To scrutinise financial performance at quarter 3 and identify issues that may require further investigation by an overview and scrutiny committee.

The Executive Director of Resources presented the report which highlighted the following key issues in Q3:

a.              Revenue spending reductions of £39.8m: The MTFS agreed by Full Council (2 March 2023) included £51.4m of planned spending reductions £39.8m which represents 77% of the year-end target.

b.              Spending pressures in demand-led services of £28m: Despite the good progress on spending constraint already identified (above), demand-led services are forecasting significant overall budget pressures of £28.495m in the year, pressures which are expected to persist into the coming year. After planned application of £20.5m of reserves set out in the reports for Q1 and Q2, the net budget pressure in People directorate is reduced to £7.995m.

c.               An overall forecast for services of £14.533m: Taking achieved savings and wider service pressures together, the overall forecast indicates net pressures in services of £14.362, which rises to £14.533m after taking into account changes to funding and corporate budget pressures.

d.              The above to be applied to the General Fund Balance, now £16.2m, at year end.

Members sought clarification on the Dedicated Schools Grant funding and High Needs Block. Members were advised that this had been included for transparency as many other Councils had a large overspend which was currently being dealt with by the statutory override provided until March 2026. If this was removed, any overspend would fall within the general fund. It was confirmed that Shropshire Council do not have this deficit.

In response to a query about the level of reserves, members were informed that budget contributions had been included to bring the level of reserves back up to £30million in the next financial year. It was expected that the general fund balance would be higher than projected.

Members requested more information with regards to the adult social care discharge fund and whether the Council is receiving any excess expenditure back from the ICB and if PWC were looking into this. The Executive Director for Resources advised that he would investigate and report back.

Members were advised that the largest overspend in the Resources Directorate was for housing benefit, which was due to being unable to reclaim housing benefit subsidy to the level that housing homeless individuals would be. Work is ongoing to find cheaper solutions to this matter to reduce this overspend.

Members queried the methods used in the demand management in Adults and Children’s Social Care and whether these were working. It was felt that the Council needed to understand where the pressures are coming from before agreeing how the demand should be managed. This could be due to an increase in the number of people accessing services, an increase in the complexity of needs or an increase in the unit cost. It was confirmed that this data could be provided following work with the People Overview and Scrutiny Committee. It was felt that this data should be brought back to this committee to then forward to either Health Overview or People’s Overview and Scrutiny as appropriate.

Members noted that work was ongoing as part of the transformation programme.

Members felt that the data requested would form part of the performance monitoring (agenda item 7) and it was therefore:

RECOMMENDED:

That additional performance indicators relating to demand within adults and childrens will form part of financial monitoring in the future.