Agenda item

Report to follow.

Zena Cooke, Corporate Director of Finance and Joel Cook, Democratic Services Manager were in attendance for this item

1) The Leader introduced the report which related to both the outturn and projections for the year, out of quarter 1 of the financial year. The report outlined the pressures, actions already being taken, the need for a short term plan and also longer terms measures to build a sustainable position for KCC.

2) Mr Oakford outlined the report which said the 2023-24 revenue budget was showing a forecast overspend of £43.7.m before management action.The overspend from 2022-2023 was severely impacting KCC’s financial resilience. The General Fund reserve level was now £37.4 million which was well below the agreed £65.8 million (5% of the net revenue budget).

The forecast revenue overspend from 2022-23 was taken into account when determining the 2023-24 budget and future medium term plans, with significant additional spending growth of £182.3m allocated in the 2023-24 budget.

Despite the additional spending growth allocated in the 2023-24 budget, the revenue forecast outturn position for 2023-24 was an overspend of £43.7m (excluding schools) before management action. Initial management action was expected to reduce this forecast overspend to £26.7 million. Significantly more action was needed to reduce this further. Work was being prioritised throughout the council to develop further management action that can be taken immediately in the current year, and over the medium term and this was to be reported back to the Cabinet meeting of 5 October.

Within the overall outturn position there were significant forecast overspends (before management action) in Children’s, Young People and Education totalling £28.4 million, and in Adult Social Care & Health totalling £25.8 million. Detailed analysis of the main areas of overspend was being undertaken to help understand the underlying causes, the degree of common features and pressures being experienced by other councils and how these were to be mitigated. The council would need to limit its actions to focus on essential activities and priorities until the financial position was brought under control. The results of the analysis and resulting actions were to be reported back at the October meeting of Cabinet.

The forecast overspend presented serious and significant risk to the council’s financial sustainability, if it was not addressed as a matter of urgency. The risk reserve set aside to deal with any overspend in 2023-2024 was only £12 million, so further action was needed to ensure the budget was brought back to as close to balance as possible by the end of the financial year. The action taken, building on the initial management action detailed in the report, would need to focus on recurring cost reductions and savings to ensure the 2024-25 budget and medium-term financial plan were not impacted.

3) Ms Cooke said the report which was to be brought to the meeting of Cabinet on 5 October was key in demonstrating that KCC was reducing the overspend, in order to demonstrate that KCC was still financially viable and financially resilient.

4) The Leader said that further actions would be taken following the meeting of Cabinet on 5 October and that it was a 3 stage process. There was an initial estimate of the projected overspend of £43.7 million and there were actions that were already committed to in 2 areas of work which would reduce the overspend but there was still a significant amount to be done.  The focus would continue to be in the areas of the biggest overspend as that was where the pressures were. However, the strong message from Cabinet was that KCC was committed to take the actions to ensure that there was a balanced position. The pressures were set out in detail in the report but they came from a number of areas in Adult Social Care, home-to-school transport (particularly but not solely in SEN and Disability school transport) and placement costs within Children’s Social Services. The pressures were well known not to be limited to Kent.

Longer term work was critical for securing Kent’s future. The whole path for local government was not in a sustainable position and this was the message of the letter that the Leader and the Leader of Hampshire County Council wrote to government ministers in 2022. It was vital that KCC did everything within its power to ensure that it was in position to continue providing vital services to residents in the county.

5) Further to comments and questions, the following points were noted:

·       The Adult Social Care and Health directorate was committed to bringing their part of budget into balance. However, it was noted that KCC was invariably at the mercy of forces beyond its control. Key elements moving forward would be close working with NHS, changing the way services were commissioned, financial assessments conducted at an earlier point in the user timeline. A fundamental staff restructure had already been undertaken.

·       Management actions in Children’s, Young People and Education would contribute to the savings. The work ongoing with NHS to look at expenditure was showing positive outcomes. By October, significant quantifiable information on progress would be able to be brought.

·       There was work going on regarding support for Looked After Children (LAC), looking at individual placements and looking at the suitability of the placements. Every appropriate member of staff was part of that forensic work into LAC placements. Work was also ongoing regarding care cooperatives in the medium term and progressing special guardianship orders.

·       The numbers of children in care was a significant factor. The targeted preventative work was significant in preventing children from coming into local authority care. KCC’s preventative work was funded in a number of ways, some funding was ringfenced with specific requirements around it.

·       In education, there were no sustainable ‘quick fixes’ and in the short term, there was a higher level of expenditure on staffing levels but it was  essential to deliver the services. There were a number of temporary staff being retained to get through the backlog of EHCP assessments.

6) Mr Cook advised Members that in considering the recommendations outlined in the report, attention should be paid to the sections relating to legal and equalities implications. Members were reminded that in developing any activities listed in the report that the council’s statutory duties need to be met.

7) RESOLVED to agree the recommendations as outlined in the report.