Agenda item

The O&S Board will consider the following budget related reports due to be considered by Cabinet on 10 December:

·       Medium Term Financial Plan (MTFP) Update

·       Quarter 2 Budget Monitoring Report

·       Assessing the serious cashflow issue caused by ever-increasing demand and cost outstripping High Needs Dedicated Schools Grant government funding

The Portfolio Holder for Finance presented the following three reports, a copy of each had been circulated to each Member and the reports appear as Appendices  'C', ‘D’ and ‘E’ to these Minutes in the Minute Book.

·       Medium Term Financial Plan Update

·       Council Budget Monitoring 2024/25 at Quarter 2

·       Assessing the serious cashflow issue caused by ever-increasing demand and cost outstripping High Needs Dedicated Schools Grant government funding.

The Board was informed that the MTFP aimed to ensure the council continued to maintain a balanced 2025/26 budget forecast by considering the impact that changes to the previous assumptions would have on the underlying approved position and taking mitigating action where necessary. This included the announcements relevant to local government in the 30 October Budget statement.

It was noted by the Board that this needed to be considered alongside the “Assessing the serious cashflow issue caused by ever-increasing demand and cost outstripping High Needs Dedicated Schools Grant government funding” report which provided an update on the ongoing conversation with the Department for Education (DfE) and the Ministry of Housing, Communities and Local Government (MHCLG) further to the letter of the Director of Finance issued on the 22 May 2024. This letter outlined concerns about the impact the ever-increasing deficit on the Dedicated Schools Grant (DSG) would have on the council’s ability to set a legally balanced budget for 2025/26.

The budget monitoring report provided the quarter two 2024/25 projected financial outturn information for the general fund and housing revenue account (HRA). The Board was informed that the February 2024 approved general fund budget for 2024/25 was balanced on the assumption of £38m in savings, efficiencies, and additional resources.Consistent with the position being reported by other upper tier authorities, the relentless demand for services and ever-increasing costs is a continual financial challenge. The 2024/25 quarter two budget monitoring position for BCP Council was a net forecast overspend for the year of £3m.

Officers were committed to bring the forecast back into balance.

·     A number of issues were discussed relating to all of the finance papers although there was a significant focus on the report addressing the DSG related cashflow issues, including:

·     Local Government Finance Settlement - In response to a question the Chief Finance Officer advised that the Local government finance settlement was delivered in November. In which the Government set out its intention towards Local Authorities. Further details on the settlement were still awaited. It outlined the basic principles on Council Tax increases which allowed for a 2.99 percent basic increase which was in line with the MTFP assumption. It was confirmed that the settlement was to include national insurance employer contributions for directly employed staff but would not cover the impact of increases in commissioned care costs. Support of the household support fund had also been confirmed. Further detail was expected on either 16 or 19 December.

·     Budget monitoring – parking costs -The Board asked about the situation with bank charges and the impact that this was having on the budget as it was reported that there were significant costs occurred. It was hoped that the summer season would have had a positive impact on this. However, the weather had not been good which had further impacted on charges.

·     The SEND statutory override – It was noted that this was due to finish on 31 March 2026. A member suggested that the Council should be working with the five local MPs to help ensure that the government was listening to the Local Authorities. It was noted that 4 out of the 5 MPs had already written on the issue and the fifth MP was taking it up directly through a parliamentary question. It was noted that the four options outlined in section 28 of the report to address this issue were all unpalatable. At the present time it was not possible to set a balanced budget and it was expected that if the government would need to provide direction on what they expected the local authorities to do.

·     Cashflow impact - It was noted that any available cash in the Council’s accounts was being used to cashflow the deficit and the cost to the council was being occurred in the loss of interest to the Council. It was noted that CIL funding was also included in the funds being used to cashflow this.

·     Transformation programme – This was included in the MTFP report and it was expected that the main transformation programme was ending soon. However, there were further transformation programmes taking place including ones within Adults and Children’s Services.

·     Carter’s Quay – The Board raised concerns regarding the release fee to the administrator and questioned the level of costs for this. It was noted that this was still highlighted as a potential risk for the Council.

·     Contingency – The Board questioned how the Council would be able to address any unexpected issues given the contingency has been depleted. It was noted that the monitoring report was aiming to provide a realistic projected picture in terms of contingency use. It was imperative that everybody worked together to address the projected overspend.

·     Additional capital programmes – It was noted that there was a lot of work being undertaken on the Capital programme and that something more transparent would be brought to a future meeting.

·     Concern was raised that only 88 percent of savings were on track to be realised and the contingency had been used in full. It was noted that reserves were also expected to fall. The Portfolio Holder responded that they had a reasonable level of confidence to achieve the savings outlined but it was expected that these would be achieved in a longer timeframe than anticipated.

·     High Needs DSG impact – It was noted that SEND leaders within the Council did not have the power to address the issue which was the demand created but not by those who needed to fund it and a lack of provision in the areas in which it was needed. Decision makers outside of the influence of the SEND budget, within BCP there was an improving SEND system but many of the demands were beyond the Council’s control.