Agenda item

The Cabinet considered a report of the Corporate Director of Resources which provided Cabinet with:

(a)          the forecast revenue and capital outturn at 31 March 2024, based on the position to 30 September 2023;

(b)          an update on the dedicated schools grants and forecast schools’ outturn as at 31 March 2024, based upon the position to 30 September 2023;

(c)           the forecast for the council tax and business rates collection fund outturn at 31 March 2024, based on the position to 30 September 2023; and

(d)          details of the updated forecast use of and contributions to earmarked, cash limit and general reserves in 2023/24 and the estimated balances that will be held at 31 March 2024.

The report also sought approval of the revised 2023/24 capital programme, other budget adjustments and proposed sums treated as outside of the cash limit in year and provided Cabinet with an update on progress towards achieving MTFP (13) savings in 2023/24 (for copy of report see file of minutes).

Councillor R Bell, Deputy Leader of the Council and Cabinet Portfolio Holder for Finance thanked officers for the detailed and comprehensive report and budget managers across the Council for their continuing efforts to manage budgets.

Unavoidable cost pressures being experienced were immense. The ever escalating demand for Children’s Social Care and the complexity of the needs of some of those children in particular was resulting in significant overspends.

It was pleasing to note that there were some cash limit underspends forecast in Adult and Health Services, Resources and the Chief Executives Office, offsetting the overspending forecast in Regeneration Economy and Growth and Neighbourhoods and Climate change – the net underspend being around £1 million to year end.

Children and Young People’s Services forecast overspend had risen from £5.2 million at quarter one to £6.2 million at quarter two and within this there were higher overspends forecasted in the looked after children budget, where the placements budget had forecasted to overspend by £7.1 million now, £1.3 million more than was previously forecast. There was a concern that £8 million of budget growth contained within MTFP forecasts next year may need to be revised upwards. The cash limit overspend within the Service was significant and would need to be met corporately, from the General Reserve.

There were corporate underspends that could cover off this position as a one off measure, with additional investment income and savings on capital financing costs through delaying borrowing and on the general contingencies budget that offset the CYPS outturn.

The updated forecasts showed a contribution to the General Reserve in year – a £3.2 million corporate underspend – meaning that the General Reserve would be £29.3 million at the year end, 5.6% of the councils net revenue budget.

Officers were undertaking a review of the reserve position, as they do every year. However, there may be a need to bolster some earmarked reserves at year end and transfer some of the general reserve.

Overall, excluding schools’ balances, earmarked reserves were now forecasted to fall by just over £33 million this year – around £1 million less than what was forecast at quarter one.

The forecast cash limit, general reserves, and earmarked reserves position for the Council, although forecast was to reduce to the year end, which still demonstrated strong financial standing.

In terms of the Collection Fund forecasts it was pleasing to note that the in-year and cumulative deficit on the Council Tax Collection Fund was fully offset by a forecast surplus on the Business Rates Collection Fund, taking into account the s31 grant received for the various business rates reliefs administered in year.

The amended Capital Programme, taking into account re-profiling and new grants and contributions secured since consideration of the quarter one report resulted in 2023/24 capital programme of circa £313 million this year.

Councillor Bell fully supported the amendments made to the capital budgets as outlined in the papers and noted the good performance against the various prudential indicators agreed by Council in February. 

Disappointingly, but not entirely unexpectedly, there was now a forecast overspend on High Needs DSG funding block of £2.1 million to year end, compared to quarter one when there was a modest £245,000 forecast underspend forecast. This overspend was particularly worrying.

The Leader of the Council echoed the comments from Cllr R Bell and said that accurately forecasting and keeping track of the finances in a council of the scale and complexity of Durham was undoubtedly challenging, but managing our finances was a key issue for us all, particularly at a time when the Council was facing unprecedented demand and volatility in terms of cost pressures and an uncertain outlook in terms of future finance settlements. Robust financial management of the Council had consistently been recognised the Value for Money assessments from External Auditors and Councillor Hopgood fully expected this would once again be the case when presented to the Audit Committee.

Many of the inflationary and demand pressures in the report would continue into next year and together with the uncertainty the financial settlement from government for next year, the Council would continue to be in a very difficult place in terms of our budget planning for 2024/25 and the MTFP position going forward.

The Cabinet would need to carefully reflect on the updated forecasts in terms of the impact on the 2024/25 budget and on the MTFP position considered at Cabinet in October when the updated position is presented to Cabinet in January 2025. Particularly the increased pressures on our looked after children’s placements budgets. Financial forecasts would be key and the details would be more clear following the Autumn Statement and the draft Local Government Finance Settlement.

Resolved:

That the recommendations in the report be approved.