To consider a report by the Executive Director for Corporate Development.
The committee reviewed the Quarter 1 Finance Report, which had been presented to the Cabinet on 28 July 2020.
The Cabinet paper reported an overspend of just under £5m for 2019/20, which was funded from reserves. The Audit & Governance Committee would receive a fuller outturn report alongside the statement of accounts for approval at its November meeting.
The report also forecasted an overspend of £43m on Council budgets in 2020/21. The Dedicated Schools Grant (DSG) was not a financial management responsibility for local tax-payers, as Regulations clarified that this fell to the Department for Education. However, the Council was carrying the cumulative overspend on DSG of £21.8m as a negative reserve in its balance sheet. A further overspend of £18m was predicted this year.
The Executive Director for Corporate Development updated the estimation of the overspend to £35m for this year. If the figure remained at £35m it would be covered by reserves but next year would prove to be a real challenge.
Members were advised that Income projections were well short of what had been anticipated due to Covid. Expenditure had increased ie. PPE and care placements had also increased. However, Covid was not the only problem there were some underlying financial challenges.
Cllr Mike Parkes welcomed the update but wanted to know if the £35m took into account the loss from revenue and what plans were in place if additional funding from central government was not forthcoming. The Executive Director for Corporate Development advised that the £35m was for this financial year. In reality COVID will have cost about £6m but the council was able to take government support for around £39m. In terms of lost income this was about £35m for this financial year. However, the government has supported some of that.
In respect of reserves the Council was in a fortunate position that monies had been set aside to fund the high needs block overspend around £13m. The next financial year was a concern nationally as well as locally. In respect of car parking, whilst car parks were closed during lockdown things were now starting to pick up. Council tax and business rates collections were being monitored. Officers were looking to close the gap through tactical savings and pushing hard on transformation programme.
Cllr Clare Sutton expressed concern regarding the funding for Adult Services funding as the majority appeared to be business as usual. She felt the pressure would get worse in this area. The Executive Director for Corporate Development advised that officers did factor in an increase for a price and level of demand when setting the budget but clearly had not anticipated Covid. For the next financial year this has now been factored this in and modelling completed. The Acting Corporate for Commissioning highlighted the new measures in place to try and mitigate this e.g. Home First programme. Work was ongoing to transform services around the community rather than around hospitals. They were now seeing a trend of people not wating to go into care homes. Members were advised that mitigations were now in place to recover and rebalance. Officers were looking into the costs and see how they could be reduced.
Following a question about the rising numbers of externally placed children in care, the Corporate Director for Education and Learning advised that work had been stalled a bit by COVID and the increased number of children in the care system was adding to pressures. However, there were a number of projects coming forward that would increase sufficiency.
In respect of the dedicated schools grant, Cllr Sutton expressed concern that the report mentioned that the debt sat with schools and they didn’t have the money prior to Covid and was concerned they would not have it now. The Corporate Director for Finance and Commercial advised that the overspend was nearer to £22m and was continuing to overspend this year. The DfE had confirmed this was not a local tax payer issue and continued to work the Local Authorities on a recovery strategy. The Executive Director for People, Children advised there was no expectation that individual schools would be asked to pick this up.
Following a question from the Chairman regarding the general standard of the school buildings in the county, the Executive Director People, Children advised there was an ongoing maintenance programme but recognised there were challenges around this. She suggested that the committee might like to look at the sufficiency of places at a later date.
In response to a question about the reduction in capital funding and whether it was realistic, the Corporate Director for Finance and Commercial advised that the £15m had not been reduced. There would be an update in the November Cabinet report, although more of the £15m had been spent. Reference to this in the appendix to the report was a request for approval of additional spending.
Cllr Susan Cocking made reference to the additional buses for school children and considered how much was being spent on this and how long did officers foresee using additional transport. The Corporate Director for Education and Learning advised that the additional money was being spent from the requirement to social distance schoolchildren. The spend for this half term was 330/350k for this half term which to date had been covered by government grants and officers were waiting to hear about future funding in this area. In respect of any additional pressure on bus services, numbers were broadly similar. However, some parents were taking their children to school and this was largely balanced through putting the right provision in place. Officers confirmed that there was no funding allocation for schools in respect of PPE.
The Vice Chairman expressed concern about the forecasting of budgets and that despite putting significant amounts of funding in each year it never seems enough. The Executive Director for Corporate Development explained that there had been an additional degree of volatility this year in respect of the care sector and additional requests for homecare. Officers were currently in the process of modelling for next year and drawing comparisons with neighbouring authorities. He accepted this was an area for improvement and work was ongoing to improve this.
Following a question from the Chairman regarding forecasting and whether there had been any thoughts of a second wave in respect of income etc, the Executive Director for Corporate Development advised that forecasting was based on first 3 months of the year and officers had not necessarily built in a second wave. There was a whole lot of other variables and assumptions being considered.
The Interim Corporate Director for Adult Care Operations advised that the only way to manage demand was to put more investment into prevention. Covid had brought the community together to respond and had enabled officers to work more on the prevention side. There was a huge cultural change ongoing and this required a lot of support. The aim was to slow down the amount of people coming into adult social care. The Acting Corporate Director for Commissioning added that one of the key issues as well as understanding the data was the huge population of self funders in Dorset and the Council was now working with a lot more people and organisations as a result of Covid. The Chairman felt it would be helpful to have separation with a written overspend for Covid and one for business as usual.
The Executive Director for Corporate Development made reference to the financial benefit as a result of Covid, in respect of office use and lack of travel expenses. Thoughts were now ongoing as to how to make this sustainable. Part of this stocktake will feature in the Qtr 2 Finance report for Cabinet in November. Transformation had not stopped, it was just that the focus for the organisation could not be entirely on transformation at the present time.
The Executive Director People, Children paid credit to colleagues in Children’s Services during the staffing changes. She updated members on the work being done with headteachers, parents and early years level and was confident there had been a good start with some savings having already been delivered. She highlighted the very credible work that had been done with partners during the Covid crisis and felt that the transformation works had made a good first step.
Following a question from a member regarding looked after children and how steps were progressing to accompany unaccompanied asylum children, the Executive Director People, Children advised this had been challenging in terms of some of the government organisations not being available to do their ordinary work. Part of a conversation nationally referred to a critical incident in Kent and that across the country no Local Authority should have nor more than 0.07 of unaccompanied children. There was a continued debate about whether there should be a forced scheme in place. Dorset had so far supported an additional five children and had been asked to support further, but to date had not been in a position to do so.
One member highlighted there were199 children at the end of June placed externally out of the county and requested up to date numbers. The Executive Director People, Children advised that for all foster carers there had been a lack of available placement s and some residential provision had been unavailable. There were currently in excess of 60 children within the family law court process which was partly due to the closure of some courts. However, the numbers of children in care had remained steady. Out of county placements had reduced by a small number to aroudn195. The level of provision remained a real challenge but there were significant pressures around the whole country.
That the Committee noted the outturn for 2019/20 and recognised the challenges regarding the forecast position for 2020/21.