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Better planning makes a better budget. Not Buzzwords!

On Wednesday 8th December 2021 the Chief Finance Officer, Simon Riley, will present a paper to Cabinet for approval which does not withstand a basic level of scrutiny.

It can be stated with a high degree of certainty that the Cabinet will unanimously approve it.

The paper is littered with hackneyed Corporate buzzwords which provide an illusion of modern thinking, authority and vision. “Resilient” ; “Sustainable” ; Partnership” ; “Co-produced” ; “Vibrant” ; Smarter”

It is none of these.

Why?

Page 5 of the report seeks to suggest that the previously reported budget gap of £13.667m will reduce to £10.618 ( no rationale given) resulting in a net budget gap of £1.844m – after £8.774m has been transferred to reserves.

Figure 1 : Extract from Cabinet paper 8th December 2021

A clearer statement would be :

There is a budget gap (deficit) of £1.844m and no transfer to reserves.

Basic financial logic is – whilst there is no surplus there can be no transfer to reserves.

All of this pre-supposes that the November 2021 forecast overspend for 2021/22 of £11m does not pass through to the following years. In a previous article “Council already forecasting a £12m overspend – incompetent budgeting!” I highlighted that the Council continues to poorly budget for the rising cost of Children’s Services and has never fully budgetted for the expected costs, in year, for the last 4 years.

Figure 2

The overspend has been financed from raiding reserves. The growth in the numbers of Children in Care is a good indicator of the spend trendline (as suggested in a previous Cabinet report) and a reasonable basis for budgetting. In the 3 year budget/forecast created in Feb 2021, it was assumed that Children’s Services would be constant at £69m (blue line). The 2021/22, 8 month actuals, confirms a forecast £8m overspend – as the trend predicted.

The numbers presented in Figure 1 assume no growth in Children’s Services. It actually assumes that in 2022/23 there will be a reduction in the costs of Children’s services!

In a statement issued by Derby City Council on 1st December 2021 the Tory leadership stated that there are £13.4m new pressures for the 2022/23 year i.e. unplanned, unexpected, unpredictable – a plan that was created in December 2020, before the success of the vaccine could have been remotely foreseen….and therefore giving rise to opportunities, not just pressures. In the same context there are £12.1m of new savings that were not identified a year ago despite a reported £11m budget gap for 2022/23.

This is symptomatic of bad planning!

Comment

The statement in Figure 1 that nearly £9m is planned to be transferred to reserves is blatant “window dressing” to simply flummox the foolish. Anyone who spends a few minutes examining this will see that it is a complete mirage.

The Council’s general budget reserves have plummeted from just over £50m when the Tories came into office in 2018 down to £14m with a much increased income.

The Council was generously supported by the Govt during the main period of the Covid lockdowns. The Chief Finance Officer, Simon Riley, continues to evade scrutiny, by using his personal buzzword of “Covid scarring” which is a convenient pseudo-intellectual excuse for unnecessary, non-specific and unaccountable costs that Cllrs seem to accept with earnest reverence.

Last year Cllr Poulter announced that the budget for 2021/22 was “remarkable”. It was remarkable in that after just 3 months it was forecast to be overspending by £11m. Most of the that resulted from incompetent planning for Children’s Services ( see Figure 1).

Riley managed to slip that schoolboy error past the befuddled gaze of the Cabinet last year – surely they won’t fall for that buzzword-fuelled trick again this year?

Categories: Uncategorized

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