Agenda item

To consider a report by the Cabinet Member for Finance, Commercial and Assets.

Decision

(1)       That the Senior Leadership Team’s forecast for Dorset Council’s position at the end of quarter 1, be noted;

(2)       That the context around  the budget that was set for the year be noted;

(3)       That the impact that any overspend would have on reserves and the general fund be noted;

(4)       That the work going into reviewing Dorset Council’s reserves and balances be noted;

(5)       That the approach to work to develop sustainability of the base budget position for 2020/21 and beyond be noted and

(6)       That the work going on around capital strategy and the capital programme and financing be noted.

Reason for decision: To ensure support and/or challenge for actions being taken in 2019/20 to balance the budget and consider the adequacy and use of reserves and to support transition and convergence.  2019/20 is a critical year for establishing the base budget for Dorset Council to enable an accurate, medium-term financial plan to be delivered alongside a longer-term, sustainable financial strategy.

The Cabinet considered a report by the Cabinet Member for Finance, Commercial and Assets providing an update on Dorset Council’s financial performance, position and forecasts at the end of the first quarter of the 2019/20 financial year.  Initial analysis of the first three months of the year forecast a year end overspend of £7.1M on its directly controlled budgets and up to £5.5M on funding for schools and education.  The general reserves had increased following the closure of the accounts from the predecessor authorities and were now higher than when the budget was agreed in February 2019.

Introducing the report, the Deputy Leader reminded Members that the budget for 2019/20 had been produced and the accounts of the predecessor authorities closed by staff who were uncertain of their futures, demonstrating the professionalism of the Council’s workforce.  Whilst he acknowledged that the forecasted overspend was concerning, there was a need to understand the causes of the increases, the work currently underway to address this and the direction of travel.  Particular attention was drawn to the increases in the cost of providing services relating to Looked After Children, Special Educational Needs and Disabilities (SEND) and Education, Health and Care Plans (EHCPs), in addition to the Dedicated Schools Grant funding.  However, he expressed his confidence that planned in year savings of £5.5M from the convergence of six councils into one would be achieved in the current year but considered that the Council should use its reserves to help to fill the gap until it was possible to resolve some of the systemic issues which had caused the first quarter overspend.

The Cabinet Member for Children, Education and Early Help explained that the cost pressure lay within the Higher Needs Block of the Dedicated Schools Grant (DSG).  He drew attention to the increase in demand for EHCPs since 2013 when there were 1,237 to an expected 2,515 in the current year.  It was anticipated that this trend would continue and there could be a rise to 2,752 EHCPs by 2021.  This was due to an increase in the number of children with increasingly complex needs which the Council were obliged to meet.  This was a national issue and an indication had been received that the Secretary of State would meet with local authorities to discuss this matter.

The Cabinet Member for Adult Social Care and Health confirmed that the pressures on the budget similarly reflected the national position in relation to the complexity of needs and the rise in the cost of care and the Council was actively working with partners in the NHS and voluntary sector and private providers to address this.

The Member for the South East Purbeck Ward, Cllr Brooks, asked whether the Council had considered evidence that the reduction in funding for school support staff had resulted in an increase in demand for EHCPs.  She also asked if there was evidence that the number of young people with EHCPs would have an impact on the future workforce and aspirations.  The Cabinet Member for Children, Education and Early Help explained that there was a need to gain a clearer understanding of the responsibility of Dorset Council and its health partners in relation to EHCPs as every child had the right to be educated in a mainstream school.  The Executive Director for People – Children recognised that this was a complex landscape; EHCPs were a contentious issue with schools and the assessment process was expensive.  She explained that there was a need for the Council to support children and young people prior to assessment for an EHCP.

In response to a question from the Cllr Ireland, Leader of the Liberal Democrat Group about the reference in the report to the financial impact of the increase in academy conversions, it was explained that there was a cost to the local authority if the school was in deficit.

In relation to the forecast overspend on the DSG, it was explained that historically the deficit had reserve funding behind it.  However, it was preferable to find long-term solutions which would negate the need to draw down reserve funds.

The Leader welcomed the report and considered that the Council should take a measured approach to addressing the forecast overspend.  He reiterated that a lot of work was underway to bring together an understanding of the risks and rewards going forward in a positive way.

Decisions

1.       That the Senior Leadership Team’s forecast for Dorset Council’s position at the end of quarter 1 be noted.

2.       That the context around the budget that was set for the year be noted.

3.       That the impact that any overspend would have on reserves and the general fund be noted.

4.       That the work going into reviewing Dorset Council’s reserves and balances be noted.

5.       That the approach to work to develop sustainability of the base budget position for 2020/21 and beyond be noted.

6.       That the work going on around capital strategy and the capital programme and financing be noted.

Reason for Decisions

To ensure support and/or challenge for actions being taken in 2019/20 to balance the budget and consider the adequacy and use of reserves and to support transition and convergence.  2019/20 is a critical year for establishing the base budget for Dorset Council to enable an accurate, medium-term financial plan to be delivered alongside a longer-term, sustainable financial strategy.