Agenda item

To receive the first budget monitoring report for the current financial year which reflects the forecast financial position as at 31 March 2020.

Cabinet considered the first monitoring report outlining the 2019/20 financial position.  It provided an early indication of the potential revenue and capital financial position of the Authority as at 31 March 2020.

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 2019/20 approved budget savings plans; an update on the Capital Investment Plan including details of variations and reprogramming that were recommended for approval.

The budget for 2019/20 had been approved by full Council at its meeting on the 21 February 2019.  The net General Fund revenue budget was set at £155.730m.  This included £10.533m of savings to be achieved (£6.875m relating to 2019/20).

The forecast overall pressure for the General Fund Revenue Account was estimated at £5.263m against an approved net budget of £155.730m.  This was driven mainly by continued pressure in Health, Education, Care & Safeguarding reflecting the continued pressures in Children’s Services of £3.083m and Adult Services of £2.528m, partly mitigated by the contingency balances that had been created as part of the 2018/19 Budget setting process and were held centrally to reflect the on-going pressures in social care being felt locally and nationally.    

Included in this projection was £2.572m of pressures in Corporate Parenting and Placements, £1.741m in Wellbeing and Assessment, and £0.791m in Disability and Mental Health.  The drivers for these pressures continued from 2018/19, as outlined in the report.

The other main movement from the initial outlook was £0.730m in Environment, Housing and Leisure.  The Service was still expecting to be able to manage pressures of £1.378m by year-end but the monitoring reflected the fact that some of the management actions were still being formulated and as such a prudent approach had been taken at an early stage of the financial year. 

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 report outlined the revenue grants which had been received during April and May 2019.

Schools were required to submit their rolling three-year budget plan by 31 May each year.  The total planned deficit for 2019/20 was £5.045m. As well as school balances reducing overall, some schools continued to face significant financial challenges.  There were nine schools with approved deficits in 2018/19 and five of these schools 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.  There had been a rise in demand for special school places and the Authority was planning for places at the end of 2019/20 to total approximately 762, compared to 664 places at the beginning of 2018/19.   

The Housing Revenue Account (HRA) was forecast to have year-end balances at 31 March 2020 of £5.087m, which was £1.216m 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 but there was also an in-year estimated underspend of £0.115m, against an in-year budget of £2.331m, due to additional income of £0.061m combined with reduction to expenditure of £0.054m.

As of June 2019, 2,284 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 2019-2023 Investment Plan, as adjusted for proposed reprogramming, totalled £199.127m (£73.326m 2019/20) and was detailed in the Annex.  The Annex to the report also set out the delivery progress to date, planned delivery for 2019/20, reprogramming and other variations identified through the Investment Programme Governance process.

The report also outlined progress against the 2018-2020 Our North Tyneside Plan which set out the overall vision and policy context within which the Financial Plan and Budget were set. 

The Authority had plans in place to deliver all elements of the Council Plan and performance against these plans was carefully monitored. The area under most financial pressure was Health, Education, Care and Safeguarding.

In Adult Social Care, as with most local authorities, and in line with the national picture, North Tyneside had seen costs continue to rise.  Although the number of adults supported remained relatively stable, their individual needs had increased due to living longer with multiple complex conditions.  Supporting those needs required more intensive packages of care which were more expensive to provide.  In addition to older people, younger adults with learning disabilities and physical disabilities were also living longer, often with multiple complex issues.      

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 LAC levels, whilst fluctuating, were on average, remaining constant but there were a wide range of levels of care provided, with more complex cases now being faced. 

Cabinet considered the following decision options: either to agree the recommendations as set out in Section 1.2 of the report, or alternatively to disagree with the proposals.

Resolved that (1) the forecast budget monitoring position for the General Fund, Schools’ Finances and Housing Revenue Account as at 31 May 2019, as set out in the Annex to the report, be noted;

(2) the receipt of £0.352m new revenue grants be approved;

(3) the Authority’s Investment Plan spend of £2.283m to 31 May 2019 and the financing of the Plan to the end of the year, as set out in the Annex to the report, be noted; and

(4) the variations of £4.531m and reprogramming of £8.106m for 2019-20 within the 2019 - 2023 Investment Plan, as set out in the Annex to the report, be approved.

(Reasons 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.)