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Council understates Children’s Services budget by £6m…again!

“The current single biggest risk that the Council faces is the cost and demands for Children’s Social Care”

“…this is of significant risk to the Council’s financial sustainability.”

Quotes from the Council’s budget proposal document from December 2021.

Yet, once again, the Council fails to set a realistic budget for Children’s Services

Background

  1. The cost of Children’s Services (exc Schools) has increased by £6-£7m each year
  2. The trend has always been consistent with the growth in the number of children in care
  3. As recent as November 2021 the Council has been warning that the number of children in care could reach 700 by March 2022 – currently around 650 ( 2021/22 assumed 675)
  4. The forecast overspend for 2021/22 was stated, in November, as being £6.5m ( £75.5m vs budget of £69m)

The mistake that the Council makes each year is that it sets the following year’s budget relative to the previous year’s budget and not the actual outturn; this means that no expected growth is included in the budget

Council’s Budget proposal – issued December 2021

The actual costs for 2021/22 are forecast to be around £75.5m. As per last year, the Council has assumed a flat budget for the next 3 years. The Local Government Association has predicted a general increase in the cost of Children’s Services at 4.8%. Figure 1 shows the last 4 years, illustrating that the actual costs have consistently exceeded the budget and that the growth tracks the number of children in care.

Figure 1

Comment

2022/23 might be the year that the trend is broken – however neither the Council nor industry organisations are predicting that outcome.

Setting a budget which does not reflect the mostly likely outcome is folly. Time will tell whether the Cabinet, the Opposition, or any other Cllr asks the obvious question as to why zero growth is being planned. If the Chief Finance Officer can’t provide a convincing answer then the budget should be adjusted.

In setting a realistic budget the costs need to be increased by ~ £6m pa. This can’t be funded by the Council Tax as this is already set at the maximum ( £6m is equivalent to a 6% increase in Council Tax). The options are either to manage demand, make cuts elsewhere, or raid reserves, or a combination of all three. The problem is that £6m pa would wipe out the Budget Risk Reserve. Whilst this won’t bankrupt the Council it will severely challenge the Council’s financial management

In “burying their head in the sand” on this issue they are simply delaying the date when the inevitable has to be addressed. If difficult decisions are going to be made then best to do it now, rather than next year.

A cynic would say that, as the Tories do not expect to be in power after May and, that by deferring the action, they leave the problem to be resolved by the next administration.

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