Agenda item

Zena Cooke, (Corporate Director for Finance), David Whittle (Director of Strategy) and Dave Shipton (Head of Finance - Policy, Planning & Strategy) were in attendance for this item.

1)    The Leader introduced the report which set out the Budget Recovery Strategy – Securing Kent’s Future, which was required to address the in-year and future years’ financial pressures faced by the Council. Key areas addressed throughout the report included the specific drivers causing the financial pressure and the specific and broader action that needed to be taken through Securing Kent’s Future to return the council to financial sustainability. The report also identified opportunity areas for further savings, accelerated transformation of the council alongside possible policy choices, all of which provided the scope to deliver significant savings over the next Medium Term Financial Plan (MTFP)period.

The Leader addressed the significant financial pressure within Adult Social Care and Children, Young People and Education and the unsustainable cost pressures that particularly reflected flaws in those markets, though also some increases in demand. The report set out the Council’s response in prioritising New Models of Care and Support (within the objectives of Framing Kent’s Future) and how it aimed to deliver this through its statutory Best Value duties. The Leader set out that the New Models of Care and Support did not seek to override the other objectives of Framing Kent’s Future, nor did it seek to privilege certain areas of the business with additional resources whilst depriving others. However, the New Models of Care were central to the challenges faced by the Council and the hard policy decisions that would need to be made. If these failed to be addressed successfully, the Council would not be able to protect or develop its services in other areas. For this reason and for the future stability of the Council, it was the expectation that all council services collectively prioritised delivering New Models of Care and Support.

2)    The Leader highlighted the four strategic objectives of Securing Kent’s Future (as detailed in the report) and invited further comment from Mr Whittle.

Mr Whittle drew Members attention to the error on the paper at paragraph 5.2 and clarified that the wording after 0.3% “for hired transport” was a drafting error.

Mr Whittle commended the work carried out by colleagues in Finance, Analytics and Management Information which identified the specific cost drivers, areas of financial pressure and overspend; all of which supported the development of Securing Kent’s Future and highlighted the value of analytics. 

The driver of costs across overspending services was complex. It was not simply a matter of the council meeting additional demand through an increased number of clients, but rather the significant increase in spending was largely driven by unsustainable increases in costs the council was meeting to secure services from market providers. As a result of the increased placement costs, relatively modest increases in client numbers have had a disproportionate and exponential increase in the costs of securing provision. Financial pressures should be considered structural in nature.

The focus on New Models of Care and Support was not intended to deprioritise the strategic objectives in Framing Kent’s Future, but it was key to recognise that the Council’s overspend was largely in people-based services and therefore the collective priority and focus in Framing Kent’s Future needed to be centred on New Models of Care and Support.

The statutory Best Value duty was a means by which the Council could appropriately meet and manage conflicting statutory duties which were central in driving significant financial pressures, not just in Kent County Council but across the entire Local Government sector. The Best Value guidance, as underpinned by the S114 regime gave power to the Secretary of State to trigger an informal or formal inspection of an authority, even without a S114 notice being issued. By using Best Value as a tool to drive all financial, service and policy decisions as expected under legislation, it would help to identify and balance competing statutory duties that needed to be delivered to Kent residents. As a service-based organisation that strives to achieve the best for its clients and service users, the Council needed to ask those services to broaden their horizons and balance that need against the need of the Council as a whole, and this would be a significant challenge. It was essential that support was in place to help services transition towards this and embed this into systems and processes. It was key to note that Best Value considerations needed to be applied at both Member and officer level.

Mr Whittle said that the Council needed to recognise the scale of risk it would face and consequently increase both its risk appetite for change and risk appetite for delivering change at a rapid pace to meet the financial pressures. The first step in that change would be through the review of the Risk Management Policy and how this could be translated so it was better understood by staff.

Mr Whittle advised that the Strategic Business Plan would be different to those previously produced and would be less about synthesising the strategic activity of services and more concentrated on the codifying and prioritisation of activity that would be required in Securing Kent’s Future. It would be inherently more directive, more specific about where the responsibilities lay and explicit in regard to accountability. The Business Plan would codify the work that was already underway in many parts of the council around the delivery of the 2024-25 budget savings and the broader MTFP.

3)    Further to comments and questions from Members, it was noted:

·         In relation to the transformation of the council’s operating models, specifically within the Children’s, Young People and Education (CYPE) directorate, it was key to recognise the challenges inherent in management transformation within a service that supported vulnerable children and young people. However, transformation of the operating models was key in achieving the identified savings required and the directorate were already on course to making those changes and were determined to drive those improvements. Furthermore, in response to comments relating services being under resourced to accommodate for other areas of the organisation with significant financial pressures, a key component of the New Models of Care and Support was around the integration of services, both internally and externally with partner organisations and assurance was provided that work was already underway within the directorate that supported the new model. In response to regulatory risk and Best Value; should the Council adopt a ‘scorched earth’ policy and only look at statutory elements, it would not be delivering Best Value. For CYPE, the non-statutory factors contributed significantly to a number of elements that remained within the Councils control, such as Children in Care.

·         Mr Oakford (Deputy Leader and Cabinet Member for Finance, Corporate and Traded Services) said that the risks associated with Securing Kent’s Future were enormous. Over the years the Council has taken decisions to reduce core services that supported the business in the organisation whilst asking people to do more. Securing Kent’s Future was a transformation to the way in which the Council delivered its business and communication was an essential component in driving support and taking this piece of work forward as a collective. The biggest risk was disengagement of staff. Strategic leadership and open communication were required at every level of the council to secure Kent’s future, thus asking services to weigh the broader interest of the whole council against the narrow interest of a specific service. In terms of the regulatory risks, the Council had statutory responsibilities it needed to deliver whilst making the necessary changes and would be progressing these changes through the correct governance channels to mitigate those risks and deliver on savings.

·         Mr Watts (General Counsel) addressed the increased risk of legal challenge that some of the decisions would bring as work progressed in Securing Kent’s Future. Both officers in their operational decisions and Members when discharging their respective roles within the council, whether executive or non-executive, should also prioritise Best Value considerations. Robust governance and scrutiny of the proposals and plans was essential in providing both transparency and assurance of the Councils overall financial position. There would be a key role for non-executive members in scrutinising the proposals that would be delivered at pace. A meeting was due to be held with the Chair and Spokespeople of Scrutiny Committee to discuss their role and the outcome of that meeting would be brought back to a future Cabinet. In recognition of the pace at which Key Decisions would need to be taken, assurance was provided that these would be processed in accordance with the Councils Constitutional arrangements and Democratic Services would prioritise support to both officers and Members in ensuring Executive Decisions were managed efficiently.

·         The crisis that the Council found itself in represented an opportunity to reform and improve the delivery of services, thus identifying innovative ways of delivering best value for money for the Kent Tax payer and the residents of Kent. Securing Kent’s Future provided a platform for the Council to make bold decisions, take decisive actions and created an innovative plan for the future. Members expressed their confidence and assurance in the corrective actions being taken by the Council to manage the budgetary situation and the collective responsibility of Members and staff to bring to fruition, a sustainable situation that protected services, protected delivery and protected the democratic rights of Members to make decisions around policies of Kent and not commissioners should the Council issue a S114.

·         In relation to the Adult Social Care (ASC) savings initiatives set out within the report, it was key whilst delivering savings to remain mindful of the need to still deliver statutory services. A number of internal projects were underway to deliver those savings, however, a significant amount of work had been undertaken with partner organisations to achieve an integrated system and deliver on those New Models of Care and Support. A key component to this work was improving the way services were commissioned and that costs were shared more equitably, in line with how other authorities were operating within their Integrated Care Board system. This would help to deliver savings but also support the NHS in delivering their objectives.

·         Mrs Cooke recognised that there would be a number of challenging decisions that would need to be made, however, they were decisions that were still within the Council’s power to make. Change in both ASC and CYPE presented significant financial implications, the effect of which would not be felt until 2025-26. For this reason, it was crucial that the necessary corrective actions on the identified areas of savings be taken to balance the 2024-25 budget. This would involve the use of one-off measures and avoiding overspends in the current year as this would create further need to use limited reserves to fund revenue overspends and weaken the financial resilience of the Council. The Council’s position needed to be confirmed by the end of October 2023 which was when the draft budget was due to be published.

·         Mr Shipton addressed the financial recovery strategy and said that the recovery plan for 2023-24 had a significant impact on the budget for 2024-25 as there would be a requirement to build into the 2024-25 budget the full year’s recurring impact of underlying structural overspends in people-based services. Addressing the structural deficits was key to securing the medium-term future; however, it would take time to achieve this. The recovery plan identified the work that would be required around the cost drivers; however, this would need to be complimented by a review of all contracts due for renewal.

4)    RESOLVED to agree the recommendations as outlined in the report and that an update on the Scrutiny arrangements be presented to a future Cabinet.