Agenda item

To consider a report from the Head of Democratic Services providing the Board with an update on the in year financial position in respect of the Revenue Budget and the Housing Revenue Account (HRA).

The Board received a report from the Head of Democratic Services providing the Board with an update on the in year financial position in respect of the Revenue Budget and the Housing Revenue Account (HRA), in line with the Board’s remit.

In attendance for this item were:

·  Cllr Debra Coupar, Executive Member for Resources

·  Victoria Bradshaw, Chief Officer – Financial Services

·  Mariana Pexton, Director of Strategy and Resources

The report related to Month 7 of the financial year, October, and is the latest update on the in year budget considered by the Executive Board throughout the financial year.

The Chief Officer – Financial Services provided an initial overview of the paper by way of introduction to board members.

The projected overspend on the revenue budget was £35.3m. This is a worsening position which reflects ongoing pressure on external residential placements within the Children and Families directorate in addition to transport costs linked to Education, Health Care Plans.

In terms of other directorates, they are also projecting overspend positions with the exception of City Development. These are being managed within  directorates, but attention was drawn to Adult Social Care budget pressures the impact of which will depend on demand through the current Winter months.

Tighter budget controls have been introduced since Christmas with restrictions on recruitment and non-essential spend as well as use of agency staff and overtime and the use of purchasing cards and these reflect a strengthening of already existing controls in place throughout the financial year, all aimed at managing the budget pressures.

In addition to this, the board were informed of projected overspends in the Housing Revenue Account (HRA) of £1.3m and Dedicated Schools Grant (DSG) of £900,000.

In response to comments and questions from the Board, discussion included the following:

·  Members noted that Month 7 position is now over 8 weeks in the past and given the worsening position of the budget particularly within Children and Families asked if there were any updates available on the revenue budget or any worst case scenarios of the outturn position for 2023/24. The Board heard that there is increasing pressure on the number of children in care particularly external placements but as yet the position is not finalised, and this will be reported to the February Executive Board in line with the agreed process.

·  The Board wanted to know more about budget monitoring processes. In response the Board were informed that every month the financial service business partners meet with budget holders to undertake a Red, Amber, Green (RAG) assessment of budget risks. This identifies red, where there are demand pressures and budgetary volatility, amber where there is demand pressure and volatility but less so and green where pressures relate mainly to staffing and fluctuate less. This monthly position is then reported to the internal finance group and financial challenge group and feeds through to the Corporate Leadership Team to provide an updated position. This process identifies mitigation measures to manage budget pressure and inform the savings plans and the robust monitoring of those.

·  The Board sought reassurance around the HRA and any plans to address the £1.3m overspend through repairs on council owned housing stock. The Board heard that measures are being considered to reduce the HRA capital programme, in order to balance the budget and that more detail would be provided to the Board on this.

·  The Board asked for more detail on the pressures being faced within Children Looked After (CLA) services and welcomed the plans to increase in house provision through additional small group living homes, board members asked how many new homes might be provided and any cost associated. In response members heard that the key aim is to develop a mixed economy for CLA placements to identify those that can return home, would be suitable for a fostering placement and those in external placement who would benefit from returning to being cared for in Leeds or in the region. A key priority of the small group living approach is to identify the children in external residential placements who would benefit from living in this accommodation and safely move them to that accommodation type, in total there are 8 such homes planned.

·  In response to a query about potential future pressures within CLA budgets if demand and cost continues to grow, members heard that if that happened then action would need to be taken to address that in the next financial year although it was noted that there are significant plans in place to address pressures and ensure budget sustainability.

·  The Board also heard about the national nature of pressures on CLA budgets and that that budgetary experience in Leeds is replicated in most other local authority areas. In Leeds the increase in demand is actually lower than in statistical neighbours and that the main issue is the cost of external placements as opposed to being driven by demand. There are also plans to develop an adolescent service within Children and Families that could divert some young people away from care into other alternative support services, this approach is currently being developed.

·  In response to a question about sufficiency of reserves the Board heard about different classification of reserves. There are general balances which is set aside for risks within the budget if they materialised, there are general reserves as well which are established corporately to ensure financial resilience (such as strategic contingency) and there are also directorate reserves which are established to enable investment in new schemes or initiatives or to facilitate external grant usage.

·  The Executive Board Member for Resources, in summary, highlighted the monthly financial monitoring process carried out in Leeds, emphasising that this is not a requirement but is done to ensure transparency with the public and elected members. Commenting on the current position of a projected overspend of £35.3m it was noted that there is ongoing lobbying to secure additional funding from Government to meet the budget pressures in children and families that are being felt in all local authorities. A comparison was made with past treatment of budgetary pressures in Adult Social Care where the Government responded to lobbying and made additional funding available through grants to local authorities.

Resolved:

Members noted the updated financial position for 2023/24 in respect of the Revenue Budget and Housing Revenue Account.