The Director of Finance stated that the report set out the financial monitoring information for the Council as at Quarter 2 (30 September) of 2024/25. The report provided Members with an overview of budget performance, including progress on the delivery of the 2024/25 saving programme and a summary of reserves and balances, to enable the Committee to take ownership of the budgets and provide robust challenge and scrutiny to Officers and, where appropriate, Committees on the performance of those budgets.

At the end of Quarter 2, the financial outlook had deteriorated further since quarter 1.

Current estimates forecasted an adverse outturn position of £21.563m on Directorate spend. This position was based on activity to date, projected trends in income and expenditure and changes to Council funding. The Council now faced a severe financial challenge that demanded immediate action. To achieve a balanced budget by the end of the financial year it was imperative to implement all possible measures to curtail spending and generate substantial cost savings. Without substantial action being taken, the Council would not be in a position to provide a balanced budget by financial year-end. The Ministry of Housing, Communities & Local Government (MHCLG) had been made aware of the Council’s financial position.

The source of the overspend reflected a further deterioration of the outturn position from 2023/24 for which an action plan had been developed and implemented. This action plan was designed to address the main issues generating the adverse position. However, the majority of this overspend was a consequence of increased demand and costs for social care services and would not be easily resolved. Addressing and mitigating the in-year adverse position would be incredibly challenging but several potential strategies were available, some of which were already in progress:

• Full utilisation of all contingency funds (fully utilised in current forecast),

• Council wide spend freeze (implemented from 9 September 24),

• Maximising the use of capital receipts to finance transformational revenue expenditure. (£2.88m already included in current forecast),

• Reallocating earmarked reserves,

• Use of general fund balances.

• Work with MHCLG to identify options for financial sustainability and potential short-term measures to address the issue within the current year. (initial contact had already been made).

The Director of Finance drew Members attention to several sections of the report regarding the pressures on both Adult and Children’s social care. It was also highlighted that the 2024/25 pay award had been agreed at the figure originally forecast for. Members discussed the significant pressures surrounding setting a balanced in year budget and the possibility of issuing a Section 114 if the Council’s financial position did not improve. It was noted that officers were also in discussion with the Ministry for Housing, Communities and Local Government to identify options for financial sustainability and potential short-term measures to address the issue within the current year.

Resolved – that,

1)  the Directorate forecast adverse position of £21.563m presented at Quarter 2 and the urgent need to examine all available options to address  ...  view the full minutes text for item 53