Subject:
Targeted Budget Management (TBM) 2024/25
Month 5 (August)
Date of meeting:
Thursday, 17 October 2024
Report
of:
Cabinet Member for Finance &
Regeneration
Contact Officer: Name: Nigel
Manvell, 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 indication of forecast risks as at Month 5 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 stage is a £7.329m
overspend on the General Fund revenue budget representing 2.8% of
the net budget and approximately 1.4% of the gross budget. This
includes a forecast overspend risk of £1.156m on the NHS
managed Section 75 services.
1.3
A significant level of savings is also shown to be at risk with the
report indicating that £4.555m (19%) of the substantial
savings package in 2024/25 of £23.627m is potentially at
risk.
1.4
The month 5 forecast is important as it gives a clearer indication
of trends than earlier forecasts. The forecast indicates continued
improvement and is £2.808m better than the early month 2
forecast but remains a significant overspend risk. Strengthened
recruitment and spending controls have therefore been instigated to
provide assurance that the position can be managed down over the
remaining months of the year.
1.5
Strengthened controls can have impacts on service availability and
responsiveness, and/or internal controls (e.g. too many vacancies
could impact on the availability of appropriate staff or managers
to safely process and/or authorise expenditure or contracts) which
are important risks to understand and consider when addressing
in-year financial pressures.
2
Recommendations
2.1
Cabinet notes the forecast risk position for the General Fund,
which indicates a potential forecast overspend risk of
£7.329m.
2.2
Cabinet notes the forecast outturn includes a forecast overspend
risk of £1.156m 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 overspend of £0.682m.
2.4
Cabinet notes the forecast overspend risk for the ring-fenced
Dedicated Schools Grant, which is an overspend of
£1.358m.
2.5
Cabinet notes the forecast position on the Capital Programme which
is an overspend variance of £2.370m.
2.7
Cabinet approves the new capital schemes requested in Appendix
7.
2.8
Cabinet notes the strengthened spending and recruitment controls
set out in Section 17.
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)
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
4.
|
Forecast
|
|
2024/25
|
Forecast
|
Forecast
|
Forecast
|
|
Variance
|
|
Budget
|
Outturn
|
Variance
|
Variance
|
|
Month
2
|
|
Month
5
|
Month
5
|
Month
5
|
Month
5
|
|
£'000
|
Directorate
|
£'000
|
£'000
|
£'000
|
%
|
|
440
|
Families,
Children & Learning
|
69,780
|
69,250
|
(530)
|
-0.8%
|
|
4,214
|
Housing, Care
& Wellbeing
|
125,961
|
129,971
|
4,010
|
3.2%
|
|
3,638
|
City
Services
|
47,419
|
49,151
|
1,732
|
3.7%
|
|
85
|
Corporate
Services
|
34,703
|
34,746
|
43
|
0.1%
|
|
8,377
|
Sub
Total
|
277,863
|
283,118
|
5,255
|
1.9%
|
|
1,760
|
Centrally-held
Budgets
|
(19,574)
|
(17,500)
|
2,074
|
10.6%
|
|
10,137
|
Total General
Fund
|
258,289
|
265,618
|
7,329
|
2.8%
|
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 and with greater
delivery risks;
·
Challenging
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
|
Forecast
|
|
2024/25
|
Forecast
|
Forecast
|
Forecast
|
|
Variance
|
|
Budget
|
Outturn
|
Variance
|
Variance
|
|
Month
2
|
|
Month
5
|
Month
5
|
Month
5
|
Month
5
|
|
£'000
|
Demand-led
Budget
|
£'000
|
£'000
|
£'000
|
%
|
|
(561)
|
Child Agency
& In House Placements
|
27,527
|
26,696
|
(831)
|
-3.0%
|
|
2,421
|
Community
Care
|
79,802
|
80,974
|
1,172
|
1.5%
|
|
2,122
|
Temporary
Accommodation
|
6,398
|
8,822
|
2,424
|
37.9%
|
|
3,982
|
Total Demand-led
Budget
|
113,727
|
116,492
|
2,765
|
2.4%
|
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 many 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: The current projected position
identifies potentially significant cost pressures: £0.293m on
Home to School transport and £0.149m on In House Childrens
Disability Provision. These together with underspends on
Children’s Placements of (£0.831m), and other
overspends of £0.172m and a recovery plan of (£0.313m)
result in a forecast underspend of (£0.530m) as at Month 5.
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.
·
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 and full-time care for another young person aged over 18
which will be funded by Adult Social Care. It is anticipated that
these factors will result in an underspend on the Drove Road budget
of approximately £0.345m.
Schools’ Budgets
For 2024/25 draft budget plans showed
46 schools requiring Licensed Deficits which totalled £10.8m.
The latest position now shows 34 schools requiring Licensed
Deficits totalling £7.1m. In July the Council’s Chief
Finance Officer (CFO) and the Corporate Director of Families,
Children & Learning agreed compliant licensed deficits
totalling £6.6m. There are 2 schools where recovery plan
information to support deficit applications is still to be
finalised and once completed, will take the overall 2024/25 deficit
figure to £7.1m. 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 against until the relevant
schools’ budgets are rebalanced.
The forecast for the 2024/25 central
Dedicated Schools Grant is an overspend of £1.358m. It is
also important to note that the central DSG budget for 2024/25
includes 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
sad record that has been exceeded in each of the last three
reporting quarters. Brighton & Hove has done incredibly well to
keep numbers 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 temporary accommodation service is forecast to
overspend by £2.424m and £1.146m of savings are at risk
of not being met. The overspend is partially offset by financial
recovery measures of £0.280m.
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 we are using. As a
broad overview, these actions can be categorised as:
·
Prevention:
i)
Prevention
ii)
Reconnections
iii)
s198
Referrals
iv)
Allocations
Policy
·
Move-On’s:
i)
TA
into Private Rented Sector (PRS)
ii)
Targeted action
for specific cohorts
iii)
Private Rented
Sector Offers
iv)
Conversions to
Assured Shorthold Tenancies (AST)
·
Reducing
Costs:
i)
Increasing
council-owned TA
ii)
Identifying new
private providers
iii)
Advertising for
new landlords
iv)
Converting
‘Spot Purchased’ to
‘Block-Booked’
v)
Separating
property procurement from property management
·
Increasing
Income:
i)
Increasing rent
collection rates
ii)
Increase
collection of arrears
iii)
Reducing void
turnaround times.
A dashboard has been developed, with
weekly meetings involving Senior Managers within both Housing and
Finance 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
£2.005m. As at 15 September, 321 households were housed in
nightly booked accommodation which is 161 higher than budgets allow
and the forecast assumes this will remain at the 320 level for the
remainder of the year, given that the service is aiming to maximise
the use of void council owned stock. 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 as the year progresses.
The underlying trend is that the number
of households using nightly booked accommodation is increasing due
to 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 Private Rented is
the main reason for homeless, but in the last two reporting
quarters, this has shot up 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 £0.715m. 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 has recently added a further 26 units in order to
offset the loss of private sector leased accommodation. The
forecast assumes this level will remain for the remainder 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 about to trial a pilot which
would separate the leasing of the property from its management. It
is anticipated this could result in annual savings of £250k,
as well as improving the service to residents. The Financial
Recovery Plan (FRP) includes £0.080m cost reduction for this
initiative during 2024/25.
Private Sector Leased (PSL) TA
budget is forecast to underspend by (£0.296m). 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 reduction of 24 properties (3.8%) with many property
renewal contracts still in negotiation. This forecast assumes PSL
TA properties will reduce by 62 properties this year. 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 and block booked 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. The service is also aiming to
make greater use of empty council housing stock on a short term
basis. This initiative is included in the service financial
recovery plan and is estimated to reduce costs by £0.150m in
2024/25.
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. Following transition to this new
operating model we are now seeing improvements in terms of a
reducing rate of households coming into TA, less complaints and
improved decision making.
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 2019 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 directly affects service delivery and has a visible
impact on the city. The overall position for City Services is a net
£1.732m forecast overspend risk at Month 5, an improvement of
£1.906m since Month 2 by continued actioning of financial
recovery plans and measures.
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 are being explored to potentially mitigate income
pressures as far as possible. This includes 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.
4.10
Centrally-held
Budgets: There is a forecast overspend of £2.074m
on centrally-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
£0.700m on Insurance budgets caused by an increase in the
value of claims paid.
There is an estimated pressure of
£0.589m on the Housing Benefit Subsidy budget. The main
element of this is a pressure of £0.709m on a certain benefit
type for vulnerable tenants which is not fully subsidised. This
pressure has continued to rise since last year but is being
investigated to assess what steps can be taken to reduce it. This
pressure is partially offset by a forecast surplus of £0.120m
on the net position of the recovery of overpayments.
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. The application of a 1% reduction in salary budgets has
produced a one-off contribution of £1.271m towards this
saving in 2024/25.
There is a forecast underspend of
£0.425m on financing costs due to increased investment income
as a result of higher balances than forecast.
Monitoring Savings
4.11
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.
4.12
Appendix 4 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 5 summarises the
position across all directorates and presents the entire savings
programme. The graph below provides a summary of the position as at
Month 5 and shows that gross savings of £19.400m have been
achieved but that inflationary pressures (exceptional price
increases) have reduced this by £0.328m. Including other
unachievable savings of £4.227m, this means that a total of
£4.555m (19%) is forecast to be unachieved in 2024/25.
5
Housing Revenue Account
Performance (Appendix 4)
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 an overspend of £0.682m,
this position includes variances within specific service areas,
details of which are provided below. The latest forecast includes
the latest estimates relating to the emergency response to the
Large Panel System survey results, this totals £0.725m. It
also includes the costs associated in responding to the water
safety risks and the new additional contractors required to ensure
compliance is met. 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 4)
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 £1.358m and more details are
provided in Appendix 4. 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 4)
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 £1.156m and more details are provided in
Appendix 4.
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 overspend of £2.370m which is
detailed in Appendix 6.
|
Forecast
Variance Month 2
|
|
Reported
Budget Month 5
|
Provisional
Outturn Month 5
|
Provisional
Variance Month 5
|
Provisional
Variance Month 5
|
|
£'000
|
Directorate
|
£'000
|
£'000
|
£'000
|
%
|
|
0
|
Families,
Children & Learning
|
17,491
|
17,491
|
0
|
0.0%
|
|
0
|
Housing,
Care & Wellbeing
|
6,955
|
7,245
|
290
|
4.2%
|
|
0
|
City
Services
|
85,178
|
85,178
|
0
|
0.0%
|
|
(339)
|
Housing
Revenue Account
|
85,809
|
87,889
|
2,080
|
2.4%
|
|
0
|
Corporate
Services
|
9,165
|
9,165
|
0
|
0.0%
|
|
(339)
|
Total
Capital
|
204,598
|
206,968
|
2,370
|
1.2%
|
(Note: Summary may include minor rounding differences to Appendix
6)
8.2
Appendix 6 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 Month 2.
|
Summary
of Capital Budget Movement
|
Reported
Budget Month 5
|
|
|
£'000
|
|
Budget
approved as at TBM month 2
|
196,555
|
|
Changes
reported at other committees and already approved
|
27,828
|
|
New
schemes (for approval – Appendix 7)
|
2,965
|
|
Variations
to budget (for approval – Appendix 6)
|
6,019
|
|
Reprofiling
of budget to later years (for approval – Appendix
6)
|
(27,989)
|
|
Slippage
(for noting only)
|
(780)
|
|
Total
Capital
|
204,598
|
8.3
Appendix 6 also details
any slippage into next year. At this stage project managers have
forecast that £0.780m of the capital budget will slip into
the next financial year.
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 and
one-off invest-to-save programmes. 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 IT&D
Investment Fund. The planned profile of capital receipts for
2024/25, as at Month 5, is £15.693m 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 as well as
the disposals approved by Cabinet on 27 June 2024.
9.3
To date there have been receipts of £0.956m in relation to
the sale of land at Portland Road, 61 Park Street, 43 Shirley
Street, 39a George Street and some minor lease extensions and loan
repayments. The capital receipts performance will be monitored over
the remainder of the year against capital commitments.
9.4
The forecast for the ‘right to buy sales’ in 2024/25
(after allowable costs and repayment of housing debt) is that an
estimated 20 homes will be sold. It is anticipated that a net
retained receipt of up to £1.000m available to re-invest in
replacement homes, the flexibility that was allowed by an amendment
to the RTB policy allowing the council to retain the treasury share
for two years from 2022/23 for two years has now come to an end,
reducing the net capital receipt available during 2024/25. In
addition to this net retained receipt the HRA will also retain
circa £0.540m to fund investment in the HRA capital
programme, specifically the new supply of affordable housing. To
date six homes have been sold in 2024/25.
Collection Fund Performance
9.5
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.
9.6
The council tax collection fund is forecasting an overall deficit
position of £2.626m, of which the council’s share is
£2.221m. The main drivers for this deficit are an assumed
reduction in the ultimate collection rate of 0.5% £1.005m,
increased council tax reduction (CTR) claimant numbers
£0.646m, increased Severely Mentally Impaired (SMI) backdated
exemption forecast cost £0.619m and backdated student
exemption cost £0.494m.
9.7
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. The council’s
share of this deficit position after allowing for section 31
compensation grants is £0.935m. There has been further
clearance this financial year of outstanding appeals against the
2017 valuation list including some large value successful appeals
backdated to 2017/18 with five supermarket assessments alone
resulting in a reduction in business rates income of £1.830m.
The forecast is currently assuming that these higher than
anticipated levels of successful appeals against the 2017 list can
be managed within the overall provision for both the 2017 and 2023
lists at 31 March 2025. In addition to the appeals provision there
are a range of other risks that could change this forecast
significantly with the main uncertain factors being business
failures and any step increase in empty properties.
Reserves, Budget Transfers and Commitments
9.8
The creation or re-designation
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 & General
Purposes Committee.
Finance Officer consulted: Jeff
Coates Date:
19/09/2024
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.
Lawyer consulted: Elizabeth
Culbert
Date: 20/09/2024
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 £7.329m at Month 5 represents
2.8% of the net General Fund budget. This forecast indicates
continuing demand and cost pressures across homelessness, a
pressure on the Section 75 Mental Health partnership, albeit
reduced, 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 overspends or savings-at-risk but the extent
of the forecast overspend indicates that escalated spending and
recruitment controls are now necessary to ensure break-even or
better can be achieved by year-end.
17.3
Acting now will help to create
a more sustainable position going forward and support planning for
the significant savings that will be needed over the next 4
years. The following actions have been instigated by
officers and will remain in place until the forecast position
improves to a satisfactory position:
·
A review of all projects to
consider what can be slowed, paused or stopped. This includes
reviewing spend on consultancy and any discretionary spend. In
addition, options for delaying potential essential spend until
April 2025 will be considered where this may be
possible.
·
An external vacancy freeze is
now in place with decisions on exceptions to be made monthly by an
officer Spending Control Star Chamber that reports to CLT for
sign-off. There will be a list of exemptions for critical areas
where mandatory or essential staffing levels or cover is
required.
·
However, secondment
opportunities, i.e. internal recruitment, for up to 12 months will
continue to be advertised as needed. This will support One Council
working and ensure secondments can continue to provide
opportunities to support delivery of key priorities.
·
Vacancies approved by CLT will
go into redeployment for 8 weeks prior to external advert unless
CLT has specified a shorter time in redeployment, following Star
Chamber recommendation.
·
A review of overtime spend to
take place at Directorate Management Team (DMT) level.
·
Existing agency working weeks
to reduce to a maximum 35 hour working week, and any new
assignments to be recruited on 35 hour working week with immediate
effect. The limitation of agency hours does not apply to areas or
roles on the list of exemptions.
·
Delay capital programme spend
and reprofile capital projects wherever possible to reduce cash
outflow.
·
Bring forward any savings
opportunities for 2025/26 that could be made earlier than April
2025 (subject to all normal or required processes of consultation
and decision-making).
If
the situation does not improve by the month 6 interim forecast, an
officer Star Chamber approach to review all spend over £1000
will be put in place.
Supporting Documentation
Appendices
1.
Financial Dashboard Summary
2.
Revenue Budget Movement Since Month 2
3.
Revenue Budget Performance RAG Rating
4.
Revenue Budget Performance
5.
Summary of 2024/25 Savings Progress
6.
Capital Programme Performance
7.
New Capital Schemes
