Agenda item

Purpose of the report:  Policy Development and Review

To update the Committee on the financial context within which the Council is planning its budget; the Council’s strategic response; and plans to ensure a balanced budget is realised over the life of the Medium Term Financial Plan 2014-19.

Declarations of interest: None.

Witnesses: David McNulty, Chief Executive

Kevin Kilburn, Deputy Chief Finance Officer

Key points raised during the discussion:

1.    The Committee was informed that significant work was being undertaken to identify savings in the Medium Term Financial Plan (MTFP). One of the key factors was uncertainty in terms of central government funding, as there were no clear proposals for a return to the former three-year spending reviews. It was acknowledged that this made it difficult to develop a five-year financial plan.

2.    The Committee heard that the increasing demand on Council services was also a factor in creating uncertainty in relation to the MTFP. Members queried what the biggest challenge was in relation to forecasting increased demand. Officers commented that the future of public finances as a whole presented a challenge, but expressed confidence that the forecasting methodology being used by the council was robust. It was highlighted that 3,000 additional school places had been secured in Surrey for the current academic year. The Committee was informed that the demographic pressures in Surrey did not always translate into additional need for services, but that there was a work being undertaken in relation to demand management and reduction. It was also highlighted that there were ways in which technology and service re-design would support the delivery of services in Surrey.

3.    The Committee questioned why savings marked as “red-risk” were not shown as unachieved in the year end forecast in the budget’s monthly report. It was clarified that the monthly services forecast reported on areas where savings had been confirmed as being achievable within the current financial year. It was recognised that “red-risk” savings may require determined management action, and that the categorisation was intended to signpost a likely level of difficulty in achieving them.

4.    The Committee asked for further detail in relation to £23 million drawn down from the Council’s reserves in 2013/14 and how much remained. Officers confirmed that this was from two sources. £12m came from unallocated general balances, leaving £16m. This size of unallocated general balances is considered to be an appropriate amount given the size of the council. The remaining £11m came from a specific reserve set up to fund the 2013/14 budget.

5.    The Committee was informed that an additional £3.8 billion funding had been announced from central government to support the integration of social care and health nationally in 2015/16. There were ongoing discussions about how much of this funding the Council was likely to be allocated. The Committee was informed that a large proportion of the funding was being allocated to the core budgets of Clinical Commissioning Groups (CCGs), and that it was possible this could be used to strategically commission work that would reduce demand pressures on the Council.

6.     The Committee discussed the role of social capital in achieving savings within the Adult Social Care directorate. It was highlighted that the Adult Social Care Select Committee had been scrutinising this topic. Officers expressed the opinion that the savings that could be made were realistic; however, there was an uncertainty about whether they would be achievable in the current financial year. The Committee was informed that Whole Systems funding had been utilised to meet some of the savings that were no longer achievable for 2013/14.

7.    The Committee was informed that many of the savings contained in the MTFP were now extensions on actions previously agreed, and that there would be an increasing difficulty in identifying new savings. The view was expressed that in order to meet the future challenges within the public sector it would be necessary for the Council to secure and expand its funding base.

Recommendations:

None.

Actions/further information to be provided:

In order to assess the impact on Surrey residents of reduced funding for the Council’s services, the Committee requested that the Chief Executive return to explain how the leadership proposes to allocate the necessary savings after the Local Government settlement, and in particular deal with the large unidentified savings shown in the Medium Term Financial Plan for 2014/15.

Committee Next Steps:

The Committee will continue to scrutinise the Medium Term Financial Plan and consider it alongside future budget proposals.