Subject:
Targeted Budget Management (TBM) 2024/25
Month 2 (May) and Council Productivity Plan
Response
Date of meeting:
Thursday, 18 July 2024
Report
of:
Cabinet Member for Finance &
Regeneration
Contact Officer:
Name: Chief Finance Officer
Tel: 01273 291233
Email: nigel.manvell@brighton-hove.gov.uk
Ward(s) affected: (All Wards)
Key Decision: Yes
Reason(s) Key: Expenditure which is, or the making of savings which are,
significant having regard to the expenditure of the City
Council’s budget, namely above £1,000,000 and Is
significant in terms of its effects on communities living or
working in an area comprising two or more electoral divisions
(wards).
For general release
1.1
The Targeted Budget Monitoring
(TBM) report is a key component of the council’s overall
performance monitoring and control framework. This report sets out
an early indication of forecast risks as at Month 2 on the
council’s revenue and capital budgets for the financial year
2024/25. Effective financial management is a core component of
providing a well-run council, a key priority within the Council
Plan that demonstrates that the council manages within its finite
resources and optimizes the use of those resources.
1.2
The forecast outturn
‘risk’ for 2024/25 at this early stage is a
£10.137m overspend on the General Fund revenue budget. This
includes a forecast overspend risk of £1.600m on the NHS
managed Section 75 services. Forecasts at this stage of the year
are based on early trends and are more difficult to predict with
high accuracy, particularly in relation to those areas subject to
seasonal variation.
1.3
A significant level of savings is also shown to be at risk with the
report indicating that £6.423m (27%) of the substantial
savings package in 2024/25 of £23.627m is potentially at
risk.
1.4
It is important to note that early projections in each financial
year are likely to indicate higher forecast risks as there are
significant underlying demand pressures to be managed down, pay
awards currently tending to be above budget assumptions, and there
are large annual savings targets required to balance the budget.
Implementing and addressing these risks is often complex and can
have varying lead-in times. There is also limited trend data
available at this stage and very limited time to react to emerging
information in order to develop recovery measures. While a high
forecast risk may give cause for concern, it conveys important
information to decision-makers, enhances accountability for
managing risk, and ensures that the council is transparent and open
about the level of potential risk it will need to manage down to
enable:
·
Councillors and
residents to be aware of the financial challenge and that managing
this can have impacts on some services as they develop recovery
plans and actions;
·
Councillors and
officers to be given advance warning that consideration to more
serious council-wide measures such as vacancy freezes or spending
restrictions may need to be given if succeeding months do not show
improvement;
·
Councillors and
officers to consider whether or not in-year budgetary reductions,
i.e. further permanent savings measures, may be necessary if
succeeding months do not show steady improvement, potentially
requiring full Council approval subject to the scale and impact on
the budget and policy framework.
1.5
The ‘forecast risk’ at Month 2 is significant and will
require exploration of a wide range of options to manage this
forecast risk. It is accepted that Budget Managers across the
authority will tend toward prudence in forecasting until the data
and trends provide more certainty which is a natural (and safer)
tendency. However, making broad assumptions about any
‘over-prudence’ is not sensible or practicable. It is
also the case that the council’s annual budget is set in an
increasingly volatile and uncertain environment, particularly
concerning inflation, demands, economic conditions and funding
certainty. However, without being transparent about the potential
risk, based on current spending and activity levels, the council
could give the impression that all budgets and savings plans are on
track. This is not currently the case for a wide range of reasons
and factors set out in the detail of the report and there is a lot
of work to be done to address the forecast risk. Potential measures
that will be explored to mitigate forecast risks will therefore
include:
·
Implementation
and potential further tightening of normal financial management
actions across all areas under pressure including vacancy controls
and spending prioritisation;
·
Continued
development and firming up of alternative recovery plans and
actions in areas where forecast risks have emerged or are emerging.
This can be managed at individual service levels right up to
directorate level, or even at a council-wide level;
·
Consideration of
(and potential consultation on) alternative options where an agreed
saving is found to be undeliverable (in whole or in part) or is
delayed for unavoidable reasons;
·
Exploration of
alternative funding sources or bids, or alternative use of
ring-fenced funds where this is possible;
·
Use
of any available ‘risk provisions’ or unexpected
one-off resources to mitigate the position in the short term. The
latter cannot normally be estimated and is only known when and if
it arises;
·
Halting or
slowing revenue and/or capital spend to alleviate in-year pressures
in the short term (but will normally result in building up future
pressures unless projects/services are ultimately stopped or
reduced);
·
As
noted earlier, implementation of considerably more severe
recruitment and spending controls including freezes.
All of the above can have impacts on
service delivery, availability and responsiveness which is also an
important risk to understand and consider when addressing in-year
financial pressures.
1.6
Elsewhere, this report also includes the council’s response
to the government’s request for local authorities to submit a
Productivity Plan by 19 July 2024 issued by Simon Hoare MP and
Minister for Local Government. The letter asks for evidence of how
the council aims to improve productivity and includes four key
areas of questioning as follows:
i)
How have you transformed the way you design and deliver
services to make better use of resources?
ii)
How you plan to take advantage of technology and make
better use of data to improve decision making, service design and
use of resources?
iii)
Your plans to reduce ‘wasteful spend’ within
your organisation and systems.
iv)
The barriers preventing progress that the Government can
help reduce or remove.
1.7
The council’s Productivity Plan response is at Appendix 8.
The plan sets out the council’s approach to improving value
for money including its plans for further organisational redesign,
its digital and data development strategy, and modernisation and
improvement programmes across key areas of service delivery. The
plan is in summarised form to meet the government’s
requirement to keep responses to 3 to 4 pages.
2
Recommendations
2.1
Cabinet notes the forecast risk position for the General Fund,
which indicates a potential forecast overspend risk of
£10.137m.
2.2
Cabinet notes the forecast outturn includes a forecast overspend
risk of £1.600m on the NHS managed Section 75 services.
2.3
Cabinet notes the forecast overspend risk for the separate Housing
Revenue Account (HRA), which is an underspend of
£0.020m.
2.4
Cabinet notes the forecast overspend risk for the ring-fenced
Dedicated Schools Grant, which is an overspend of
£0.456m.
2.5
Cabinet notes the forecast position on the Capital Programme which
is an underspend variance of £0.339m.
2.7
Cabinet approves the new capital schemes requested in Appendix
6.
2.8
Cabinet notes the Treasury Management Update as set out in Appendix
7.
2.9
Cabinet notes the council’s Productivity Plan response at
Appendix 8.
3
Context and background
information
Targeted Budget Management (TBM)
Reporting Framework
3.1
That The TBM framework focuses on
identifying and managing financial risks on a regular basis
throughout the year. This is applied at all levels of the
organisation from Budget Managers through to Cabinet. Services
monitor their TBM position on a monthly or quarterly basis
depending on the size, complexity or risks apparent within a budget
area. TBM therefore operates on a risk-based approach, paying
particular attention to mitigation of growing cost pressures,
demands or overspending through effective financial recovery
planning together with more regular monitoring of high risk
demand-led areas as detailed below.
i)
General Fund Revenue Budget Performance
ii)
Housing Revenue Account (HRA) Performance
iii)
Dedicated Schools Grant (DSG) Performance
iv)
NHS Controlled S75 Partnership Performance
v)
Capital Investment Programme Performance
vi)
Capital Programme Changes
vii)
Implications for the Medium Term Financial Strategy
(MTFS)
viii)
Comments of the Chief Finance Officer (statutory S151
officer)
3.3
The report may also include a Treasury Management update from time
to time. This is required to comply with the updated Treasury
Management Code which requires a minimum of quarterly reporting.
The committee already receives mid-year and end-of-year reviews and
therefore two additional interim reports will be provided via an
appropriate TBM report to ensure compliance with the new reporting
requirements. In this respect, a Treasury Management update is
provided in this report at Appendix 7.
4
General Fund Revenue Budget Performance (Appendix 3)
4.1
The table below shows the
forecast outturn for council-controlled revenue budgets within the
General Fund. These are budgets under the direct control and
management of the Corporate Leadership Team. More detailed
explanation of the variances can be found in Appendix
3.
|
Provisional
|
|
2024/25
|
Forecast
|
Forecast
|
Forecast
|
|
Outturn
|
|
Budget
|
Outturn
|
Variance
|
Variance
|
|
2023/24
|
|
Month
2
|
Month
2
|
Month
2
|
Month
2
|
|
£'000
|
Directorate
|
£'000
|
£'000
|
£'000
|
%
|
|
(1,564)
|
Families,
Children & Learning
|
69,727
|
70,167
|
440
|
0.6%
|
|
937
|
Housing, Care
& Wellbeing
|
125,847
|
130,061
|
4,214
|
3.3%
|
|
(258)
|
City
Services
|
47,227
|
50,865
|
3,638
|
7.7%
|
|
(729)
|
Corporate
Services
|
34,175
|
34,260
|
85
|
0.2%
|
|
(1,614)
|
Sub
Total
|
276,976
|
285,353
|
8,377
|
3.0%
|
|
(654)
|
Corporately-held
Budgets
|
(18,861)
|
(17,101)
|
1,760
|
9.3%
|
|
(2,268)
|
Total General
Fund
|
258,115
|
268,252
|
10,137
|
3.9%
|
4.2
The
General Fund includes general council services, corporate budgets
and central support services. Corporate Budgets
include centrally held provisions and budgets (e.g. insurance) as
well as some cross-cutting value for money savings targets. Note
that General Fund services are accounted for separately to the
Housing Revenue Account (Council Housing). Note also that although
part of the General Fund, financial information for the Dedicated
Schools Grant is shown separately as this is ring-fenced to
education provision (i.e. Schools).
4.3
The chart below shows the monthly forecast variances for 2024/25
and the previous three years for comparative purposes. This
indicates that forecast risk early in the year has been higher in
recent years. This is partly due to:
·
Pay
awards coming in higher than the budget assumptions due to
persistent inflation;
·
The
requirement to deliver successive, large savings programmes which
becomes increasingly challenging over time;
·
Continuing
economic conditions which are impacting external provider costs,
many income sources (demand), and recruitment costs and which is
difficult to predict with accuracy.
Last year, 2023/24, was also
exceptional in terms of the availability of one-off resources of
over £10m across the year, which significantly aided in
addressing forecast risks.
Demand-led Budgets
|
Provisional
|
|
2024/25
|
Forecast
|
Forecast
|
Forecast
|
|
Outturn
|
|
Budget
|
Outturn
|
Variance
|
Variance
|
|
2023/24
|
|
Month
2
|
Month
2
|
Month
2
|
Month
2
|
|
£'000
|
Demand-led
Budget
|
£'000
|
£'000
|
£'000
|
%
|
|
(1,201)
|
Child Agency
& In House Placements
|
27,864
|
27,303
|
(561)
|
-2.0%
|
|
430
|
Community
Care
|
79,719
|
82,140
|
2,421
|
3.0%
|
|
1,001
|
Temporary
Accommodation
|
10,655
|
12,777
|
2,122
|
19.9%
|
|
230
|
Total Demand-led
Budget
|
118,238
|
122,220
|
3,982
|
3.4%
|
The chart below shows the monthly forecast variances on the
demand-led budgets for 2024/25.
TBM Focus Areas
4.5
There are clearly
ongoing pressures across most areas of the council, particularly
front-line, demand-led areas which is a clear indicator of the
inflationary and demand pressures driven by current economic
conditions. Key areas of pressures are outlined below:
4.6
Children’s Services: as follows: The current projected
position identifies potentially significant cost pressures:
£0.322m on Home to School transport and £0.301m on In
House Childrens Disability Provision. These together with
underspends on Children’s Placements of (£0.561m) and
other overspends of £0.378m result in a forecast overspend of
£0.440m as at Month 2. Key drivers of the projected position
are as follows:
·
Home to School
Transport:There are several
factors contributing to overspends in Home to School Transport.
These include increased demand on the service (both at 5-16 ages,
and 16 up until 19th birthday), increased numbers of
children requiring single occupancy journeys, lack of local SEND
school sufficiency, and increased numbers of routes required to
accommodate individual post 16 learners’ timetables.
Market forces
within SEND transport are also contributing to overspend in Home to
School Transport. The service is being increasingly impacted by
local driver, vehicle passenger assistant, vehicle shortages and
increased running costs. There is also a lack of competition in the
transport market, particularly minibus providers, which is pushing
up contract prices still further. There is increasingly less
capacity in the local system to meet demand, not just in the
numbers of children requiring transport but the nature of the
transport requirements. The escalation of Home to School Transport
costs is a national and regional issue and options are being
explored to change the delivery model to ensure the long term
sustainability of the service in the context of the council’s
limited finances.
·
In-house
Children’s Disability Provision: Part of the
directorate’s savings plan for 2024/25 was to re-commission
Tudor House to facilitate savings from existing external
residential disability placements. Due to the details with this
scheme and complications regarding building adaptations this saving
of £0.504m is now being identified as unachievable in
2024/25. However, Drove Road is providing full time residential
provision for one young person which is being fully funded by
Health. This arrangement is continuing into 2024 and it is
anticipated that this will result in an underspend on the Drove
Road budget of approximately (£0.200m). Recovery measures are
being explored to mitigate the savings risk within the division
including submission of a bid for funding to access alternative
premises to relieve pressures.
Schools Budgets
For 2024/25 draft budget plans showed
46 schools requiring Licensed Deficits which totalled
£10.800m. The latest position now shows 35 schools requiring
Licensed Deficits totalling £7.600m; with net School Surplus
Balances of only £0.281m there are insufficient balances to
license these deficits within the scheme for financing schools. The
CFO has advised that a reserve will need to be identified against
which this potential deficit can be set. Work is ongoing with
schools to help and advise them with regard to improving their
financial position including the use of the School Resource
Management Adviser (SRMA) service which provides peer reviews by
sector-based experts.
The early forecast for the 2024/25
central Dedicated Schools Grant is an overspend of £0.456m.
It is also important to note that the central DSG budget for
2024/25 includes the one-off funding from the underspend of
£1.275m carried forward from 2023/24.
4.7
Adults Services:
The service faces
significant challenges in 2024/25 in mitigating the risks arising
from increasing demands from client needs, supporting more people
to be discharged from hospital when they are ready and maintaining
a resilient local provider market. It is to be noted that this is
after applying service pressure funding of £10.302m in
2024/25 which has been used to fund budget pressures resulting from
the increased complexity and costs of care.
The 2024/25 savings plan for HASC totals
£4.712m. There are continued actions focussing on attempting
to manage demand on and costs of community care placements across
Assessment Services and making the most efficient use of available
funds.
The
HASC directorate has a Modernisation Programme which aims to
implement a consistent strengths-based approach across key work
streams, ensuring robust pathways are in place, developing a
community reablement offer and re-designing the front door service.
Currently the Health & Social Care system is under considerable
pressure, and this is generating additional costs for the council
due to:
·
Pressures on the system due to short-term grant monies
and an unresolved
national, long-term funding solution;
·
Significant pressures on the acute hospital resulting in
increased costs to support timely discharge into residential,
nursing and home care;
·
Pressures on NHS outreach and other preventative services
including community nursing (known as Integrated Primary Care
Teams);
·
Workforce capacity challenges across adult social care
services.
The funding of all care packages is scrutinised for
Value for Money, ensuring that eligible needs are met in the most
cost-effective manner which will not always meet people’s
aspirations. Established safeguards are in place to provide
assurance within this process.
In respect of financial recovery and
the ongoing management of Community Care Budget pressures, a
monthly savings and efficiencies meeting provides rigorous
monitoring and oversight of the Adult Social Care & Health
savings progress. Additionally, each month the top ten spends on
placements and packages of care are reviewed to ensure immediate
remedial action is undertaken to look at options and, wherever
possible, reduce the cost of care whilst meeting assessed need.
Negotiations are also underway with Sussex partnership NHS
Foundation Trust regarding addressing the current high spending
commitment within the Mental Health s75 arrangements.
4.8
Housing Services and
Temporary Accommodation (TA): In England and Wales, there are now more
households in Temporary Accommodation (112,660) than ever before; a
record that has been exceeded in each of the last three reporting
quarters. Brighton & Hove had succeeded in keeping numbers
relatively stable, but since December 2023 there has been a steady
increase. During 2023/24, this increase in Brighton & Hove was
3%, compared to 10% nationally.
As well as demand pressures there are
also price pressures, with the average price of nightly
accommodation increasing by 12% since 2023/24. As a result of these
pressures, the service is forecast to overspend by £2.488m
and £1.146m of savings are at risk of not being met. The
overspend is off-set by financial recovery measures of
£0.320m with further actions being explored.
A TA Reduction Plan has been developed,
setting out a range of activities being undertaken to either reduce
the number of households entering into TA; assist households to
move on from TA, or reduce the cost of the TA in use. As a broad
overview, these actions can be categorised as:
·
Increasing the
rate of ‘reconnections’;
·
Increasing the
rate of ‘move-on’s’;
·
Increasing new
supply (including council owned supply);
·
Conversion of
licences to tenancies;
·
Development of
alternative housing options;
·
Launching a
campaign to attract more private landlords (including targeted
incentives);
·
Piloting a scheme
separating leasing from management;
·
Improvements to
void turnaround;
·
Improvement of
rent collection.
Weekly meetings involving senior
managers within both Housing and Finance have been established to
track the effectiveness of these measures. The overspend relates to
the following elements:
Emergency nightly booked (Spot
Purchased) accommodation is forecast to overspend by
£1.629m. As at 16/6/24, 263 households were housed in nightly
booked accommodation which is 79 higher than budgets allow and the
forecast assumes this will increase to 320 units of nighty booked
accommodation by 31/3/25. Additionally, the price of nightly booked
accommodation has seen a steep increase of around 12% compared to
prices in 2023/24. The market prices do change with demand and
seasons and this will be monitored closely to see if this average
price improves throughout the year.
The underlying trend is that the number
of households using nightly booked accommodation is increasing due
to:
·
Increased demand:
There was a 20% increase in homelessness presentations during
2023/24, and so far in 2024/25 we have experienced a 30% increase
for the same in the previous year. Although not all these
households will end up in accommodation, around 55% do end up
meeting the statutory threshold.
·
Changes to the
private rented sector: There has been a significant change in
the private rented sector over the past year, with many landlords
exiting the market. This market disruption has been caused by
cumulative external events, which are outside the control of the
local authority, such as: increases in landlord taxes, increase in
mortgage rates; threat of impending legislation. This has a double
impact on homelessness. End of a Private Rented tenancy is the main
reason for homeless, but in the last two reporting quarters, this
has markedly increased from 34% of all new cases to 58%. The
Private Rented Sector is also the greatest means of preventing
homelessness.
Booked Accommodation: This
budget is forecast to overspend by £0.741m. The budget
assumed that there would be an average of 261 units of block booked
accommodation for the year 2024/25. The service currently uses 340
properties and this forecast assumes this will continue for the
remainer of the year due to the current level of demand on the
service and the limited opportunities for move-on to social housing
and the private rented sector. The council is considering a
pilot (subject to Cabinet approval) that would separate the leasing
of the property from its management and result in potential annual
savings of between £0.250m-£0.500m, as well as
improving the service to residents.
Private Sector Leased (PSL) TA
budget is forecast to underspend by (£0.289m). PSL’s
are the best form of TA, both in in terms of cost and quality. In
2023/24 the number of landlords exiting this market, contributed to
a 7% reduction in PSL properties. So far in 2024/25, there has been
a further 8% reduction. This forecast assumes PSL TA properties
will reduce by 62 properties this year from a total of 617 to 555
homes. This is based on prior year trends but also the number of
leases (over 50% of stock) coming to an end this financial year.
The new leases are also commanding a higher rate and shorter terms.
This is part of the reason for the increased numbers in nightly
booked spot purchased accommodation identified above. Future
forecasts will depend on the costs associated with any new
contracts agreed with landlords as and when new contracts are
agreed.
The service is continuing to look for
measures to reduce the number of households accommodated, looking
for innovative and different methods of provision and move-on
options as part of the TA Reduction Action Plan, the broad themes
of which have been set out above. A weekly Financial Recovery
meeting is in place to keep all options under review.
The Housing Needs Service also
completed a Service Redesign in May 2024. As well as achieving an
annual saving of £0.285m, this now provides a far greater
focus on homelessness prevention. The service is currently in a
transitional period, where roles created through the Redesign are
recruited to. It is anticipated this would complete by the end of
July.
Directorate activities and services
were heavily impacted by COVID-19 in previous years and the
services are starting to see a steady return, in line with city
recovery. The savings targets can only be achieved if demand
exceeds pre-COVID levels for key income areas such as paid parking,
commercial activities and Planning & Building Control fee
incomes. In-year pressures are being mitigated by reductions in
supplies & services and holding vacant posts to reduce staffing
costs, but this does affect service delivery and has a visible
impact on the city. The overall position for City Services is a net
£3.638m forecast overspend risk at Month 2.
4.10
Data on income trends must continue to be carefully analysed with
many income forecasts needing to be seasonally adjusted to reflect
historic patterns and traditionally higher incomes over summer
months (e.g. parking). Data for the early months of each financial
year needs to be treated with particular caution and a key issue is
that complete monthly data is often only available two to three
weeks after each month-end. However, current trends are concerning
and therefore financial recovery actions will be explored over
coming weeks to potentially mitigate income pressures as far as
possible. This can be through a combination of measures to try and
boost income alongside measures to reduce the cost of services.
However, the latter requires a balance to be struck in relation to
income generating areas to ensure that a net financial benefit
remains if income is likely to be further impacted by cost
reduction measures, for example, holding vacancies.
4.11
Corporately-held
Budgets: There is a forecast overspend of £1.760m
on corporately-held budgets. Of this £1.300 m relates to the
estimated additional cost of the 2024/25 pay award in excess of the
amount provided in the budget.
There is also a pressure of
£0.350m on Insurance budgets caused by an increase in the
value of claims paid.
The corporate ‘Organisational
Redesign’ saving of £2.475m is also held in this area.
At present the saving is at risk although the lead-in time for
delivery was always expected to take some months. In lieu of the
lead-in time for delivery council-wide vacancy management and some
spending controls will remain in place to mitigate the savings
risk.
Monitoring Savings
4.12
The savings package
approved by full Council to support the revenue budget position in
2024/25 was £23.627m following directly on from a
£14.173m savings package in 2023/24 and 14 years of
substantial savings packages totalling over £232m since
government grant reductions commenced in 2010, and which have been
necessary to enable cost and demand increases to be funded
alongside managing the reductions in central government grant
funding.
4.13
Appendix 3 provides a
summary of savings in each directorate and indicates in total what
has been achieved, what has been offset by in year pressures and
the net position of unachieved savings. Appendix 4 summarises the
position across all directorates and presents the entire savings
programme. The graph below provides a summary of the position as at
Month 2 and shows that gross savings of £17.607m have been
achieved but that inflationary pressures (exceptional price
increases) have reduced this by £0.403m. Including other
unachievable savings of £6.020m, this means that a total of
£6.423m (27%) is forecast to be unachieved in 2024/25.
5
Housing Revenue Account
Performance (Appendix 3)
5.1
The Housing Revenue
Account (HRA) is a separate ring-fenced account which covers income
and expenditure related to the management and operation of the
council’s housing stock. The majority of expenditure is
funded by Council Tenants’ rents and housing benefit (rent
rebates). The forecast outturn is a minor underspend of
£0.020m, this position includes variances within specific
service areas, details of which are provided below. An underspend
in the HRA will result in a contribution to general reserves at
year end.
HRA Risks
5.2
The HRA is entering into a period of significant uncertainty
regarding the financial position, there are major risks that need
to be addressed and monitored to ensure that the position remains
stable. These risks include but are not limited to:
·
Health &
Safety compliance
·
Building Safety
compliance
·
Disrepair
claims
·
Rent
arrears and collection rate
·
Final
pay award settlement
5.3
The HRA will continue to review spend to try to maintain the
current financial position. Any
variations will be reported to future Cabinet meetings.
6
Dedicated Schools Grant
Performance (Appendix 3)
6.1
The Dedicated Schools
Grant (DSG) is a ring-fenced grant within the General Fund which
can only be used to fund expenditure on the Schools’ Budget.
The Schools Budget includes elements for a range of services
provided on an authority-wide basis including Early Years education
provided by the Private, Voluntary and Independent (PVI) sector,
and the Individual Schools Budget (ISB) which is divided into a
budget share for each maintained school. The forecast outturn
is currently an overspend of £0.456m and more details are
provided in Appendix 3. Under the Schools Finance Regulations any
underspend or overspend must be carried forward within the
Schools’ Budget in future years.
7
NHS Managed S75 Partnership
Performance (Appendix 3)
7.1
The NHS Trust-managed
Section 75 Services represent those services for which local NHS
Trusts act as the Host Provider under Section 75 Agreements.
Services are managed by Sussex Partnership Foundation Trust (SPFT)
and include health and social care services for Adult Mental Health
and Memory and Cognitive Support Services. The provisional outturn
is an overspend of £1.600m and more details are provided in
Appendix 3.
8
Capital Programme Performance
and Changes
8.1
The table below provides a
summary of capital programme performance by Directorate and shows
that there is an overall underspend of £0.339m which is
detailed in Appendix 5.
|
Forecast
Variance Month 0
|
|
Reported
Budget Month 2
|
Provisional
Outturn Month 2
|
Provisional
Variance Month 2
|
Provisional
Variance Month 2
|
|
£'000
|
Directorate
|
£'000
|
£'000
|
£'000
|
%
|
|
0
|
Families,
Children & Learning
|
17,005
|
17,005
|
0
|
0.0%
|
|
0
|
Housing,
Care & Wellbeing
|
9,306
|
9,306
|
0
|
0.0%
|
|
0
|
City
Services
|
81,972
|
81,972
|
0
|
0.0%
|
|
0
|
Housing
Revenue Account
|
79,172
|
78,833
|
(339)
|
-0.4%
|
|
0
|
Corporate
Services
|
9,100
|
9,100
|
0
|
0.0%
|
|
0
|
Total
Capital
|
196,555
|
196,215
|
(339)
|
-0.2%
|
(Note: Summary may include minor rounding differences to Appendix
7)
8.2
Appendix 5 shows the changes to
the 2024/25 capital budget. Cabinet’s approval for these
changes is required under the council’s Financial
Regulations. The following table shows the movement in the capital
budget since approval at Budget Council.
|
Summary
of Capital Budget Movement
|
Reported
Budget Month 2
|
|
|
£'000
|
|
Original
Approved Budget 2024/25
|
209,932
|
|
Changes
reported at other committees and already approved
|
1,360
|
|
New
schemes (for approval – Appendix 6)
|
1,285
|
|
Variations
to budget (for approval – Appendix 5)
|
4,859
|
|
Reprofiling
of budget to later year/s (for approval – Appendix
5)
|
(20,881)
|
|
Slippage
(for noting only)
|
0
|
|
Total
Capital
|
196,555
|
8.3
Appendix 5 also details
any slippage into next year. However, as normal, project managers
have forecast that none of the capital budget will slip into the
next financial year at this early stage.
9.1
The council’s MTFS sets
out resource assumptions and projections over a longer term. It is
periodically updated including a major annual update which is
included in the annual revenue budget report to full Council. This
section highlights any potential implications for the current MTFS
arising from the 2024/25 financial year and details any changes to
financial risks together with any impact on associated risk
provisions, reserves and contingencies. Details of Capital Receipts
and Collection Fund performance are also given below because of
their potential impact on future resources.
Capital Receipts Performance
9.2
Capital receipts are
used to support the capital programme. Any changes to the level of
receipts during the year will impact on future years’ capital
programmes and may impact on the level of future investment for
corporate funds and projects such as the Strategic Investment Fund,
Modernisation Fund, Asset Management Fund and the Information,
Technology and Digital Investment Fund. The planned profile of
capital receipts for 2024/25, as at Month 2, is £15.503m
which includes receipts expected for Montague Place, Land at Mile
Oak, a major industrial lease extension and the land site disposals
at Moulsecoomb relating to the housing project. There are also a
number of residential and commercial properties identified for
disposal as reported within the Residential Property Strategy
report and Commercial Investment Property Strategy report to
committee in December 2023. To date there have been receipts of
£0.036m in relation to some minor lease extensions and loan
repayments. The capital receipts performance will be monitored over
the remainder of the year against capital commitments.
Collection Fund Performance
9.4
The Collection Fund is a
separate account for transactions in relation to council tax and
business rates. Any deficit or surplus forecast on the collection
fund relating to council tax is distributed between the council,
Sussex Police & Crime Commissioner and East Sussex Fire
Authority, whereas any forecast deficit or surplus relating to
business rates is shared between the council, East Sussex Fire
Authority and the government.
9.5
The council tax collection fund is forecasting an overall deficit
position of £2.606m, of which the council’s share is
£2.204m. The main drivers for this deficit are an assumed
reduction in the ultimate collection rate of 0.25% £0.545m,
increased council tax reduction (CTR) claimant numbers
£0.766m, increased Severely Mentally Impaired (SMI) backdated
exemption cost £0.513m and backdated student exemption cost
£0.192m.
9.6
The business rates collection
fund is forecasting an overall deficit position of £2.306m
which relates entirely to the brought forward position arising from
higher appeals costs. There are a range of risks that could change
this forecast significantly with the main uncertain factors being
business failures and any step increase in empty properties. The
council share of this deficit position after allowing for section
31 compensation grants is £0.935m.
Reserves, Budget Transfers and Commitments
9.7
The creation or redesignation
of reserves, the approval of budget transfers (virements) of over
£1 million, and agreement to new financial commitments of
corporate financial significance require Cabinet approval in
accordance with the council’s Financial Regulations and
Standard Financial Procedures. There are no items requiring
approval at this stage.
10
Analysis and consideration of
alternative options
11
Community engagement and
consultation
11.1
No specific consultation has
been undertaken in relation to this report.
12
Financial
implications
12.1
The financial implications are
covered in the main body of the report. Financial performance is
kept under review on a monthly basis by the Corporate Leadership
Team and members and the management and treatment of strategic
financial risks is considered by the Audit & Standards
Committee.
Finance Officer consulted: Jeff
Coates
Date: 20/06/2024
13.1
Decisions taken in relation to
the budget must enable the council to observe its legal duty to
achieve best value by securing continuous improvement in the way in
which its functions are exercised, having regard to a combination
of economy, efficiency and effectiveness. The council must also
comply with its general fiduciary duties to its Council Tax payers
by acting with financial prudence, and bear in mind the reserve
powers of the Secretary of State under the Local Government Act
1999 to limit Council Tax & precepts.
13.2 Appendix 8 sets out the detailed requirements of the
Productivity Plan, which requires member oversight and
endorsement.
Lawyer consulted: Elizabeth
Culbert
Date: 21/06/2024
14.1
There are no direct equalities
implications arising from this report.
16
Health and Wellbeing
Implications:
16.1
The council’s budget
includes many statutory and preventative services aimed at
supporting vulnerable children and adults. The budget prioritises
support to these core and critical services including management of
any emerging in-year pressures to minimise impacts on statutory
provision.
17.1
The forecast overspend risk of £10.137 million at Month 2
represents 3.9% of the net General Fund budget. This early forecast
indicates a number of demand and cost pressures across
homelessness, a pressure on the Section 75 Mental Health
partnership and a number of significant income pressures across
City Services. There is evidence of the continuing impacts of
higher inflation and interest rates on social care and temporary
accommodation costs (prices) which are coming in above budget
assumptions. There are also continuing impacts on incomes such as
commercial rents and planning fees due to a suppressed economy.
These are also impacting the achievement of some savings
programmes.
17.2
As set out earlier in the report, understanding the level of
forecast risk is important to inform decision-making and recovery
actions. A number of Financial Recovery Measures have already been
identified to mitigate overspend or savings risks but at this early
stage further work is being undertaken by Corporate Directors to
corroborate cost, income and demand trends and to develop further
actions to mitigate risks.
17.3
In the meantime, vacancy management and spending control processes
remain in place across the council to contribute to in-year
financial management and the option remains to tighten these
further if interim monthly TBM reports do not indicate a downward
trajectory of the forecast risk.
Supporting Documentation
Appendices
1.
Financial Dashboard Summary
2.
Revenue Budget Performance RAG Rating
3.
Revenue Budget Performance
4.
Summary of 2024/25 Savings Progress
5.
Capital Programme Performance
6.
New Capital Schemes
7.
Treasury Management Update
8.
BHCC Productivity Plan
