Agenda item

Zena Cooke, Corporate Director, Finance and Mr Richard Smith, Corporate Director, Adult Social Care and Health were in attendance for this item.

1) Mr Oakford said the report was in a revised format and contained additional information on reserves, the treasury position and council tax. The report was based on the position in May 2021, updated with significant items up until the end of July 2021. The forecast revenue position excluding schools and Covid-19 was a £9.7 million overspend.  The majority of the overspend was within Adult Social Care. This included increased cost of care packages for people with learning difficulties and older people. There had been an increase in numbers and the cost for clients with mental health difficulties as well as changes in support for disabled clients with more receiving care through supported living services and less through direct payments. The reported Covid-19 position showed a forecast spend of £32.1million. There were corporately held Covid-19 related budgets of £16.1million and the remainder of the spend was to be met though the Emergency Covid-19 Reserve, resulting in a situation of ‘breaking even’ for the year.  Without the additional government funding, KCC’s forecast outturn would have been £32.1million higher.

The Capital Forecast showed an underspend of £42.7million, with £57.3million relating to re-phasing and £14.6million as a ‘real’ overspend.  The Schools Delegated Budget had reported a £49.6million overspend which reflected the impact of high demand for additional SEN support and high cost per child of high need placements.

The Treasury Management position was consistent with regular reports to the Governance and Audit Committee which showed the council’s level of external and internal debt and investments. The management of the council’s Treasury was governed by the Treasury Strategy. KCC’s strategy for borrowing was to seek an appropriate low risk balance between low interest rates and long-term certainty over financial cost.

Accumulated external borrowing had amounted to over £850million, largely consisting of long-term maturity debt of fixed rate interest.  Only around 15% of the debt was due to mature over the next 5 years. The Investment Strategy sought to take an appropriate balance between risk and return, minimising the risk of incurring losses through defaults, maintain adequate liquidity and securing reasonable returns. The investments included internally managed short term and medium term investments and long term external investments in pooled funds.

Monitoring of district council tax collection had become even more important in the wake of reductions in the council tax base following the Covid-19 pandemic.  There had been an impact from increased council tax reduction discounts and reduced collection rates. The scale and pace of recovery on both of these elements would be key in the 2022-23 Budget and Medium Term Financial Plan Strategy as compensation from government had so far only extended to extending the treatment of the in-year collection losses from 1 year to 3 years and for one grant in 2021-22 to compensate for the reduction in the collectible tax base.

2) Ms Cooke said the outcome of the Spending Review would be particularly important, given the point made that without the one-off Covid-19 grants that were received late in the last financial year, an overspend would have been reported.  There was an ongoing impact of Covid-19 on the cost of services and this was to be monitored closely. The high needs budget deficit was the single biggest financial risk for KCC and work was being done with the service to stem, in particular, in-year increase in cost, which was not being experienced elsewhere in the country.

Cabinet Members commented and asked questions:

·       Mrs Chandler said that changes to services for care leavers had not been about cutting costs and KCC as corporate parent were working to promote the independence of care leavers.

·       The Leader said that there had been concerns that suppressed demand in social care would come back following the pandemic and if it was not in terms of numbers, that cases would increase in complexity.

·       In response to the Leader’s comments, Ms Cooke said that Finance was working closely with colleagues in the directorates and with analytics to look at modelling and forecasting moving forward.

·       Mr Smith said that during the pandemic people had not been able to access preventative services so acuity of need of those coming into the system was greater. There had been a marked increase in need for mental health services.  There had been pressures on the workforce and it had been difficult to recruit and retain staff. One of the strengths in Kent was the level of detail in the data held and this would help to look at what could be done to address the changes in demand. There had been changes relating to hospital discharge and people during the pandemic had been placed in very costly placements. Conversations were ongoing with NHS colleagues about working to address this issue and measures were in place to address the changes in demand.

·       Mrs Bell said that an increase in activity was not always negative. An increase in supported living for people with learning disabilities meant that fewer people were in residential care and while this potentially cost more, the benefits for individuals needed to be taken into consideration There were long term benefits from providing extra provision to allow more people to live independently in the community.

·       Mr Oakford said there was a huge amount of concern about the level of overspend through the coming year and in real terms there was not more money for next year than the current year, unless something surprising was to happen through the Spending Review. One of the greatest concerns was that some of £31million of Covid-19 money was one off and if related costs recurred, this would be on top of the other pressures and costs would need to offset during the budget setting process.

·       Miss Carey said that people had a right to services and if people were eligible, the service had to be delivered. During lockdown, district authorities were collecting more waste with people being at home and therefore, there was more waste for processing. KCC had tried to manage demand and in working with district authorities, the amount of waste people were putting out for collection had reduced. However, recycling rates were still below 50% and the best recycling in the county was 65%. If waste was sorted and not contaminated, this material had value but ultimately, the best way forward is to reduce waste.

3) RESOLVED to note and agree the recommendations in the report.