Agenda item

RESOLVED:

That the following be noted:   

1.    Forecast revenue budget outturn for 2017/18, is £21m overspend (paragraph 1 of the submitted report). This includes:

£9m savings to be identified,

£12m savings considered unachievable in 2017/18,

£11m service demand pressures

£11m underspends and additional income.

2.    Significant risks to the revenue budget (paragraphs 38 to 42) could add £13m to the forecast overspend:

£4m in Adult Social Care

£8m in Children, Schools & Families and

£1m in Place Development & Waste

3.    Forecast planned savings for 2017/18 total £83m against £95m agreed savings and £104m target (paragraph 43 of the submitted report).

4.    The Section 151 Officer’s commentary and the Monitoring Officer’s Legal Implications commentary in paragraphs 15 to 18 of the main budget monitoring report to Cabinet that the council has a duty to ensure its expenditure does not exceed resources available and move towards a sustainable budget for future years.

5.    Cabinet will receive a recovery plan for consideration in October 2017.

The the following be approved:

6.    £18,000 draw down of Highways & Transport’s capital carry forward from 2016/17 (paragraphs 60 to 62 of the submitted report).

7.    £2.9m amendments to schools’ devolved capital budgets (paragraphs 63 to 66 of the submitted report).

Reasons for decisions

This report is presented to comply with the agreed policy of providing a monthly budget monitoring report to Cabinet for approval and action as necessary.

[The decisions on this item are subject to call in by the Overview and Budget Scrutiny Committee]

The Leader of the Council read out the statement below regarding Cabinet’s monthly budget monitoring report following which each Cabinet Member was asked to provide a brief outline of the budget position for the services within their portfolio.

‘Today I present the budget monitoring report for period five of 2017/18, up to 31 August 2017.

In February this council set its budget for 2017/18 in the face of:  significant rising demand pressures (particularly in social care);   falling Government funding and  continuing restraint on our ability to raise funds locally.   To balance 2017/18’s budget the council had to make plans to deliver an unprecedented £104m.   This challenge comes on top of making over £450m savings since 2010.

Within the £104m savings target, the council has agreed plans for £95m savings, with £9m savings to be identified.   After five months of the financial year, services have already achieved over £46m of savings and another £28m on track for delivery, with £8m facing potential barriers. £12m savings are now thought to be unachievable in this year (including £6m in Adult Social Care, £3m in Early Help and £3m in Waste Disposal).

The council’s 2017/18 budget includes significant demand and cost pressures, mostly in social care. In some services a small change in volume can lead to significantly increased costs.   In the first five months of the year,   demand has increased above what was expected even a short time ago.   In Children’s Services, demand, and the complexity of the demand, continues to increase and is expected to add a £9m pressure by the end of the financial year.   In Public Health, retendering a major contract is forecast to delay planned changes and add a pressure of up to £2m.   Partially offsetting these pressures, there are forecast underspends elsewhere, including in Schools & SEND, Highways & Transport.

The combined impact of delivering lower savings than planned and demand rising faster than anticipated is a forecast overspend of £21m for 2017/18.   This is a £3m improvement on the overspend forecast as at 30 June 2017, reported to Cabinet in July 2017.    However, considerable risks of volatility remain in some key budgets that are outside the council’s control and the forecast year end position could worsen by up to £13m.    This could put the forecast overspend over £30m.

The Local Government Finance Act requires the council to ensure its expenditure (including spending already incurred in year and anticipated to be incurred) does not exceed its available resources.   In response, Cabinet as advised by the Section 151 Officer, is developing a recovery plan to ensure a balanced in-year budget.   Cabinet will consider the recovery plan in its next budget monitoring report in October.

Given the gravity of this forecast position, it is vital members and officers continue their actions to identify and implement ways to mitigate the impact of savings shortfalls and service pressures. The council needs to identify and implement alternative savings and cost reductions quickly to address the ongoing issues affecting the 2017/18 budget and the council’s future financial sustainability.’

The Cabinet Member for Adults advised that there had been a deterioration in the budget position for the Adult Social Care directorate over the last month. The Council was continuing to deal with growing demand for social care services which meant there was a projected of £6 million overspend in the Adult Social Care budget. This had being offset by an additional £4 million in income that it was anticipated would be generated through increased fees and charges on social care services provided by residents. There was some concern around the implications that winter pressures could have on the Adult Social Care budget but some encouragement could be taken from SCC’s performance on Delayed Transfers of Care.

Ms Clare Curran stated that there was a £11.5 million overspend in the Children, Schools and Families budget for the financial year 2017/18. The financial sustainability of Children’s Service was at risk on account of the high number of calls that the Council was receiving that were reporting concerns about the welfare of a child. Ofsted and the Department of Communities & Local Government had also placed specific requirements on the Directorate in relation to caring for vulnerable children that was creating additional cost pressures on the budget and therefore contributing further to the projected shortfall. The Multi-Agency Safeguarding Hub (MASH) was also experiencing levels of demand significantly beyond what had been expected when it had first been established. The MASH was proving to be exceptionally resource intensive on account of the large numbers of staff that were required to manage this demand.

The Cabinet Member for Education stated that the change from Special Educational Needs Statements (SEND) Statements to Education, Health and Care Plans (EHCP) had led to a 25% increase in the number of children who qualified for support for services that SCC is obliged to provide. The service did, however, have a £1.8 million underspend projected due to staff vacancies.

Mr Mike Goodman, Cabinet Member for Environment & Transport indicated that there was a forecast overspend of £2.5 million within his portfolio’s budget. This was partly due to the fact that it had been necessary to revisit the savings expected to arise from the review of community recycling centres. It was anticipated that contract negotiations with Suez would help to drive out further efficiencies although if these were not achieved then the service’s potential overspend could be £4 million.

The Cabinet Member for Communities indicated that the Surrey Fire and Rescue Service’s (SFRS) savings plan was £0.3 million short of balancing her portfolio’s budget. It was expected that staff savings, fleet reductions and changes to pension arrangements would close this shortfall.

Mrs Helyn Clack informed Cabinet that there was a forecast overspend within the SCC’s Public Health budget arising from the difficulty in negotiating a new contract for the provisions of sexual health services.

Mr Tim Oliver highlighted that further changes could be made within his portfolio’s budget by more effective and ubiquitous use of digital communications by Council staff and Members. In particular he stressed the need to reduce the amount of paper used at meetings.

The Cabinet Member for Highways, Mr Colin Kemp, indicated that an increase in energy prices had created some pressure within the budget for the highways service. £500,000 in savings had been found but there was a degree of risk to these and so it would be necessary to monitor these carefully. Mr Kemp advised that the recommendations contained within the report including a request for Cabinet Members to approve a  draw down of £18,000 from Highways & Transport’s capital carry forward from 2016/17.

RESOLVED:

That the following be noted:   

1.    Forecast revenue budget outturn for 2017/18, is £21m overspend (paragraph 1 of the submitted report). This includes:

£9m savings to be identified,

£12m savings considered unachievable in 2017/18,

£11m service demand pressures

£11m underspends and additional income.

2.    Significant risks to the revenue budget (paragraphs 38 to 42) could add £13m to the forecast overspend:

£4m in Adult Social Care

£8m in Children, Schools & Families and

£1m in Place Development & Waste

3.    Forecast planned savings for 2017/18 total £83m against £95m agreed savings and £104m target (paragraph 43 of the submitted report).

4.    The Section 151 Officer’s commentary and the Monitoring Officer’s Legal Implications commentary in paragraphs 15 to 18 of the main budget monitoring report to Cabinet that the council has a duty to ensure its expenditure does not exceed resources available and move towards a sustainable budget for future years.

5.    Cabinet will receive a recovery plan for consideration in October 2017.

The the following be approved:

6.    £18,000 draw down of Highways & Transport’s capital carry forward from 2016/17 (paragraphs 60 to 62 of the submitted report).

7.    £2.9m amendments to schools’ devolved capital budgets (paragraphs 63 to 66 of the submitted report).

Reasons for decisions

This report is presented to comply with the agreed policy of providing a monthly budget monitoring report to Cabinet for approval and action as necessary.