To consider the report of the Portfolio Holder for Finance.
Financial Overview and Forecast - October 2019
Minutes:
Documents:
· Financial Overview and Forecast as at 31 October 2019
Discussion:
· The forecast has improved with a projected year end overspend of £2.7M due to additional savings delivered
· £8M of savings remain undelivered of which £2.7M are assured of being achieved by year end
· Pressures have not all materialised within Adult Services due to earlier intervention
· Demographic pressures are often cited in reports and the Panel question whether these actually exist. The 2001 to 2011 Census showed an increase in the over 65 population of 16% but the increase in care home residents had only increased by 0.4%. A Member had recently attended a briefing which indicated that there was a significant reduction in numbers of residents in care homes and that there were significant surplus places. Maintaining residents’ independence at home is welcomed, but savings are not materialising.
· The Chair noted that expenditure on over 65s is now well controlled but there is significant expenditure in under 65s. Children’s Services demonstrate a low demand with a high unit cost, but Adult Services for those under 65 show a high demand with a low unit cost.
· A further concern was raised whether there was unmet demand as Members were aware that it was proving difficult to recruit domiciliary carers.
· The position regarding Children’s Services has improved slightly with a reduction in costs of Children Looked After and agency costs
· The impact on reserves shows the figure if the current, projected overspend is realised. The level of reserves would still be in line with policy.
· Efficiency savings stand at 66% delivered. £5.3M are undelivered and will be considered alongside next year’s budget proposals.
· Members were concerned as to how many of the undeliverable savings were identified within impact assessments as being high risk. The Head of Finance replied that up to £3M of savings had been added to the budget late in the process and may well not have been as robustly assessed as they should have been.
· Performance on savings seemed to be significantly worse than in previous years. If savings are not achieved in the current year, they will be rolled over and impact on next year’s budget. Council Tax had been increased by 9.5% and still savings have not been delivered.
· The Senior Leadership Team is exploring ways forward and will update Cabinet on 3 December
· Briefing papers from Heads of Service are critical and savings which cannot be delivered must not be left in the budget plan
· The Panel questioned whether one off savings would be sought to balance the current year’s budget or would savings for the longer term be sought. This should be subject to further discussion by the Council. The Head of Finance thought there may be elements of both short and long-term proposals, with any new proposals being considered as part of the budget in February.
· It had been a suggestion by the Panel some years ago that services should over budget for savings to allow some flexibility in delivery throughout the year. This had been accommodated by providing a revenue reserve budget.
· Members expressed concerns that in regard to the current budget, impact assessments had failed, a budget had been approved without awareness of all risks and alternatives may now be included which had not had adequate Member scrutiny – what confidence is there that impact assessments are adequate for the budget for forthcoming years? Budget proposals had changed late in the year and impact assessments had not been updated. The process is considered to be robust, but it is essential that the assessments are completed robustly. These should be reviewed by the relevant Head of Service and Portfolio Holder. A Cabinet Panel would also review all impact assessments. The Authority was aware of criticism regarding delivery of savings proposals from both the WAO and Finance Scrutiny Panel.
· It was agreed that impact assessments were key to the process in identifying mitigation measures around high risk proposals and the need to understand the impact on other areas of the Authority
· Services are being asked to deliver in different ways and are finding challenges along the way. This is compounded by significant financial pressures.
· Following challenge by the Panel, the way in which BRAG status is shown in the report has changed to reflect the impact on reserves of overspends etc
· It was noted that Finance appeared to be underspent by £5.6M. This included all corporate activity including capital charges and a surplus on council tax. The Capital Programme is underspent year on year which benefits the revenue budget. A complete review of the capital programme is being undertaken.
· The Panel was informed that the cost per child of children’s services was £1328 in Powys which was £300 more than Ceredigion and £100 more than Gwynedd. Although it was acknowledged that Powys had had a difficult CIW report, Gwynedd had a very positive report and lessons should be learned. This was the aim in the long-term, but the service was addressing historic care packages whilst trying to invest in early intervention.
· Those areas where savings had not been achieved would be reviewed as part of current budget discussions. Sensitivity analyses should have been carried out to ensure proposals were robust.
Outcomes:
· The report was noted