Agenda item

To receive the first 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 2022.

Cabinet considered the first monitoring report outlining the 2021/22 financial position. It provided an early indication of the potential revenue and capital financial position of the Authority as at 31 March 2022.

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; an indication of the impact of Covid-19 on Collection Rates and on the Collection Fund; the implications of Covid-19 for the Authority’s cash position; the delivery of 2021/22 approved budget savings plans; and an update on the Capital Investment Plan

The net General Fund revenue budget for 2021/22 had been set by full Council at £150.154m.  This included £4.337m of savings to be achieved, all of which had been identified in previous years.

The forecast overall pressure was estimated at £5.850m against the approved net budget.  This was made up of a forecasted pressure of £1.847m on normal activities and £4.003m relating to the impact of Covid-19.  The pressure on normal activities in the services was driven mainly by Health, Education, Care and Safeguarding of £7.771m, reflecting the continued pressures in Children’s Services, 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 ongoing pressures in social care being felt locally and nationally.

Included in this projection was £5.999m of pressures in Corporate Parenting and Placements, and £1.609m in Integrated Disability & Additional Needs. The drivers for these pressures continued from 2020/21 and arose from continued growth in demand in Children’s Social Care Services; growth in numbers of children with Education and Health Care Plans; the timing of delivery of some aspects of the Efficiency Savings Programme to the extent that achievement of some savings may be at risk; and increases in staffing costs.

It was anticipated that the outturn forecast for normal activities would improve over the course of the financial year as planned remedial actions began to impact on both expenditure and income.

With regards to the impact of Covid-19, the main drivers behind the £14.421m impact on services were also within Health, Education, Care and Safeguarding where £7.714m was for increased costs to the Authority.  Significant Covid-19 related pressures also existed in Environment, Housing and Leisure (£2.233m) and in Commissioning & Asset Management (£3.723m).

The report outlined new revenue grants which had been received during April

and May 2021.

The total planned deficit for schools in 2021/22 was £5.132m.  The Authority had been working with schools for a number of years with regard to the long-term strategic issue of surplus secondary places and the associated financial pressures, which continued to be compounded by rising employment costs.  The provisional outturn for the year ended 31 March 2021 showed a surplus of £3.721m, which reversed the trend of deficits over the previous few years.  The forecast trend going forwards, however, was increasing deficit balances.

As well as school balances being forecast to reduce overall, some individual schools continued to face significant financial challenges.  There were six schools with deficit budget plans for 2021/22, all of which continued to be in deficit following 2019/20.

The High Needs Block had ended in 2019/20 with a pressure of £8.720m.  The initial forecasting of the budget position for 2021/22 indicated an anticipated in-year pressure of £3.268m reflecting a further rise in demand for special school places. 

The Housing Revenue Account (HRA) was forecast to have year-end balances at 31 March 2022 of £3.058m, assuming all identified Covid-19 related costs and income shortfalls were covered centrally. These balances were £0.046m higher than budget which had been set at £3.012m, due mainly to the impact of the previous year’s financial performance, but there was also an in-year estimated underspend of £0.010m, against an in-year budget of £1.943m. 

Universal Credit had been fully implemented across North Tyneside on 2 May 2018.  As of early June 2021, 3,428 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 approved 2021-2026 Investment Plan totalled £270.465m (£93.506m 2021/22) and was detailed in the Annex.  The Annex also set out delivery progress to date, planned delivery for 2021/22, reprogramming and other variations identified through the Investment Programme Governance process.

An officer led review of the Investment Plan had resulted in proposals for variations of £5.324m of which more details were set out in the Annex to the report.  The revised Investment Plan stood at £98.593 for 2021/22 and to the end of May 2021 spend of £3.753m had been incurred which represented 3.81% of the revised plan. 

The 2021-2025 Our North Tyneside Plan (Council Plan) set out the overall vision and policy context within which the Financial Plan and Budget were set.  The Council Plan had three key themes – Our People, Our Places and Our Economy.  For each one there was a set of policy outcomes that the Authority was seeking to deliver as detailed in the report.

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 common with most local authorities, and in line with the national picture, North Tyneside had seen costs within adult social care continue to rise.  Along with the number of adults supported increasing over the last few financial years, the individual needs of those residents had increased due to people 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. 

Over recent years, there had been an increase nationally in demand for

children’s residential placements but with no corresponding increase in central

government funded provision.  As such, the levels of Looked After Children

(LAC) and children who required supervision after leaving care continued to

generate a significant financial pressure.  Data for LAC levels suggested that,

whilst fluctuating, there was a general trend of a steady increase in numbers

as set out in the report but there were a wide range of levels of care provided, with more complex cases now being faced.

The Elected Mayor commented it had been a very difficult 18 months financially, but that plans were in place to get back on track over the coming months as the response and recovery to Covid-19 continued.

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, Collection Fund, Schools’ Finance and Housing Revenue Account as at 31 May 2021, as set out in the Annex to the report, be noted;

(2)  the receipt of £0.459m new revenue grants beapproved;

(3)  the Authority’s Investment Plan spend of £3.753m to 31 May 2021 and the

financingof the Plan to the end of the year, as set out in the Annex to the report, be noted;and

(4)  the variations of £5.324m within the 2021–2026 Investment Plan

(£5.0879m for 2021-22), as set out in the Annex to the report, beapproved.

(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.)