Agenda item

John Betts (interim Corporate Director Finance) and Joe McKay(Acting Chief Analyst) and Cath Head (Head of Finance) were in attendance for this item

1.  Mr Oakford, Deputy Leader and Cabinet Member for Finance, Corporate and Traded Services, introduced the report which set out the revenue and capital budget monitoring position as at November 2024-25 which highlighted a projected overspend of £23.3 million and represented 1.6% of the Council’s total revenue budget. This was a reduction of £3.5 million compared to the end of Q2, however, it remained a significant concern for the Authority. It was essential to take action to reduce the forecast for 2024-25 and limit the need to draw from reserves. Key points included:

-       Savings: The forecast indicated that £80.3 million in savings would be delivered for 2024-25. This was a substantial amount, and thanks were paid to all officers and teams for their efforts. These savings were being closely monitored across different teams, with actions being taken to improve the robustness of savings proposals and their monitoring.

-       Adult Social Care and Health continued to have the largest overspend, projected at £35.4 million. Of this, £26.2 million related to savings that could not be delivered for 2024-25 but were expected to be achieved in future years. The remaining £9.2 million overspend was due to service-related pressures, driven by increases in the price and complexity of new social care placements. These financial challenges were similar to those faced by many upper-tier authorities, with 82% of local authorities with social care responsibilities experiencing similar issues.

-       The Growth Economic and Transport Directorate was projected to overspend by £6.3 million. Unavoidable pressures included £3 million related to the national concessionary travel scheme. Extreme weather had also contributed to overspends in the Highways Department. These pressures would be addressed in the medium-term plan.

-       With regard to Reserves there was a need to draw down an additional £9 million from the corporate ICT reserve over the next two years to fund the update of the Oracle Cloud program. The system, which was over 20 years old, required more development than anticipated to meet business needs without adaptation. Investing in the system now was crucial to avoid future problems and higher costs.

-       The current estimated capital program spend for the year was forecast to be £315.5 million, representing 74% of the approved budget. The capital spend to date was £160.4 million. Directorates were projecting an underspend of £111.6 million against the budget, split between a £12.9 million real variance and £124 million of rephasing. Delaying prudential borrowing would help with short-term revenue savings, but rephasing could result in less funding due to inflationary pressures.

-       Any overspend was a concern for the Authority and remained a risk to the Council's future financial sustainability. Reserves were a one-off solution, and continued use without replenishment was unsustainable. The detailed financial challenges and the actions being taken to mitigate them were crucial for the Council's long-term stability.

2.    Mr Watkins highlighted that the significant challenges within the

Adults Directorate. However, the directorate remained on track to deliver £40 million in savings and income uplifts, which was a substantial achievement.  A savings of £25 million was still required amongst an additional £10 million in demand, which was harder to manage. The focus was on addressing the £25 million shortfall. The team continued to work hard on various transformation projects, with some early successes in areas like reviews and technology and the directorate remained committed to improving the situation and keeping the overall budget on track.

3.    RESOLVED that Cabinet agree to:

A) Note the forecast revenue overspend of £23.3m (excluding Schools).

b) Note the forecast overspend on Schools’ Delegated Budgets of £30.4m.

c) Note the forecast capital underspend of £111.6m.

d) Note the progress on the delivery of savings.

e) Agree the Capital budget changes.

f) Note the Reserves, Treasury Management and Prudential Indicators Monitoring