Agenda item

To consider the report.

Following consideration of the officer report, appendices and discussion, the Executive:

a.        Noted the forecast overspend of £26.1m (as at month 4) for the year and the key risks, future issues and opportunities.

b.        Requested that each of the Scrutiny Committees urgently reviews the budget monitoring position for their areas of responsibility and that the relevant Executive members set out the reasons behind the current forecasts and the actions that are being taken to address the position. 

c.        Approved that member briefings are set to ensure every councillor has the opportunity to fully understand the financial current situation and the financial challenges facing the council going forward.

d.        Received a monthly update on the financial position and actions being taken to address it. 

ALTERNATIVE OPTIONS CONSIDERED: As set out in the officer report

REASON FOR DECISION: As set out in the officer report

The Leader of the Council and Lead Member for Governance and Communications, Cllr Bill Revans, invited Mr Alan Debenham to address the Executive.

Mr Alan Debenham addressed the Executive with questions regarding the Somerset Council's financial position, responses from the Executive Lead Members are provided in Appendix A to the minutes.

The Lead Member for Economic Development, Assets and Planning, Cllr Ros Wyke, added an update on the nutrient neutrality scheme and that once clarity on this scheme is received, the information will be communicated.

The Leader of the Council and Lead Member for Governance and Communications, Cllr Bill Revans, invited the Deputy Leader and Lead Member for Resources and Performance, Cllr Liz Leyshon, to introduce the report.

The Deputy Leader and Lead Member for Resources and Performance, Cllr Liz Leyshon, introduced the report, highlighting: that the report sets out the very stark and challenging situation that is faced both locally and nationally, including recent Government announcements; the forecast overspend and draw and use of reserves, the budget monitoring position and the addition of month four budget monitoring report; the opportunity as one Council to identify risks, improvements and opportunities; and the Directorate Management Teams work on actions to mitigate the position and financial recovery plans, including the five Scrutiny Committees to review the budget monitoring position of their area, risk reporting, monthly all Member Budget Monitoring Briefings and a monthly update on the financial position and actions being taken to address it.

The Executive Director - Resources and Corporate Services, Jason Vaughan, further added to the above points, highlighting: the upcoming use of the solver budget monitoring tool;  Section 114 notices; the recommendations presented to inform Council of the financial pressures; the increase in expenditure and income, with the Government National funding received by Councils not matching responsibility and expenditure;  the transformation, savings and income generation proposals; treasury management activities.

The Leader of the Council and Lead Member for Governance and Communications, Cllr Bill Revans, invited Executive Lead Members to provide an update on projected overspends, mitigations and opportunities within their area of responsibility. In reference to Strategy & Performance and Governance, the Leader advised of an overspend due to the continued need to place legal cases, principally in respect of childcare, with legal experts with actions including reviewing practice and developing the capacity of the legal team and reducing the need to externalise this work.

The Lead Member for Adult Social Care, Cllr Dean Ruddle, highlighted: the increased pressure on services and costs resulting in a projected £3.8m overspend; and the work to achieve £10m savings over two years, including monitoring and reviewing the budget to achieve efficiencies and the five key areas of planned mitigation to deliver efficient savings.

The Lead Member for Children, Families and Education, Cllr Tessa Munt, highlighted: the work on rationalisation of cost centres and the work to clearly present information and figures; the external placements budget overspend; and the use of Microsoft Dynamics and solver budget planning tool and the work with the finance team to provide information and delivery of savings timescales.

The Executive Director – Children, Families and Education, Claire Winter, further added the above points, highlighting: the increasing complexity of need post pandemic; the key areas of overspend in relation to external placements for children in care, the sharp rise in providers costs and the national market; the mitigations to manage escalating costs including Homes & Horizons, 16+ market development, reducing unregistered placements; the work with Impower consultancy to increase the number of internal foster cares and step across options for children and young people and the work with local providers to develop the local market for value for money and quality, the work to manage the private equity market to benefit children and manage costs; and the work to effectively manage SEND school transport routes effectively.

The Lead Member for Public Health, Equalities and Diversity, Cllr Adam Dance, highlighted the budget monitoring challenges faced due to significant inflationary increases and the limited Public Health funding.

The Leader of the Council and Lead Member for Governance and Communications, Cllr Bill Revans, added to the above points highlighting: that the shortage of funding is a risk and that prevention through public health is important to the sustainability of the Council; and the important joint work with the NHS for the sustainably of the Council.

The Lead Member of Communities, Housing and Culture, Cllr Federica Smith-Roberts, highlighted: that there is no projected variance within Communities; the risks in projecting while not knowing the complete expenditure and the work with the finance team; the volatility in housing and homelessness, including the increase in numbers presenting due to the cost of living crisis; and the extended use of temporary accommodation due the economic climate and local demand pressures, with the received grants not covering costs.

The Lead Member for Transport and Digital Cllr Mike Rigby, highlighted: the

£1.1m overspend in the highways area due greater amount of safety defect work across the network, following a harsh winter; the maintenance of the asset and repair report; the predicted IPG overspend; the actions in MTFS and the work with the finance team to ensure budget pressures highlighted and managed; that additional costs have been incurred in the ICT area in respect of the Office 365 backup costs and that the work in respect of consolidating into a single electronic payments system will be more than anticipated; and that  work on the data centre consolidation is not achievable in this financial year, meaning the budget will be exceeded.

In the absence of the Lead Member for Environment and Climate Change, the Executive Director – Climate and Place, Mickey Green, provided an update, highlighting: the £800k overspend for the end of month 4, due to waste services, including an increase in residual waste: the additional bank holiday for the King’s Coronation impact on waste collections; and the negotiation of an improved pay award shared with Suez and the anticipated change of legislation due in January 2024.

The Lead Member for Economic Development, Planning and Assets, Cllr Ros Wyke, highlighted: the one-off pressure in economy, employment and planning, of £0.4m,  due to a change in how funding from DWP can be applied; the exploration of other funding streams to mitigate this action; the property services budget and strategic assets budget, including the unbudgeted expenses, including the structural services, particularly the RAAC issue and shortfall in the Saltlands solar park; the vacant property running costs due to the ongoing phosphates issues delaying planning;  additional pressures in year due to the additional security costs of the old Bridgwater hospital sites; anticipated savings from staff budgets due to vacancies; pressure of utility costs and consolidated Unitary accurate forecasts; the Commercial investments budget and the current vacancies, with the overall portfolio holding up in terms of income; and  high streets transition and associated impacst.

The Lead Member for Transformations and Human Resources, Cllr Theo Butt-Philip, highlighted: that  Partnership & Localities and Workforce & Transformation predict no overspends for this financial year;  ongoing work including, a review of third sector grants, workforce and transformation work; how LCNs would be key to networking and developing partnerships; and that the transformation and change programme was ongoing with a review of the transition programme, focusing on developing, consulting and implementing management staff structures and securing management staff capacity for the Council.

The Deputy Leader and Lead Member for Resources and Performance, Cllr Liz Leyshon, highlighted: the overspend in finance and procurement areas due to human resources pressure; the cross directorate transformational work and improved reporting; the favourable variance of £0.5m for special grants due to receiving confirmation that the Rural Services Delivery Grant and the 2023/24 Services Grant will be higher than budgeted; and that the national bargaining non-service pay award has not yet been agreed upon, with the corporate contingency  showing as being fully committed to cover the additional cost of the national pay award over and above the 5% budgeted for.

The Leader of the Council and Lead Member for Governance and Communications, Cllr Bill Revans, invited comments from other Members present, questions and points raised included: the budget gap;  budget monitoring and  work to mitigate the financial pressure, demonstrate fiscal responsibility and the opportunities available to avoid issuing a Section 114 notice;  that doing nothing to address the financial pressures was not an option; thanks to the Officers for their work through transformation, delivering business as usual and working through changes in employment; the cut in Government National funding; demonstrating, communicating and educating the complex Council budgets to the general public; that  Council Tax increases cover a large proportion of spend but do not cover the increase in costs and demand in services; the welcome monthly budget update and the responsibility of all Councillors to understand budget monitoring in preparation for budget setting; the tracking and monitoring of the 17 key areas; budget setting for Adult Social and Children Social Care; the percentage of useable reserves used and the review of the complete reserves position; budget setting including new ways of supporting children placements outside of the private equity market;  the risk to cutting services and repairs; the work of the MTFP Board including mitigations and actions being taken; the significant reduction in school maintenance and associated Government funding issues preventing work being actioned; the clarity of the expectation of the Scrutiny Committee to review budgets; the decline in Local Authority funding and the need for urgent action from the Government to address the wider system; the my life, my future programme, including the delayed and guaranteed savings and the challenges and risks faced;  and the clear governance process to monitor the  progress and achievements of the programme.

The Chief Executive, Duncan Sharkey, highlighted the Local Authority wider system funding issue, and and that if the current situation continued more Councils, as a result of not being able to balance budgets, could be issuing section 114 notices; and further explained the importance of highlighting the actions needed now,  to lay quality plans to protect local services.

The Executive proceeded to vote on the recommendations, which were agreed unanimously.

The Executive:

a.        Noted the forecast overspend of £26.1m (as at month 4) for the year and the key risks, future issues and opportunities.

b.        Requested that each Scrutiny Committees urgently reviews the budget monitoring position for their areas of responsibility and that the relevant Executive members set out the reasons behind the current forecasts and the actions being taken to address the position. 

c.        Approved that member briefings are set to ensure every councillor has the opportunity to fully understand the current financial situation and the challenges facing the council going forward.

d.        Received a monthly update on the financial position and actions being taken to address it. 

ALTERNATIVE OPTIONS CONSIDERED: As set out in the officer report

REASON FOR DECISION: As set out in the officer report