Issue - meetings

To scrutinise the Authority’s financial management report to 30 November 2022 (reported to Cabinet on 23 January 2023) setting out the current financial position in the context of the policy priorities in the Our North Tyneside Plan, where the Authority continues to face financial pressures and its plans to address these.

The sub-committee was presented with a report, which had been considered by Cabinet on 23 January 2023, relating to the financial position of the Authority as 30 November 2022 in the context of its policy priorities set out in Our North Tyneside Plan.

The Authority continued to see areas of pressure across Adults’ and

Children’s Social Care and significant impacts on income particularly

across Sport and Leisure Services, Home to School Transport and Catering Services. The ‘cost of living crisis’ was further increasing demand on the Authority’s services and increasing costs, adding significant financial strain to the Authority’s budgets. Consequently, it was reported that as of 30 November 2022 the Authority was facing a total pressure on its budget of £23.511m. The sub-committee examined details of various mitigations to be applied within the current financial year which together would reduce the in-year pressure to £8.625m. It was expected that future actions to review activity and performance across the organisation, reducing non-essential spend and controlled vacancy management, should see the pressure reduce in the coming months.

The report also included details of a small forecast underspend of £0.090m in the Housing Revenue Account, details of the additional grants received by the Authority since the Budget was set, the position so far on the 2022/23 schools’ budgets and schools’ funding, delivery of the Authority’s Investment Plan, the Collection Fund position for 2022/23 and information on Treasury Management.

The sub-committee paid particular attention to the forecast revenue outturn for Children’s Services of £34.840m, which represented a variance of £13.477m over the budget of £21.363m. Members asked to be provided with a more detailed explanation of the long-term underlying causes for the financial pressures within the Children’s Services and whether these pressures could continue to be managed within the Authority’s existing financial plans. It was suggested that, in co-ordination with the Children, Education and Skills Sub-Committee, the Interim Director of Children’s Services be invited to attend the next meeting of the sub-committee to examine these issues in more detail.

Members also examined the actions taken to recruit a Head of Law and to restructure the legal service to attract and retain permanent staff in the service thereby reducing a reliance on locums which resulted in increased staff costs.

It was agreed that (1) the 2022/23 Financial Management Report to 30 November 2022 be noted; and

(2) in co-ordination with the Children, Education and Skills Sub-Committee, the Interim Director of Children’s Services be invited to attend the next meeting of the sub-committee to examine the long-term underlying causes for the financial pressures within the Children’s Services and whether these pressures can continue to be managed within the Authority’s existing financial plans.

To receive the fourth budget monitoring report for the current financial year which reflects the first indication of the potential revenue and capital position of the Authority at 31 March 202

Cabinet considered the fourth monitoring report outlining the 2022/23 financial position.  It provided an early indication of the potential revenue and capital financial position of the Authority as at 31 March 2023.

The report 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 of 2022/23 approved budget savings plans; and an update on the Capital Investment Plan, including details of variations and reprogramming, that was recommended for approval.

The Authority’s finances were complex in any year given the range of services that were delivered; the picture this financial year was even more volatile given the national and global economic challenges.  At a Service level, before the application of planned contingencies and central funding, the gross pressure would be £23.511m.  However, the budget for the year included contingencies of £6.752m and other central funding of £1.006m (both shown within the Central Items figure in Table 1). As a result, the total forecast year-end pressure for the General Fund, shown in Table 1 reduces to £15.753m.  Table 1 sets out the initial variation summary across the General Fund, with a detailed commentary of variances included in Annex 1 to the report.

Central Items, its use was identified as: £3.116m to offset the pressures in Children’s Social Care; £1.301m was supporting the under achievement of savings targets; and £2.325m to support the inflationary pressures being faced by the Authority. In September’s report, a £0.316m saving was included reflecting the part year reversal of the national insurance increase along with a £4.927m of Minimum Revenue Provision (MRP) savings following the conclusion of External Audit work into the methodology change; these items remained in the forecasts.  In 2021/22 these savings were set aside in a new MRP reserve, which remained on the balance sheet, but it was likely that the in-year saving would be required to support the bottom-line position in 2022/23, so was currently included in the forecast position.  This gave a total underspend for Central Items of £13.002m.

Table 2 added further detail to the information in Table 1.  The top half of table 2 breaks down the forecast £15.753m pressure into the main factors of covid legacy, utility, other inflation and other pressures. The covid pressures of £8.021m arose primarily from fees and charges income not yet returning to pre-pandemic levels and additional fixed term staff employed to cover increased demand or to enable front-line service provision to continue. 

The lower half of Table 2 included details of funding set aside to support known pressures.  As part of the 2022-2026 Medium-Term Financial Plan (MTFP) agreed by full Council in February, £2.200m was set aside from the Change Reserve to support additional pressures in Home to School Transport (£0.400m), Special Educational Needs (£0.400m), additional children’s social care provision (£1.200m) and for the development of the Customer Relationship Management programme (£0.200m). The £0.400m relating to Home to School Transport had now been allocated to Commissioning & Asset Management  ...  view the full minutes text for item 81