Agenda item

RESOLVED:

That the following be noted.

1.         Forecast revenue budget outturn for 2017/18, is £17m overspend (paragraphs 1 and 8 to 39 of the submitted report). This includes:
£9m savings to be identified,
£16m savings considered unachievable in 2017/18,
£11m service demand pressures
less
£19m underspends and additional income.

2.         Significant risks to the revenue budget (paragraphs 40 to 44 of the submitted report) could add £13m to the forecast overspend, including: £8m in Children, Schools & Families and £3m in Adult Social Care.

3.         Forecast planned savings for 2017/18 total £79m against £95m agreed savings and £104m target (paragraph 46).

4.         All services continue to take all reasonable action to keep costs down and maximise income (e.g. minimising spending, managing vacancies wherever possible etc).

5.         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 state that the council has a duty to ensure its expenditure does not exceed resources available and move towards a sustainable budget for future years.

6.         The council and all eleven district and borough councils in Surrey have submitted an application to form a business rates retention pilot in 2018/19 (paragraph 45 of the submitted report).

That the followed be approved.

7.         Transfer £8m from the Budget Equalisation Reserve to Central Income & Expenditure to negate the deferral of the increase in Waste PFI credits (paragraph 36 of the submitted report).

Reason for decision:

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 can be called in by the Overview and Budget Scrutiny Committee]

The Leader of the Council presented the budget monitoring report for the sixth month of the 2017/18 financial year, covering the period up to 30 September 2017.

He explained that 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 of savings.  This significant challenge for the council comes on top of already making over £450m savings since 2010.

He explained that within the £104m savings target, the council has agreed plans for £95m savings, with £9m savings to be identified.  After six months of the financial year, services had already achieved £47m of savings with another £26m on track for delivery, and £6m facing potential barriers. £16m savings were now thought to be unachievable in this year.

He also explained that the council’s 2017/18 budget included significant demand and cost pressures, mostly in social care.  In the first six months of the year, demand had increased above that forecast even a short time ago.  For example, in Children’s Services, demand continued to increase and was expected to add a £9m pressure by the end of the financial year.  Partially offsetting these pressures, there were forecast underspends elsewhere, including in Children Schools & Families and Adult Social Care, Orbis, Highways & Transport and Waste.

He went on to explain that services had already taken action as part of the recovery plan to reduce costs by £4m. There was a need to continue to take all reasonable action to manage our spending within available resources by keeping costs down, managing vacancies and maximising income wherever possible.  The combined impact of delivering lower savings than planned and demand rising faster than anticipated was a forecast overspend of £17m for 2017/18. Whilst this was a £4m improvement on last month’s forecast position, considerable risks remain in some key budgets that were outside the council’s control and the forecast year end position could potentially worsen.

He explained that, this month, he and the leaders of the eleven district and borough councils in Surrey gave full agreement to a bid to form a Surrey business rates pilot in 2018/19.  He was pleased to report that the bid was submitted to the Department for Communities and Local Government and that it had the support of both of Surrey’s Local Enterprise Partnerships.’

The Cabinet Member for Adults spoke of the overspend in Adult Social Care and shortfall in budget due to increased demand and increasing costs.  He paid compliments to the Finance and Benefits Team that had done an outstanding job looking at all service user costs.  He also stated that staff were aware costs needing to be reduced.

The Cabinet Member for Children spoke of the overspend for Children’s Services which had deteriorated since the last report which was due to staffing budget and the extra social workers needed.  There was also a significant increase in the cost of placements for Looked After Children and asylum seekers, especially those with multiple complex needs. She explained the gap in funding in the Government grant received versus the costs for asylum seekers.

The Cabinet Member for Education spoke of an estimated underspend due one-off underspends, some of which were temporary such as unfilled vacancies that needed to be filled.  She also reiterated the challenge to find £13m savings this year but to find a further £12m to £14m savings next year may also affect council budgets as well as Dedicated Schools Grant.

The Cabinet Member for Environment & Transport spoke about the shortfall due to savings not being realised in waste however a balanced budget was expected by end of year.  He also stressed caution in that some of the costs of completing the Community Recycling Centres would now go to 2018 which would put pressure on the budget next year.  He also explained that in relation to recommendation 7 of the report, this was not a cost to the council.

The Cabinet Member for Highways stated that highways budget was target for this year and further savings had been made.  He also spoke of the risks of winter and flooding.  Savings made and challenges going forward will be noticed by residents as cuts were made to front line services.

The Cabinet Member for Communities spoke of the various savings to be made and the projected overspend.

The Cabinet Member for Health reported on the overspend due to sexual health services but that mitigation was in place to reduce the overspend by the end of the year.

The Cabinet Member for Property and Business Services reassured Cabinet that Orbis continue to drive forward cost savings.

The Deputy Leader explained that for every £1 the council gets 70p is spend on demand services.  Cuts were being forced on councils by Government and the economic viability was at risk in Surrey.

The Leader stated that in 14 weeks’ time he would have to propose a budget to the council.  He had deep reservations that cuts to services were now having an effect on residents.  The business rate retention project was not the answer to the council’s problems just a small piece of a large picture and would only be run for a year.  Reality needed to be faced and there would be more cuts to services going forward.  It was an extremely difficult time for councils.

RESOLVED:

That the following be noted.

1.         Forecast revenue budget outturn for 2017/18, is £17m overspend (paragraphs 1 and 8 to 39 of the submitted report). This includes:
£9m savings to be identified,
£16m savings considered unachievable in 2017/18,
£11m service demand pressures
less
£19m underspends and additional income.

2.         Significant risks to the revenue budget (paragraphs 40 to 44 of the submitted report) could add £13m to the forecast overspend, including: £8m in Children, Schools & Families and £3m in Adult Social Care.

3.         Forecast planned savings for 2017/18 total £79m against £95m agreed savings and £104m target (paragraph 46).

4.         All services continue to take all reasonable action to keep costs down and maximise income (e.g. minimising spending, managing vacancies wherever possible etc).

5.         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 state that the council has a duty to ensure its expenditure does not exceed resources available and move towards a sustainable budget for future years.

6.         The council and all eleven district and borough councils in Surrey have submitted an application to form a business rates retention pilot in 2018/19 (paragraph 45 of the submitted report).

That the followed be approved.

7.         Transfer £8m from the Budget Equalisation Reserve to Central Income & Expenditure to negate the deferral of the increase in Waste PFI credits (paragraph 36 of the submitted report).

Reason for decision:

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.