Councillors and committees

Agenda item

2019/20 OUTTURN, COVID-19 COSTS & FUNDING & BUDGET LESSONS LEARNED

Purpose of the report: To present the 2019/20 outturn position, the latest forecast on COVID-19 costs and funding and the lessons learned from the 2020/21 budget process.

Minutes:

Witnesses:

Anna D’Alessandro, Director of Corporate Finance

Mel Few, Cabinet Member for Resources

Leigh Whitehouse, Executive Director of Resources

Rachel Wigley, Director of Financial Insight

 

Key points raised during the discussion:

  1. The Director of Corporate Finance presented headlines of the report. At outturn of the financial year 2019/20, a small surplus of £200,000 had been delivered on revenue. All services had contributed to this surplus. £2.6m had been added to the contingency, as well as £2.8m that had been added to the general fund reserve. In 2019/20, £82m of efficiencies had to be delivered, and there was slippage of £9.5m, comparing favourably to slippage of £22m in 2018/19.
  2. The Director continued to explain that there had been two tranches of Covid-19 funding from government, totalling £47m. Of that, £900,000 had been spent on Covid-related costs and income loss in 2019/20, and the rest would be carried forward to 2020/21. A ‘Delta 2’ return had been submitted to the Ministry of Housing, Communities and Local Government (MHCLG) on 15 May. Work conducted with finance business partners had identified that £4.3m of efficiencies would be undeliverable because of Covid. The reporting to MHCLG was consistent with what other counties were reporting.

 

Ayesha Azad joined the meeting at 10:33am.

 

  1. After the 2020/21 budget, the Finance team had conducted an extensive ‘wash-up’ exercise in partnership with Democratic Services around Select Committee involvement in the budget process. For the 2021/22 budget, Select Committees would be involved in the process more and earlier, conducting two rounds of scrutiny in September-October and December. The 2021/22 budget would be discussed at the first round of budget scrutiny in September/October 2020 and the second round in December 2020.
  2. A Member noted that there had been an improvement in the final month of the year, with £5.6m additional savings. He asked why this had come so late and whether services were holding back savings until the end of the year. The Director of Corporate Finance said that the latter was not the case and services worked hard to achieve efficiencies all year. Sometimes efficiency needs did not become clear until the end of the year, as well as certain events that could only be undertaken at year-end from a Corporate Finance perspective. She acknowledged that the Council still had some way to go to refine forecasting. The Cabinet Member for Resources added that paragraph six of the report showed explanations for the delivery of efficiencies in month 11.
  3. A Member remarked that in the years she had been a Surrey county councillor, she did not remember Special Educational Needs and Disabilities (SEND) ever coming within budget, despite promises that the numbers would be brought under control. Were there assurances that it would now be under control without this being detrimental to young people? The Director of Financial Insight responded that there was now a transformation programme board chaired by Julie Iles as well as other relevant scrutiny. In 2019/20, there had been a £29m overspend had been projected; in reality, the overspend had been £1m higher than this, at £30m. The SEND overspend target for 2020/21 was £24m, and at the moment the Council was on target to achieve this; it was a top priority. The Executive Director of Resources acknowledged the long-standing nature of this issue and said it was a high-value and volatile area. At the moment, the Council was stuck between not being able to recognise SEND as a general fund pressure and not being funded for the pressure as part of the schools delegated budgets. In relation to the above point, a Member commented that surely projecting an overspend every year meant that the budget was incorrect in the first place. Was the Council being overoptimistic or setting our budget incorrectly? The Director of Financial Insight explained that SEND expenditure was funded through the dedicated schools grant (which came from the government), so in effect the Council was not being given enough government funding for SEND. New rules had been brought in that prohibited the Council from using its general fund for SEND expenditure. The Council was trying to bring SEND costs down. The Executive Director added that the Council was providing for the overspend and setting it aside on the balance sheet.
  4. A Member referred to the £900,000 recovery relating to Children’s services, and asked what this entailed. The Director of Financial Insight replied that she did not have that information to hand and would respond to this outside the meeting.
  5. The topic of performance data, particularly with regards to areas that fell outside this Select Committee’s remit, was raised, and the Executive Director said that he was working on bringing performance data to other Select Committees.
  6. Regarding Covid-19 related costs, a Member asked whether the Council had now received funding from the government for the Test and Trace system. Considering that Surrey was a leader in the South East, and that Surrey County Council’s normal Public Health grant was one of the lowest in the country, the £3.5m Test and Trace funding seemed quite low. Would the Council supplement this using its own budget? The Executive Director responded that the funding was based on historic Public Health grant allocations, which could be problematic for Surrey County Council due to its low funding in the past. If more was needed, the same principles would apply as other Covid related spending. The Member enquired whether there was an indicative budget on how much Test and Trace would cost in total – how much more or less than £3.5m would it be? The Executive Director said that at the moment they were waiting for the Test and Trace plan to be finalised; once it was, they would conduct the appropriate reviews to ensure there was sufficient funding.
  7. A Member queried whether there had been any feedback from the government on the Council’s monthly Covid costs submissions. The report states that the Delta 2 submission to MHCLG (in May 2020) had forecast unmet efficiencies due to Covid of £15.8m, but that this had since been revised to £4.3m. A Member raised this and asked why this had changed. The Director of Corporate Finance said work had been done to determine in which services efficiencies would not be delivered, and the £4.3m represented unmet efficiencies in adult social care (ASC). She would share details of the movement from £15.8m to £4.3m. For Delta 1 (April 2020), there had not been a steer from central government on how to fill in the Delta form, leading to discrepancies between different Local Authorities (LAs), so Grant Thornton had been commissioned by the County Councils Network to compare different LAs, which had since led to increased consistency.
  8. A Member asked how infection control funding from government was distributed to care homes. The Executive Director explained that Surrey had been allocated around £19m for infection control in care homes, three quarters of which would be channelled straight to care homes. The remaining quarter could only be distributed to care homes once they had reached certain criteria to demonstrate implementation of effective infection control.
  9. A Member praised the Council’s initiative in setting up the Seacole Centre at Headley Court[1] and asked whether the building and equipment were leased or purchased. The Director of Financial Insight replied that the Council’s involvement in that had been to prepare the building for the NHS, so the Council’s spending on that would be fully reimbursed by the NHS. The Executive Director added that Headley Court was a privately owned property that had been leased until November at the earliest. The equipment was all owned by the NHS.

 

Recommendations:

  1. That a summary of the following be presented in the next report at the October Select Committee meeting:
    1. the latest financial situation around COVID-19 and the latest information regarding the government’s Test and Trace programme;
    2. the updated assessment of the impact of COVID-19 on Surrey County Council’s short- and medium-term financial position; and
    3. the financial support being provided to the Council’s most vulnerable.

 

Actions/further information to be provided:

  1. The Director of Financial Insight to provide details on the £900,000 recovery in Children’s services;
  2. The Director of Corporate Finance to share details of why the forecast efficiencies unmet due to Covid changed from £15.8m (Delta 2) to £4.3m.


[1] One of the Nightingale hospitals set up to ensure sufficient capacity for Covid patients.

Supporting documents: