Agenda item

1.    The Chairman introduced the item and reminded Members of the Committee’s previous consideration of the revenue and capital budget monitoring report at its 7 December meeting, where it was agreed to defer consideration of the report to a future meeting.

2.    Mr Oakford provided a summary of the report and reminded the Committee that it contained the Council’s financial position to September 2022, with an in-year overspend at financial year end forecast at £60m. A breakdown of overspend at the directorate level was provided, with Adult Social Care and Children, Young People and Education highlighted as the directorates with the most significant forecast overspends at £27.7m and £33.9m respectively. The Committee were warned that the forecast set out in the report meant that KCC could not rely solely on its £25m risk reserve to offset overspend. It was explained that the remaining overspend would need to be drawn down from the general reserve as well as earmarked reserves in certain cases. 

3.    Mr Oakford was asked, by a Member, what actions had been taken in response to the first forecast of an in year overspend in the 2022/23 financial year and whether the agreed revenue budget had been unrealistic. He confirmed that an overspend of £70m had been predicted in the June 2022 budget monitoring report, with the prediction adjusted to £60m in the September report. He reminded Members that the risk reserve had been included in the budget to mitigate the impact of an in year overspend and that higher than forecast inflation, exacerbated by the Russian invasion of Ukraine which followed the agreement of the budget in February, had caused greater cost pressures.

4.    Mrs Chandler addressed the projected overspend within Integrated Children’s Services. A national shortage of social workers which had necessitated a greater use of agency staff as well as a shortage of foster carers and increased service demand were cited as the main factors. She assured Members that Early Help Services continued to offer positive prevention which reduced, over the long term, the number of children in care and pressure on the Council.

5.    Mrs Bell detailed the key reasons for the projected overspend within Adult Social Care. She shared her disappointment that all earmarked savings had not been realised. Delays to the full implementation of the new operating model, inflationary costs pressures, increased case complexity and demand, a national shortage of care staff and increased use of short term beds which were linked to hospital discharge were cited as contributing factors.

6.    Miss Carey drew Members’ attention to the anticipated overspend within the Environment portfolio. She explained that increased contract costs for the incineration of residual waste, which were tied to RPI and stood at 10% in April 2022, were the main factor. The efforts to offset overspend by increasing service revenue, minimise costly waste processing routes and improvements to recycling and reuse were explained.

7.    Mr Love addressed the projected overspends within Education, drawing attention to the £13.6m overspend on Home to School Transport. He told the Committee that regulations and national guidance had been adhered to and that, in addition to inflationary increases on transport contracts and an increase in demand, overidentification of children with special educational needs (SEN) had contributed to what was a national issue. He gave assurance that eligibility was an ongoing area of particular focus.

8.    Mr Hill highlighted a £200,000 overspend on trading standards as the only projected overspend within the Community and Regulatory Services portfolio. He told Members that the overspend was anticipated due to a lack of government funding to support additional provision which had been necessary following EU Exit.

9.    Mr Brazier explained that the £3.6m overspend which had been predicted for Highways and Transport had been caused by a delay to the implementation of a removal of bus subsidies, under key decision 22/00052 (Supported Bus Funding Review), as well as £1.2m in increased energy costs for street lighting. He noted that increased revenue from street works permits would partially offset the predicted overspend.

10.Mr Murphy acknowledged that a £70,000 overspend was predicted for Economic Development in September 2022. He explained that legal fees related to Section 106 challenges had been the primary reason for the initial overspend prediction. He reassured the Committee than a £50,000 underspend would be achieved by the end of financial year.

11.Members cited the concerns raised by the Committee prior to the agreement of the 2022/23 revenue budget, that the forecast rate of inflation of 3% was unrealistic and did not adequately estimate cost pressures for the financial year ahead. Mr Oakford explained that the £25m risk reserve contained within the agreed budget served as a contingency to meet the foreseen increased costs and reiterated that inflation had increased considerably following the unforeseen Russian invasion of Ukraine, beginning 24 February 2022, which occurred after the budget was agreed on 10 February 2022. He noted that the budget had been considered robust by the Corporate Director for Finance, as Section 151 officer, in their Section 25 Assurance Statement to Council.

12.Concerns were raised by a Member with regard to Adult Social Care cost pressures which resulted from inflation, increased case complexity and the non-achievement of savings. Mrs Bell reassured Members that the full implementation of Making a Difference Everyday (MADE) KCC’s 2022-2027 Adult Social Care Strategy and completion of the service redesign alongside greater integration with local NHS partners would increase the likelihood of achieving savings. She noted that workforce pressures within the adult social care sector posed a significant risk.

13.In response to a question from a Member on whether non-adherence to the Home to School Transport Policy had a negative financial impact on the Council, Mr Love reminded Members of the remit of appeals panels, their powers and stated that, whilst non-adherence was not a significant reason for the projected overspend, further work was required to understand the impact of not non-adherence to the Policy.

14.Mr Oakford assured Members that a new process had been agreed with the Corporate Director of Finance to accelerate the budget monitoring report process, though he noted that the same level of detail may not be available.

RESOLVED to note the report.