Decision details

Cabinet considered the third monitoring report outlining the Authority’s 2019/20 financial position which provided an update on the expected revenue and capital financial position of the Authority as at 31 March 2020.

Thereport covered the forecast outturn of the Authority’s General Fund and Housing Revenue Account (HRA) revenue budget including management mitigations where issues had been identified; the delivery of2019/20approved budget savingsplans; and an update on the Capital Investment Plan, includingdetails of variations and reprogramming, that were recommendedforapproval.

The forecast overall pressure on the General Fund was estimated at £4.809m against the approved net budget of £155.730m.  This was driven mainly by Health, Education, Care and Safeguarding reflecting the continued pressures in Children’s Services of £4.615m and Adult Services of £1.384m, partly mitigated by the contingency balances that had been created by Cabinet as part of the 2018/19 budget setting process and continued to be held centrally to reflect the on-going pressures in social care being felt locally and nationally. Included in this projection was £3.656m of pressures in Corporate Parenting and Placements and £2.178m in Wellbeing and Assessment.  The drivers for these pressures continued from 2018/19, as outlined in the report.

The other main areas of pressure existed within the Resources section, primarily due to additional costs within ICT Retained Services.  It was anticipated that the overall outturn forecast would improve over the course of the financial year as planned remedial actions began to impact on both expenditure and income.  

The HRA was forecast to have year-end balances at 31 March 2020 of £7.585m, which was £3.714m higher than budget which was set at £3.871m.  The higher than forecast balances were mainly as a result of higher opening balances due to the impact of the previous year’s financial performance (£1.101m) but there was also an in-year estimated overall underspend of £2.613m, against an in-year budget of £2.331m, due to additional income of £0.496m combined with reduction to expenditure of £2.117m, which was linked to savings identified following the end of the Kier JV from April 2019.

Universal Credit had been fully implemented across North Tyneside on 2 May 2018. As of the end of September 2019, 2,850 North Tyneside Homes tenants had moved on to Universal Credit and a team was working proactively with tenants to minimise arrears.  This position would be closely monitored as the year progressed to identify any adverse impacts on the budget position.  

The total planned schools’ deficit for 2019/2020 was £5.045m. The trend for reducing school balances continued, and some individual schools continued to face significant financial challenges. There were nine schools with approved deficits in 2018/19, five of which continued to be in deficit for 2019/20.  Six schools were also new to deficit in 2019/20.   

The High Needs Block had ended 2018/19 with a pressure of £0.920m.  Initial forecasting of the budget position for 2019/20 indicated a similar level of pressure within the year of £0.952m.  In line with the national picture, there had been a rise in demand for special school places within North Tyneside and the Authority was planning for places at the end of 2019/20 to total approximately 776.  This compared to a total of 664 places at the beginning of 2018/19.

The 2019-2023 Investment Plan, adjusted for proposed programming, totalling £210.607m (£74.906m 2019/20) was detailed in the Annex to the report.  The Annex also set out delivery progress to date, planned delivery for 2019/20, reprogramming and other variations identified through the Investment Programme governance process.

The new revenue grants received during the period August and September 2019 were set out in the report.

The Authority had plans in place to deliver all elements of the Council Plan and performance against those plans was carefully monitored. In common with most local authorities, and in line with the national picture, the Authority had seen costs within adult social care continue to rise.  The number of adults supported in placements within Residential and Nursing Care and Homecare and Extra Care had risen during the second quarter on 2019/20. In Children’s Services good progress continued to be made on engaging with children in the early years of life to ensure that they were ready for school. Safeguarding vulnerable children and maximising their educational attainment remained key priorities.

The levels of Looked After Children (LAC) and children who required supervision after leaving care continued to generate a significant financial pressure. In year data suggested that the Authority’s LAC levels had risen steadily from 293 in September 2018 to 315 in September 2019.  There was a wide range of levels of care provided, with more complex cases now being faced. Increasing demand and complexity continued to drive financial pressure in 2019/20 and the Authority was forecasting a pressure of £3.656m in Corporate Parenting and Placements.

An officer led review of the Investment Plan had resulted in proposals for variations of £10.180m, more details of which were set out in Section 7 of the Annex to the report.  The revised Investment Plan stood at £74.906m for 2019/20 and to the end of September 2019 spend of £18.698m had been incurred which represented 24.96% of the revised plan. 

The Elected Mayor thanked officers and the Cabinet Member for Finance and Resources for their work in dealing with ongoing budget pressures.

Cabinet considered the following decision options: either to approve the recommendations as set out in paragraph 1.2 of the report, or alternatively, to not approve the recommendations.

Resolved that (1) the forecast budget monitoring position for the General Fund, Schools’ Finance and Housing Revenue Account as at 30 September 2019 be noted;

(2) the Authority’s Investment Plan spend of £18.698m to 30 September 2019 and the financing of the Plan to the end of the year be noted;

(3) the variations of £10.506m within the 2019-2023 Investment Plan be approved;

(4) the receipt of £0.162m of new revenue grants and £10m capital grant be approved; and

(5) the performance of the Treasury Management Strategy and the Collection Fund, and the performance against the Prudential Indicators be noted.

(Reason for decision: It is important that Cabinet continues to monitor performance against the budget, especially given the current level of financial pressures faced by the public sector.)