a more considered budget approach. As this required longer to prepare, work had already started on this budget.

As it was noted that an additional 2% had been added to the budget on top of the already budgeted 3% increase for inflation, it was questioned whether it was expected that this risk would be realised. It was advised that inflation was a big issue nationally and it was difficult to forecast the length of time it would have an impact.  The additional sum had been added into the budget to ensure that inflationary costs had been realistically estimated. It was not a given that the Council could pick up inflationary pressures from contractors. The inflationary increase would be held corporately and only released to services once it had been demonstrated that they had done everything possible to keep costs down.

The Committee welcomed confirmation that a group had been set up to improve the capital programme. This group had started by creating the capital budget set out in the Cabinet report and would next be testing the forecasting on delivery. Having a capital programme with a focus on reducing ongoing revenue costs was also welcomed.

It was questioned whether there was a sufficient stock of places of association to accommodate the voluntary sector and whether this could be a principle that was embedded in the capital programme. It was advised that the asset disposal plan needed to consider the broad aspects before disposal. If the Council wanted to drive its debt down, one way of achieving this was through selling assets. However, there was also a need to take a balanced view and look across services to ensure that disposal did not lead to significant knock on problems elsewhere.

The recent disposal of Ashburton Lodge was highlighted as an example of the Council taking account of other factors beyond financial income. It was confirmed that all asset disposals were promoted to the voluntary and community sector in the borough, with a one smaller asset recently sold to an organisation in the sector. 

At the end of this item, the Chair thanked the officers and the Cabinet Members for their contribution to the discussion, noting that the progress made with the budget was largely reassuring.

Conclusions

At the end of this item the Scrutiny & Overview Committee reached the following conclusions:-

1.    It was recognised that although there were still challenges requiring a continued tight control on expenditure there was a reasonable expectation that the Council would come in on budget.

2.    The Committee was supportive of the recommendations set out in the Cabinet reports.

3.    The flexibility displayed on capital disposals where there was community interest in the asset was to be commended.

4.    Given the Capital Programme was being reviewed, the Scrutiny & Overview Committee would like to be kept informed of the outcomes arising from this, with a view to scheduling further scrutiny of the programme in 2022/23.