Agenda item

The Scrutiny & Overview Committee is presented with the latest Financial Performance Monitoring report (Period 4 – July 2023) for its information. The Committee is asked to: -

1.      Review the information provided in the report on the 2023-24 Period 4 Financial Performance Report, and

2.      Consider its conclusions on the latest budget position for 2023-24

3.      Consider whether there are any recommendations to bring to the attention of the Mayor.

The Committee considered a report on pages 23 to 58 of the agenda that provided an overview of the latest budget position for 2023-24, up to the end of Period 4 (July 2023). This report was included on the agenda as part of the Committee’s ongoing scrutiny of the delivery of 2023-24 budget.

The Chief Executive, Katherine Kerswell, Corporate Director for Resources & Section 151 Officer, Jane West, Director of Finance, Allister Bannin, Assistant Chief Executive, Elaine Jackson and Corporate Directors Nick Hibberd, Debbie Jones and Annette McPartland were in attendance for this item at the meeting.

During the introduction to the report, the following points were noted: -

• There had been a small reduction in the previously projected departmental overspend which had led to a reduction in the anticipated use of the Corporate Contingency Fund from the previous period.
• There was an increased overspend within the Housing Revenue Account (HRA) capital budget due to the need to address the backlog of outstanding housing repair cases following the move to new contractors. Responding to cases of disrepair was also another contributory factor of the overspend.
• Overall, the Council was still projecting a balanced year-end position in its General Fund budget, which was healthy in comparison to many other local authorities who were facing their own financial challenges.

Following the introduction, the Committee proceeded to ask questions about the information provided in the report. The first question asked for further explanation of the reduced departmental spend mentioned in the introduction, given the two largest overspends, arising from Childrens and Adults budgets respectively, remained at the same level as the previous month. It was confirmed that the reduction was within the Resources directorate budget and could mainly be attributed to a reduction in the overspend within Legal Services and the expectation that there would be a greater contribution from schools towards their utility costs than previously anticipated.

Given that a balanced budget was being projected in part due to savings from staff vacancies, it was questioned whether this was sustainable for the organisation in the longer term. In response, it was highlighted that staff vacancies were part of the natural operation of the Council. A large proportion of the savings related to staff vacancies related to small gaps between staff leaving the organisation and their replacements being recruiting. It was acknowledged that the environment for recruitment across the local government sector was challenging and in certain services it could take longer to fill vacant posts as a result. Staffing was the biggest area of spend for the Council and the projected saving of £4.5m was not out of keeping for similar sized authorities, with it likely that there would be a similar trend each year as the Council would never be fully staffed.

It was asked whether extra support would be provided to help manage the overspend within the budget for the Childrens service. In response it was highlighted that £2.2m of the overspend was due to placement costs. There were currently seven high cost placements, which were needed to ensure the children were in the right place to meet their complex needs. As the Council had a statutory duty to respond to the presenting needs of children, it had little control over the costs of these placements.

Similarly, it was also asked what was being done to reduce the budget overspend for working age adults. It was advised that Service was experiencing similar issues to Childrens related to the cost of placements. The service was coming to the end of a three year transformation programme and would continue with further transformation going forward. There were specific programmes aimed at enablement to help residents live as independently as possible and reablement, with NHS England, to support people leaving hospital care.  The high cost of care was a national issue and locally there was a focus on prevention, although this approach would take time to deliver savings.

As a follow-up it was asked whether the right balance was being struck between reviewing high cost care packages and the implementation of prevention work? It was acknowledged that the amount of invention currently delivered could be increased, but it was important to find the right balance to maximise the use of money to produce the best results for residents.

Regarding the allocation of £4m to the transformation budget from reserves, it was advised that in the last financial year £4m had been allocated from the capital budget for transformation, which had slipped to the current year. When the transformation bids were reviewed it was realised that many required revenue spending rather than capital, as such £4m was allocated from Council reserves rather than using the previously allocated amount from capital.

It was confirmed that as the overspend within the HRA budget had arisen from the need to address the backlog of repairs that had built up under the previous contractor, it would not be a case of looking to reduce this overspend as it was important that these outstanding repairs were completed. The Housing service was currently in the process of profiling the number of repairs outstanding and as such it was difficult to confirm at this stage when the backlog would be cleared until this work had been completed. At the same time the service was progressing the stock condition surveys which would provide an overall picture of the condition of the Council’s housing stock. Confirmation that the HRA budget for the current year would be reviewed to take account of the additional repair costs was welcomed by the Committee, along with work to rebalance future year’s budgets. Reassurance was given that the HRA account had a healthy level of reserves which could be used to fund the repairs backlog. It was highlighted that the Council’s position was not dissimilar to other providers across London who were seeing similar pressures on their repair’s budgets.

Regarding the underspend within the capital budget, it was confirmed that the biggest underspend related to slippage on schools’ projects within the Education service, which could often be complex as they required delivery outside of term times. Reassurance had been received from the Department for Education that this would not result in any allocated grants being lost. It was highlighted that the capital programme often included multi-year projects which depending on progress made could result in budgets moving from one year to the next.

At the conclusion of the item, the Chair thanked the Cabinet Member and officers for their engagement with the questions of the Committee.

Actions

The Scrutiny & Overview Committee agreed the following actions arising from their discussion of this item: -

1.     That as part of the budget scrutiny process, the Scrutiny Sub-Committees would be asked to consider whether a deep dive was needed on any of the major capital projects within their respective remits, to provide reassurance on deliverability. 

Conclusions

Having reviewed the report and the information provided at the meeting, the Scrutiny & Overview Committee reached the following conclusions on the Period 4 2023-24 Financial Performance Report: -

1. The slight reduction in the use of the Council’s corporate contingency to balance the projected overspend in the budget was welcomed, although it was also acknowledged that Children and Adults services remained the chief drivers of the projected overspend, with the overspend in these services remaining at largely the same level as projected in the previous reporting period.
2. The Committee welcomed the reassurance provided by both the Cabinet Member and officers that the projected level of saving being delivered within the budget was not out of keeping for a local authority the size of Croydon. However, the Committee agreed that it would seek further reassurance through benchmarking these staff vacancy savings against other similar local authorities.