Agenda item
Strategic Performance and Corporate Revenue and Capital Budget Monitoring Q1 2014/15 (Month 3) To Follow
To consider the quarterly monitoring report containing the financial position of the Council at the end of Quarter 1 compared to budget, and service performance against targets and includes year-end projection updates for the General Fund Revenue and Housing Revenue Account; and an overview of performance for all reportable strategic measures.
Minutes:
Special Circumstances and Reasons for Urgency
The Chair informed members of the Committee that the special circumstances and reasons for urgency associated with the proposals were detailed on the front page of the report and that the Constitution required that he agree these before OSC consideration of the report could take place. The Chair subsequently agreed the special circumstances and reasons for urgency as set out on the front page of the report and also set out below:
“This document was not available for despatch with the main agenda and it cannot wait until the next meeting as Members have to consider and comment upon the information provided in the report prior to its consideration by Cabinet on the 1st October, 2014.”
However the Chair sought and was given clarification as to why the report had not met the statutory publication deadlines, and therefore required reasons for urgency.The Chair subsequently noted that this was a quarterly report submitted to both OSC and Cabinet, there was a process for delivering it in a timely way, and the OSC expected publication to meet the statutory deadlines for OSC next quarter.
Chris Holme (Acting Corporate Director Resources) introduced, and highlighted key points, in the monitoring report which detailed the financial outturn position of the Council at the end of Quarter 1 2014/15 compared to budget, and service performance against targets for all reportable strategic measures. Councillor Aminur Khan (Cabinet Member for Policy Strategy & Performance) and Councillor Abdul Asad (Cabinet Member for Health & Adult Services) together with Kevin Miles (Chief Accountant Corporate Finance), Robert McCulloch-Graham (Corporate Director ESCW), Kate Bingham (Service Head Resources ESCW),Louise Russell, Service Head Corporate Strategy and Equalities and Kevin Kewin (Service Manager Policy Strategy & Performance) were also in attendance for this item.
Points highlighted by Chris Holme included:-
· All directorates were forecasting a breakeven position to budget at Quarter 1 excepting ESCW where significant financial pressure had been identified relating principally to Adults Social Care packages, and an overspend of £2.1 million was currently forecast.
· The HRA was projecting a small overall underspend for 2014/15.
· There was a projected underspend for capital outturn, mostly relating to ESCW grant related slippage and this would be carried over into 2015/16.
A discussion followed which focused on clarification being sought and given on the following points:-
· Referencing para 7.8 of the report concern was expressed that the performance against target for percentage of LPO7+LA Staff who have a disability had not been met; and clarification sought as to what mitigating action was being taken to meet it in future. This was a very small cohort of staff and the dip in performance may be due to just 1 individual leaving the Council’s employ.
· Referencing Appendix 2 “Corporate Monthly Budget Monitoring”/ page 2 - Service Area C18 Communications and /page 21 - Vote H82 Holding Account & Support Services, concern expressed that there were very large variances against budget and no explanation given, whereas other small variances had explanations. Requested that explanations be provided for all significant variances in future reports. C18 - Although significant in overall terms the variance to date was not the likely profile against 12 months expenditure. There was more income in Communications and the variance likely to be due to contracts. Overall projections in cost terms were in line with budget, however there had been a downturn for advertising revenue from East End Life in Quarter 1 due to market conditions. H82 This was a holding account for central support services to be allocated against the Dedicated School Grant at year end, an explanation would be included in the Quarter 2 monitoring report.
· Concern expressed that there was a significant capital underspend against budget at this point in the year and slippage would carry forward to 2015/16. The lag in spending to budget meant benefits accruing late to residents of the borough and this had been a phenomena going back many years; why was the programme of spend not rolled forward so benefits accrued to residents? Scheme slippage over a long period was inevitable, and although there was a case for over-programming so schemes could be brought forward to absorb budgeted spend, in a period of reducing resources a position could arise where there were insufficient resources to pay for schemes. There would be no over-programming going forward.
· There may need to be a skill uplift for capital spending if, as advised, directorates continued to bid for resources in year 1 and then identified that they could not spend until year 2. Resources Officers were reliant on technical experts for an assessment of scheme spend. There was also a balance to be struck in terms of resources to be gained from treasury management and not holding large cash balances.
· Clarification sought as to:
o Why capital schemes for Banglatown Art Trail and Arches and Bancroft Library Phase 2b been rescheduled for 2018. What was the arches scheme, which part of Brick Lane would it be on, where had the scheme come from, what was the scheme intended to achieve. Was there a paper/ report on it which would unlock the rationale? CH undertook to respond in writing.
o Why capital schemes for Multi-Faith Burial Ground and Faith Buildings had been scheduled for spend in 2014/15 when nothing had been heard of the former progressing and it was understood the latter was held up by legal challenge. CH undertook to respond in writing.
o Brick Lane Mural:-What was the mural, which part of Brick Lane would it be on, where had the scheme come from, what was the scheme intended to achieve. Was there a paper/ report on it which would unlock the rationale? CH undertook to respond in writing.
o Watney Market Idea Store was detailed as complete, yet there was currently scaffolding outside, had it been completed and now being revisited due to problems with the work? CH undertook to respond in writing.
· Consideration that some of the vote titles in the list of capital schemes were overly vague and global eg D&R “Council House-building Initiative” and a further breakdown would be helpful.
· Consideration that the current reporting did not enable the reader to identify what the overall Section 106 budget was, where S106 resources came from, which schemes generated the funding, how much was generated, and where it was allocated. CH undertook to provide a briefing note to OSC members.
· Concern expressed over the forecast overspend of £2.1 million in ESCW due principally to Adults Social Care packages and insufficient grants and reserves to fund the whole forecast amount, reported in juxtaposition with forecast unallocated DSG of £4.367 million. The overspend relating to ASC packages was due to reduced funding from health with the formula based on a set number of cases with the authority now absorbing the remainder. Rising demand also required mitigating action. A financial recovery group had been established to examine the matter in depth and to engage with health partners to resolve it, and funding was being regained.
· Was the problem caused by cost shunting by the NHS or growth pressures or increased medical need? There had been a shift of responsibilities and budgets, but improved discipline in Adult Social Care and mitigating action was now bearing fruit, however it remained an area of concern. Negotiations with the Clinical Commissioning Group (CCG) were ongoing with a view to reaching an arrangement for community care and health care. A contract of £42 million for this was currently being negotiated with CCG and other partners including East London Mental Health Trust and Barts Health. Cost shunting was on the agenda at all meetings, with concerns relayed and a more robust approach in the last 6 months. There were growth issues due to demographic trends eg care package growth for those with mental health issues like demensure. Contracts were in place for adults with learning difficulties, but budget gaps needed mitigated by smarter contracting and better use of the community asset base of carers. The Care Act and the Better Care Fund had major implications and there remained significant funding unknowns; more information would be forthcoming as these changes approached.
· What action was being taken to safeguard services to residents during the period whilst an arrangement was reached between LBTH and partners on responsibilities and budgets? Adult Social Care and ESCW had a responsibility to ensure that no residents were failed, and none had been. However the budget needed managed and preventative work needed undertaken with ASC and specialist services addressing issues at an earlier point.
· Were mechanisms in place to chase the resources due to LBTH and to secure external funding? There were a number of areas in the partnership where it had been successful in securing funding eg CCG fund to prevent bed blocking in hospitals. Also through re-ablement packages, with LBTH being robust where health partners withholding funding for this.
· Given the range of factors causing budget problems eg savings expectations not proving possible and a need for reconfiguring ESCW was the Mayor’s budget the right one? The Budget was right for ESCW and budgetary pressures would be managed and in balance by year end, even if ASC issues needed covered by budget transfers from other areas in the directorate.
· To what extent were costs being controlled, did care packages need reduced, were they tight enough? What was the tipping point and safety valve? Re-ablement was a good example of how care could be provided in a home environment with a cost saving for the authority. There was a need for realism in the outcomes sought for individuals a care package to cover all eventualities may not be appropriate. The Community was an asset that needed to be harnessed much more.
· LBTH was in a different position to all other local authorities in the country, was it a net importer of those with high social care needs? There was a widely held perception that because LBTH did not charge for homecare this created increased demand with people moving into the borough to receive care. There was currently no evidence base to support the perception or refute it, it was anecdotal.
· Given the frequent assertion that budgets were under extreme pressure it was puzzling that the only evidence of pressure was a single overspend;Were sufficient budget savings being required? Directorates had a history of containing spend within budget and the Acting Corporate Director Resources was confident they would deliver this in 2014/15. If this was not possible for the £2.1 million ESCW overspend relating to ASC packages, it should be offset by underspends in other directorates, but there were sufficient contingencies to mitigate it if necessary and risk had been factored into the Medium Term Financial Plan. The implications of the Care Act were a much more significant risk going forward.
The Chair Moved and it was:-
Resolved
1. That Quarter 1 financial performance compared to budget for 2014/15, as detailed in Sections 3 to 7 and Appendices 1 to 4 of the report, be noted; and
2. That Quarter 1 performance for 2014/15 strategic measures, as detailed in Appendix 5 to the report, be noted.
Action by:
Chris Holme, Acting Corporate Director Resources
Louise Russell, Service Head Corporate Strategy and Equalities
Supporting documents:
- 10.1a CMBM SM Report Q1, item 7.3 PDF 203 KB
- 7.3b Appendix 1 - Control Budget, item 7.3 PDF 56 KB
- 7.3c Appendix 2 - Revenue Monitor P3, item 7.3 PDF 152 KB
- 7.3d Appendix 3 - HRA, item 7.3 PDF 18 KB
- 7.3e Appendix 4 - Capital Q1 2014-15, item 7.3 PDF 75 KB
- 10.1f Appendix 5 - 2014-15 STRATEGIC MEASURES - Q1 v0 7, item 7.3 PDF 277 KB