Question

There is a paragraph in every Revenue Monitoring Report called “Analysis of Issues” which is on p 29 of this agenda.  It says “Effective monitoring of budgets is an essential element of providing cost effective services and enables any corrective action to be undertaken, if required.  Many of the budgets are activity drive and can be volatile in nature.

P 28 shows that there was an overspend of £454,000 in the year 2015/16, roughly equivalent to ½% of Council Tax.  The situation worsened between January and the end of the financial year.   Was this overspend because the monitoring you were carrying out was not effective, because the corrective action you took was not effective, or because you did not think corrective action was required?

Answer

The Council did indeed overspend by £454k last year which is 0.2% of the gross expenditure of approximately £191m.  Although we don’t like any overspends at all, and I get very cross as my Executive colleagues will know, it is important to recognise it is the first time we have overspent and the numbers I was able to dig out go back to 2007/08.  I think I was appointed in 2007 so I think that is a pretty good track record and I calculated about £6.1m underspend during that period.

The situation worsened as you referred to from January amounting to £77k and as you will see from the agenda on page 28 we have favourable variances in the Chief Executive’s Department of £185k, we have an adverse variance in Children’s of £106k (and it is detailed underneath what that was on).  We have Health and Wellbeing detailed as £278k and we have favourable in Environment and Finance; so a net figure of £77k.  This means that our accuracy at forecasting is very accurate because we are within 0.4% gross expenditure which shows that our monitoring is effective.  Indeed in the whole year of 2015 we were within 0.3% of gross budget.

Budget variances that revealed themselves in 2015/16 reveals the nature of spend pressures we face which are often uncontrollable.  In particular the additional high cost children’s care placement that we must make and also find housing for increased levels of homelessness.  We cannot simply turn the tap off with regard to these statutory cost pressures but we can do what we can to find savings elsewhere to compensate as has been detailed in the report.  We did this in many areas across the Council’s budgets and managed to offset an unusually high increase in our statutory demand led budgets.  Corrective action also includes ensuring such pressures are factored into following years’ base budgets, which if you look at the 17/18 Medium Term Financial Plan you will find that is what happened.

We take financial management very seriously at the Council here as is shown by our forecasting accuracy and our performance over the last 10 years and in general underspends over those 10 years were common.  Furthermore we have also successfully delivered on significant savings plans over that period in response to both growing costs of statutory services and rapidly declining Government grant.

Supplementary Question

I will take the supplementary in writing Anthony you will be relieved to know when you hear what it is.

Because you referred to going back to 2008/09 I did a similar exercise of going back as far as I could with what is available on the website because we have always had similar pressures we are a demand led organisation and you can’t say no.

What I would like is the same figures that are on page 27 i.e. a general fund, Housing Revenue Account and Schools Block over or underspends since we became a unitary authority in 1998?  I am sure we have those figures somewhere and if we don’t then go back as far as you can and I will take it in writing.  I am not expecting you to answer me now.

Supplementary Answer

The Leader of Council gave the following response:

I would just draw your attention to the £220k non-payment from a third party administration which no one, regardless of what political party you are, could actually anticipate that and that is nearly half the overspend unfortunately.

Thank you for your question and we will get your supplementary answered in due course.