Agenda item

Update on the Council's Financial Position

To discuss with the Executive Member for Transformation & Finance and the Borough Treasurer the current financial position in preparation for scrutiny of the 2018/19 budget proposals.

 

Minutes:

The Borough Treasurer introduced an information report and gave a supporting presentation to provide the Commission with transparency of the Council’s most up to date financial position in respect of the current year and the following years’ budgets.  The report and presentation also served as a progress update in respect of the delivery of the Efficiency Plan which set out the approach to be taken to deliver balanced budgets for the period up to 2019/20.

 

The Commission was provided with a reminder in respect of the Council’s financial challenge 2017/18 to 2019/20, the latest budget monitoring position for 2017/18, progress with delivering the Transformation Programme and next steps in planning for 2018/19 to 2019/20.

 

The financial challenge when the current year’s budget was agreed consisted of a budget gap of £25m to be met by delivering the agreed Transformation Programme, Council Tax increases, efficiencies and savings to be identified cash-flowed by use of balances.  The Commission was advised of what the Council’s Medium Term Strategy could potentially deliver up to 2020/21 across departments taking account of pensions, debt and other factors provided that demand could be managed effectively and no significant Government policy shifts occurred.

 

The latest reported 2017/18 monitoring position showed that there were significant increases in demand for social care services exceeding budgeted provision by approximately £3.7m; minimal predicted variances from other services; and a range of issues being closely tracked that were expected to have financial impact during the year totalling £0.6m of additional pressure, the most significant of which was income loss in the region of £0.45m due to the closure of Coral Reef.  Usage was expected to rise after re-opening in September 2017.  This equated to a position at the end of July 2017 of a potential overspend of up to £4.3m with a remaining contingency of £1.7m.  This excluded grant for Adult Social Care from the Spring Budget (subject to the Care Quality Commission inspection) of £0.9m.  Further money released by the Clinical Commissioning Group was £0.4m.  Borrowing was lower than expected, reducing debt charges, and a consistent pattern of underspends was emerging in the last part of the year.  Although there was cause for concern, the position was being kept under close review and spend was tightly managed.

 

Transformation reviews had commenced in 2016/17 and underpinned the 2017/18 and 2018/19 budgets.  Most reviews had been delivered or were on track for delivery realising savings of Libraries (£0.4m), Leisure (£1.5m), Arts (£0.2m), major property reviews (£0.5m), income generation (£2m), Support Services (£0.8m), capital financing (£0.4m) and town centre car parking (£0.5m).  Other reviews in the areas of Planning and Building Control (£0.2m) and Parks and Countryside (£0.4m) had been brought forward to deliver savings earlier.

 

Significant increases in demand were being experienced in Adults’ and Children’s Services where transformation reviews had identified possible savings up to £5m (£3m Adults’ and £2m Children’s).  The delivery of savings in Adults’ Services were behind original expectation whilst the Gateway Review for the Analyse stage of the Children’s Services review was due at the end of September 2017.  There was a difficult balance to strike between a whole systems approach and targeted interventions together with a need to respond to rising service demand alongside delivering transformational change with pressure on resources becoming a critical factor.

 

The Commission was of the view that it was critical that the savings targets for these two departments were met. Bearing in mind the financial resources being discussed there was a significant risk that the Council's financial targets would not be met as they were dependent on the successful completion of the transformation programme.

 

Financial planning for 2018/19 and 2019/20 was based on Efficiency Plan assumptions in the areas of revenue spending pressures, capital programme spend, Transformation Programme savings, efficiency savings, the four year settlement, business rates income increases, maximum permitted Council Tax increases and the use of balances to support the budget.  The Commission was advised of the current position in these areas.

 

The move to new national funding systems did not include the Local Government Finance Bill in the current legislative programme which featured a new 100% business rates system and further local flexibility around business rates chargeable.  The Government was seeking further pilot areas to test possible future arrangements and Berkshire authorities were working on a joint bid.  Work was continuing on a ‘fair funding’ review to support a new system introduction.  The Government’s intention to introduce national schools funding formula was reaffirmed with the Secretary of State’s announcement of increased minimum per pupil funding which would benefit local schools with funding paid directly to schools from 2020.

 

Conclusions drawn were that significant demand increases were causing financial pressure in the current year and most probably in future years; a higher level of savings would be required than signalled in the Efficiency Plan, unless additional income could be secured; the Transformation Programme was largely delivering expected savings with a current focus on the pace of delivery of complex Children’s and Adults’ programmes; the 2017/18 finance settlement placed an additional £2m pressure on the medium term financial plan; further adverse changes were possible in 2018/19; and the long term future remained uncertain.  Officers were continuing to work on options for Members to consider in the Autumn.  Securing resources to deliver the scale of change needed alongside delivering services remained a key challenge.

 

The following points arose from questions and discussion:

 

·                     The opening of the Lexicon had led to a six fold increase in town centre car park income but this was over a very short time period and would need to be monitored.

·                     The additional Council Tax precept for social care consisted of a 3% supplement in years one and two with no supplement in year 3.

·                     A saving of £400k would be realised when Easthampstead House was demolished.

·                     The Berkshire authorities’ joint bid for the Government’s pilot to test possible future arrangements was likely to be a pooled arrangement with grant split between the individual authorities according to the agreed formula.

 

Commission members were encouraged to prepare for, and attend, the Children's Services Analyse phase Gateway Review the following week.

Supporting documents:

 

Contact Information

Democratic services

Email: committee@bracknell-forest.gov.uk