Agenda item

To receive a report from Sean Cremer, Director - Resources (S151)

The Director of Resources (S151) introduced the report. The report flagged that the current risk rating had been lowered to medium albeit that the underlying risk remained high. It was summarised how the council spent its money, with the headline that the council was in a balanced position with a moderate underspend. The milestone represented the active financial management and being able to balance the council’s budget against the macroeconomic climate. It was delivered through offsetting, tighter spend controls and budget constraints. The report also highlighted the assessment on the reserves which included a review of what the risks were, what the expected financial magnitude of those risks were, and taken an overall view of financial risks which were being controlled.

A discussion was had regarding treating the reserves with caution due to pressures elsewhere. An overall summary of the tables within the report was given.

A question was asked regarding whether the quarter 1 (Q1) spend would have any impact on the rest of the year should that spend be high. It was explained that those figures were being worked on at the time and would come back to the committee meeting in October. It was noted that there had been a familiar forecast profile this year in terms of Q1 and Q2 becoming challenging followed by an overspend in Q3 and an underspend in Q4.

Regarding an item on page 104 within the report, it was asked whether a reference to an external report was being used to validate excuses as to why the council was not achieving its budget or was it being used to learn how to stem the issues. The paragraph in question had been put in to set the context of spending within Children’s Services across the country rather than to make any excuses. Children’s Services were working with partners to work with families as soon as possible and make sure that cases did not escalate into high-cost areas, however the number of children in care had gone up.

It was noted that a statement of caution was present in the report explaining that the positive headline should be treated with caution due to underlying financial pressures on services continuing. It was explained that the residual risk remained high due to these financial pressures, however current risks were reduced due to the underspend. All councils had been offered a potential 90% write off of the Dedicated Schools Grant (DSG) deficit which at the time stood at £150 million and was driving the reason for the risk being at a medium level. Concerns were raised that while this deficit write off would help, the council would inevitably incur extra costs over the next couple of years and it was asked whether it was too soon to downgrade the risk. As stated in the report the council would still spend in excess of the budget, and while the DSG deficit could be written off, it was still expected to grow to a similar number by 2028. However, due to the continued response from central government regarding the DSG deficit the risk was significantly mitigated.

Notwithstanding the reporting of an underspend the Chair emphasised the role of the Committee in ensuring that the Council understands the risks it faces. He expressed concern and reminded members of underlying financial pressures and trends and the need for caution as to how any underspend is reported. 

The recommendations were noted.