Agenda item

To consider a report from the Head of Democratic Services providing the Board with the latest update on the in year financial position in respect of the Revenue Budget and the Housing Revenue Account (HRA) and the financial outturn position for the financial year ended 31 March 2024 (financial year 2023/24).

(Please note Appendix 2 to follow as a supplementary item)

The Board considered a report from the Head of Democratic Services providing the latest update on the in-year financial position in respect of the Revenue Budget and the Housing Revenue Account (HRA) and the financial outturn position for the financial year ended 31 March 2024 (financial year 2023/24).

In attendance for this item were:

·  Cllr Debra Coupar, Executive Member for Resources

·  Mariana Pexton, Director of Strategy and Resources

·  Richard Ellis, Deputy Chief Officer Financial Services

To introduce the report the Board received a presentation from the Deputy Chief Officer Financial Services covering the following key points on the 2023/24 Outturn Report:

·  The authority achieved a Balanced Position: Directorate Overspend £44.7m funded through WYCA £17.7m; £5.2m Merrion House reserve; £17.8m debt savings; £3.3m Earmarked reserves.

•  There were budgeted Action Plans of £58.6m of which £45.7m were delivered.

•  Additional £7.2m of budget action plans identified in year of which £4.9m were delivered.

•  Therefore, the total saving realised was £50.6m.

•  Housing Revenue Account had a £0.9m underspend.

•  DSG (Dedicated Schools Grant) had a £2.6m overspend.

•  On reserve balances these reduce by £44.5m from £219.1m to £174.6m, the general reserve increased by £3m to £36.2m.

•  Council Tax collection rates were 93.94% in 2023/24 (£442m collected).

•  Business Rates collection rates were 97.03% (£339.9m collected)

In respect of the in-year Quarter 1 financial position the following key points were covered:

·  Projected Overspend of £19.9m.

·  Adults and Health £7.97m overspend based on Demand pressures of £16.4m.

·  Children and Families £17.9m overspend of which external residential placements accounts for £13.9m.

·  Budgeted Action Plans of £63.9m of which £60.37m projected to be delivered.

·  Further savings of £31.96m identified with a projected £17.23m to be delivered.

·  Given budget pressure being experienced particularly in demand led services the Council is undertaking cross-directorate work to support and challenge the highest cost/spend areas and directorate action plans are being developed to address budget pressures.

·  In addition, no travel is being undertaken unless it is required for the essential delivery of a service or in very exceptional circumstances and with exceptions e.g. social work roles, a recruitment freeze is now in place.

·  Also, tighter controls are in place in respect of agency and overtime, and all spend that is not critical for the delivery of a service is not to be incurred. To assist in delivery of this all purchase orders need to be approved and no spend is to be incurred on Purchase Cards unless this is critical to the delivery of the service.

·  Council Tax collection rates are currently at 18.25%.

·  Business Rates Collection rates are currently at 21.37%.

·  Dedicated Schools Grant has a £4.641m projected deficit.

·  Housing Revenue Account is projecting a balanced budget position.

·  Treasury Management Prudential Indicators - actual gross and net debt for the Council in 2024/25 remain within both the Operational Boundary and the Authorised Limit set by Council.

Responding to comments and questions from board members the following points were discussed:

·  The Board requested more detail in terms of comparison on financial indicators with other core cities. Specifically on debt Leeds has a higher level than other core cities though it was noted that straight comparison can be difficult, Leeds is the second largest local authority in the country and operates a Housing Revenue Account that has associated debt, other authorities do not have any housing related debt. It was also noted that Leeds is performing well when debt is factored against overall assets.

·  Members requested a briefing document on financial indicators to be shared with members. The Executive Board Member for Resources added that a session can be developed on finance for elected members and can be developed through colleagues in Democratic Services.

·  Members asked about council tax collection rates, in response the board were informed that there is now a full complement of staff targeted at collecting debt and that direct debit numbers have increased which should improve the current collection position.

·  In response to a query about the 2023/24 outturn and adult social care budget action plans and reserves. It was agreed that this information would be provided outside of the meeting.

·  On overspending both in the last financial year and projected in year, members asked about the ongoing pressures in Children’s Services which has seen significant overspending in recent years particularly on transport and external Children Looked After (CLA) placements. In response it was explained that actions are ongoing to mitigate those pressures but have been subject to delay linked to both internal and external factors. The pressures on CLA budgets linked to demand are a concern but Leeds is doing well in terms of prevention measures to manage demand and compares well with other local authorities both in overall CLA numbers and external placements. It was also noted that the cost of external placements has increased significantly in recent years for all authorities, due to increased costs within the private sector, as opposed to the numbers overall going up. Small group living arrangements are a key measure being introduced to reduce external placements and deliver improved care for children and young people who live in them.

·  The Board acknowledged that Leeds has an open and transparent approach to monitoring financial health and budgetary matters with financial reporting considered at each Executive Board in the municipal year, which is not the case in many local authorities.

·  The Board also noted that the current overspend figure is a projection and is subject to mitigation measures that are currently underway, so it is possible that the projections will change as the financial year progresses.

·  The Board asked about outsourcing in legal services and the use of locums as opposed to having more FTE positions within the service. It was agreed that this would be followed up with a briefing note or discussion to provide details. A key issue here is problems with recruitment and retention.

·  Members asked about budget planning within CLA budgets, and the problems faced in accurately projecting what are demand led budgets. In response the Board heard that the authority is always looking at ways to improve financial management and modelling however, the budgets are very much demand led and open to impacts from external factors in wider society. The Board were also informed that Executive Board considered and approved the CLA Sufficiency Strategy at the June Executive Board which set out the approach being taken to managing CLA placements in the city. The Children and Families Scrutiny Board has also recently considered an item on the same strategy. In addition, the difficulty of budget forecasting is illustrated by the possibility of high-cost care packages being required at short notice and that are very difficult to predict.

·  Responding to a question on transport costs for children and young people it was explained that demand has been a key factor with EHCP volumes increasing exponentially and therefore associated transport costs also increasing.

·  The Board acknowledged that within the existing budget envelope there are competing statutory requirements and demands such as those held by the Section 151 Officer around budgetary robustness and sustainability and those held by the Director of Children and Families around sufficiency of care for Children Looked After in the city.

·  The Board asked about lobbying of the new Government on the possibility of additional funding for Children Looked After. It was confirmed that lobbying is ongoing through the various professional organisations, such as CIPFA and ADCS, where it is possible to address sector wide issues to make the case for additional funding. It was noted that the existing financial envelope available in Leeds was set out by the previous Government.

·  The Board acknowledged the hard work being done by officers in all directorates on financial management and the difficult circumstances being faced in recent years.

·  Returning to the development of small group living accommodation for Children Looked After the Board heard that there had been unexpected delays to their implementation some of which are internal and are being worked on, but others are outside of the authority’s control such as Ofsted registration which can take as long as 20 weeks or more to secure, this is being worked on by the Director of Children and Families in conjunction with other Directors regionally and nationally. There are obviously significant risks of placing children in unregistered homes so being able to speed up that process is an important area of work that is external to the Council.

·  Responding to a question on reserves it was explained that ear marked reserves are used for specific purposes, and it would be expected that these would fluctuate throughout a financial year. On the general reserve a calculation, as agreed with the council’s external auditors,  is carried out, taking account of risk and financial impact to determine a level of resource that is required for the general reserve, the current position of £36m in the general reserve is consistent with that calculation. The Board noted plans to contribute £3m in each year of the Medium Term Financial Strategy to enhance budgetary robustness.

Resolved - The Board noted the content of the report and appendices in line with the wider Board remit linked to financial sustainability and long-term budgetary robustness.