Agenda item

Purpose of the item: To receive an update from the Deputy Leader and Cabinet Member for Finance and Resources on their priorities and recent work undertaken.

Witnesses:

Becky Rush, Cabinet Member for Finance and Resources and Deputy Leader

Leigh Whitehouse, Executive Director of Resources

The aspects of the Cabinet Member for Finance and Resources’ portfolio that came under the Select Committee’s remit were finance, the Orbis partnership, HR&OD, IT and digital, procurement, and legal and democratic services.

Key points raised during the discussion:

1.    A Member asked what the main challenges were regarding the setting of the 2022/23 budget, and how confident the Cabinet Member for Finance and Resources was that these challenges could be addressed. The Cabinet Member replied that at the moment the Council was in the early stages of putting together the first view of the budget, which currently estimated a budget gap of £47.1m; however, this figure was prone to change on a daily basis. This figure represented part of the £200m gap in the Council’s finances forecast over the medium term in the Medium-Term Financial Strategy (MTFS).

2.    The Cabinet Member continued to explain that the main areas of challenge were adult social care (ASC) and children’s social care, in particular, special educational needs and disabilities (SEND). Regarding ASC, there had been an increase in the number of people requiring care following the Covid-19 pandemic, as well as an increase in provider costs, and therefore ASC generated 60% of the budget gap for the 2022/23 financial year. Regarding children’s social care, there was significant pent-up demand for these services following the pandemic, including an increase in the number of looked after children and looked after children assessments, leading to an increase in the cost of placements and an increase in the number of external placements. The Council was looking to address the overspend in the field of SEND, which represented 22% of the 2022/23 budget gap. Directorates were currently working to address budget pressures by identifying efficiencies, and had expressed confidence that they would be able to address the gap. The Council would be using a new ‘twin-track’ approach, working across directorates, to tackle the £200m gap.

3.    The Executive Director of Resources added that another challenge was that the government would usually give local councils a multi-year indication of resources, but for the last few years, including the current year, indications from government had been shorter term and had not been released until December (soon before the final setting of the budget). The Council was expecting a spending review to be released at the end of October, but in the meantime the Council was basing its budgeting on its best estimate of the results of the government’s spending review; it was expected that the review would result in negative changes to the Council’s funding from central government.

4.    A Member noted that the government had recently announced an increase in national insurance contributions, the money raised from which would be used to fund the NHS and social care systems nationally, and asked for witnesses’ thoughts on this and how this would affect the Council’s budget generally. The Executive Director responded that the potential impacts were that there would be an increased cost of national insurance for the Council as an employer (this could also have an impact on the supply chain as providers that were also employers would have to account for this increased cost) and, conversely, increased funding for the Council as a provider of ASC. There was not yet enough clarity to know the exact impact on the Council and the wider supply chain. The Member highlighted that this was a potentially serious issue.

5.    A Member enquired how Surrey County Council would be consulting effectively with district and borough councils on the effects of the increase in national insurance and the ASC precept increase. According to the Member, there had been concerns about a lack of consultation with district and borough councils in the past. The Executive Director, who was also the section 151 officer for Surrey County Council, explained that he would meet with the section 151 officers for Surrey district and borough councils. Dialogue and consultation with district and borough councils would continue throughout the year.

6.    A Member enquired whether the Orbis partnership provided good value for money for the Council and residents. The Executive Director of Resources explained that the Orbis partnership, between Surrey County Council, East Sussex County Council and Brighton and Hove City Council, had delivered significant savings since its inception. He emphasised the benefits that came from sharing resources and expertise. Since 2018, the Orbis partnership had been refined; Surrey County Council had drawn its finance, HR and land and property services back in-house, showing that Surrey County Council would adapt the its role in the partnership based on what represented good value for residents.

7.    A Member asked what plans there were for consultation with residents on the 2022/23 budget. The Cabinet Member stated that the Select Committee’s comments on budget consultation had been taken on board and the Council planned to run a more in-depth programme of resident budget engagement this year than it had done in the last few years. The Cabinet Member expressed the hope that the feedback gained in this round of budget consultation could be applicable for a number of years to come. The consultation programme on the 2022/23 budget would begin in September or October 2021 and would include online workshops and telephone surveys. A sample group of approximately 1,100 residents would be consulted, who would be demographically representative of the wider Surrey population. The aims of the consultation were to raise awareness among residents on the context of the Council’s budget, explore various topics, such as transformation programmes, understand residents’ spending preferences, and test residents’ spontaneous attitudes towards service changes. The resident consultation would be just one piece of information amongst many that would be factored into the formulation of the budget; others included benchmarking and service views.

8.    A Member requested an update on the Digital Business and Insights (DB&I) programme, in particular, the implementation of a new enterprise resource planning (ERP) system. The Executive Director replied that significant progress had been made since the last discussion on the DB&I programme at the Select Committee. Phase one, involving the procurement system, was now live. The next milestone was for the finance, HR and payroll elements to go live; this was planned for December 2021. User acceptance testing was currently being conducted, and the status of the programme would be reviewed following this testing.

9.    Another Member emphasised that the implementation of the new ERP system carried risk and asked whether the programme was still on track. The Cabinet Member responded that, as September 2021 was a critical month in the programme, the Council would have to wait until the end of September to be able to say whether it was on track; however, when this information was available, the Select Committee could be informed. A decision would be made in September 2021 on whether to withdraw from the current ERP subscription before the end of 2021 or not.

10.  The Select Committee discussed the Council’s risk register, overall responsibility for which sat with the Audit and Governance Committee. The Select Committee agreed that if its Members wanted more information about the risk register and how this related to the budget, they could informally approach the Chairman of the Audit and Governance Committee for a discussion.

Recommendations:

1.    The Select Committee recommends that Surrey County Council actively involves residents in the budget setting process and carefully takes into account relevant feedback, observing the ethos of participatory budgeting.