Agenda item

The report presents the revenue and capital budget outturn, reserves position, dedicated schools grant outturn, housing revenue account, and results of council company and partner organisations for the financial year 2023/24.

In general terms the council’s attempt to improve the financial health and sustainability of the authority have been successful with the 2023/24 drawdown on specific reserves reduced from the original budgeted amount £30m to £23m at financial outturn. At quarter three the estimated drawdown was forecast to be £27m although this was expected to improve due to the ongoing application of a freeze on expenditure and the Cabinet decision to release a previous accrual relating to the Dolphin Shopping Centre.

Services have delivered 94% of the budgeted savings of £34m, achieved through transformation, third party spend reduction, staff savings and raising additional income.

The Financial Outturn 2023/24 report and the Medium Term Financial Plan (MTFP) Report were considered in conjunction with each other. The Portfolio Holder for Finance presented the reports, a copy of each had been circulated to each Member and copies of which appear as Appendix 'A' and Appendix ‘B’ to these Minutes in the Minute Book. The Board considered the reports of which the Outturn Report presented the revenue and capital budget outturn, reserves position, dedicated schools grant outturn, housing revenue account, and results of council company and partner organisations for the financial year 2023/24.

The Board was advised that in general terms the Council’s attempt to improve the financial health and sustainability of the authority had been successful with the 2023/24 drawdown on specific reserves reduced from the original budgeted amount of £30m to £23m at financial outturn. At quarter three the estimated drawdown was forecast to be £27m although this was expected to improve due to the ongoing application of a freeze on expenditure and the Cabinet decision to release a previous accrual relating to the Dolphin Shopping Centre.  Services have delivered 94% of the budgeted savings of £34m, achieved through transformation, third party spend reduction, staff savings and raising additional income. The Board raised a number of points in the subsequent discussion, including:

The Board also considered the MTFP report which:

·       Aimed to ensure the council continues to maintain a balanced 2025/26 budget forecast by considering the impact that various assumptions would have on the underlying approved position. 

·       Proposed a financial strategy to support the delivery of a robust and financially sustainable budget for 2025/26. 

·       Proposed a budget planning process and timeline for key financial reports.

·       Presented the outcome of the CIPFA Financial Resilience Review undertaken in the summer/autumn of 2023 and finalised in the spring of 2024.

The Board was advised of a letter submitted by the Director of Finance to DLUHC and CIPFA outlining concerns regarding the impact the deficit on the Dedicated Schools Grant is having on the financial sustainability of the Council. This recognised that due to the forecast £92m accumulated deficit on the 31 March 2025 the Council will be technically insolvent (a situation where the deficit on the DSG is greater than the total reserves held by the council with a negative overall general fund position) when the current statutory override finishes on 31 March 2026. The Board raised a number of issues in the subsequent discussion, including:

·       Rebase of the 2024/25 Budget - This was due to the reflective consideration of the final quarter budget for 2023/24 and movements in this provided some ability to readjust the 2024/25 budget.

·       CIPFA recommendations – The Board asked if capital-based solutions or invest to save as referenced in the CIPFA report could be given further consideration. It was noted that on a per head basis BCP spent the lowest amount of any of the comparator authorities. The Portfolio Holder confirmed that the aim of the Council was to invest in services but that at the moment the cash resources were not available due to the position with the DSG. There had been significant spending over the past year in terms of purchasing houses to help with homeless problem.

·       Budget Setting - Starting process with a balanced budget for 2025/26 and then having the ability to adapt and make changes to the budget as required.

·       DSG deficit – It was a result of the government not recognising the difficulty placed on local authorities. The Board was advised that the level of debt was now significant and there did not appear to be any guidance on how to approach this. The Chief Finance Officer advised that he had written to the DLUHC but a formal response had yet to be received. It was confirmed that the cost of financing the deficit in 2024/25 was £4million.

·       Transformation financing – It was noted that the original systems-based transformation was due to come to an end during this financial year b ut there were also service based transformation programmes which would deliver savings towards the MTFP.

·       Company outturns – The Board considered the impact on the Council’s finances on profit and loss from companies. There was an element of governance improvement which needed to be undertaken and significant progress has been made in this regard. Directors of each company would take a decision regarding the use of any profit. However, it was noted that most companies were not established in order to produce a profit.

·       Underspend – The Board welcomed the £7million underspend last year. It was noted that the new finance system was much more reactive, and it could be seen that a significant proportion of this was the underspend on adult social care requirements.

·       Optimism Bias Reserve – Whether this needed to remain in place? The Portfolio Holder felt that this continued to be needed particularly in light of ongoing pressures in Children’s Services. Last year there was an overspend in this budget and this trend appeared set to continue.

·       Carters Quay – The mortgage over the property and whether there was a level of doubt with regards to the Council position. It was noted that the position remained broadly the same as when the budget was set for 2024/25. It was hoped that this would be turned into a viable business case.

·       Finance System Dashboard - Councillors requested to have access to these for further monitoring.

·       Spending Moratorium – It was noted that last year’s budget outcome was very successful but that some of this was due to a spending freeze in certain areas. The Portfolio Holder was asked if the same level of services could be expected going forward. The Portfolio Holder confirmed that they would like to see this lifted. It was confirmed that Councillors would be made aware of any changes in this area. Some concern was raised to the Portfolio Holder’s approach to which areas had spending freezes lifted and it was felt that this should be based on the areas in which the most utility can be driven in terms of provision of services to residents rather than those areas which achieved the best savings. It was noted that at present the position DSG would not permit any changes in this regard. The Board discussed the approach to this issue further but agreed to wait to consider the next budget monitoring report to gain an up-to-date picture of the situation.