The 2nd August 2023 Cabinet report on the Council’s finances from 1 April to 30 June 2023 showed a potential overspend of £6.1m for the whole year. This is the 3rd year running that the Tories set a budget in the February which collapsed within a few months.

Any decisions made by the new Labour administration since the AGM on 24 May 2023 won’t have impacted on this forecast position.

As in previous reports the forecast overspend is not due to factors that have arisen since the budget was approved by Cabinet in February, but simply through “bad budgetting”.

Pay Award £3.4m

The Cabinet approved the budget on 15 February 2023 based on a 3% pay award for 2023/24. The Joint Unions pay claim for 23/24 (issued 31 January 2023) sought an award of RPI+ 2% which would have been around 15%. The Employers made a counter offer (in broad terms) on 24 February 2023 of 3.88% plus an increase of £1925.

The Council’s budget for the pay award was £6.7m with a projected overspend, now, based on the latest offer of £3.4m – 50% variance!

Social Care £3.4m

This overspend is attributable to:

• Adults – “due to increased costs in Mental Health services and younger adults due to the rising costs of complex placements transitioning from children’s social care”
• Children – “placement costs”

These are well known and understood issues.

Cost of electricity for street lighting £0.148m

The budget was set at £0.987m and the overspend is forecast at 15% (£0.148m)

Comment

The above overspends are offset by some modest improvements elsewhere within the budget.

The Council, through its Local Government and Union contacts should have, at its disposal, the most current position on pay award claims and aspirations together with an informed view on most likely outcomes. Budgetting on the basis of a low “unlikely outcome” given that inflation was 10%+ is not competent budgetting. It is simply making the numbers “fit”

Increasing costs in social care for Adults and Children is not a new issue. The Council will not have been presented within this 3 month period an unexpected tick up in demand or complexity of cases. A good budget would expect pay award increases – in this sector they would probably be higher than the average given the aspiration to significantly increase the national living wage levels.

The increasing costs of electricity is well publicised and should not come as a surprise. A 15% variance shows that the Council has no competence in modelling usage and

The net effect of this forecast overspend is that the Budget Risk Reserve will be ZERO at 31 March 2024. This specific reserve was £36m at the start of the Tory administration in 2018 – there were £22m in other budget related unearmarked reserves. This total of £58m has been totally depleted. This is unaffected by the A52 overspend which was covered by a loan, nor by COVID where the Council was given very generous additonal grants that actually generated a surplus.

This loss was simply down to the Tory administration consistently approving budgets that drew on reserves to “balance the books” – both the Administration and the departed Chief Finance Officer used opaque and disingenuous language to suggest that the budgetting was “remarkable” when in fact it was incompetent and masked infrastructural issues.

Given the speeches that were made by the Tories around the time of budget setting regarding the many hours spent on examining each cost category, line by line, and scrutinising detail it is surprising that such obvious issues were overlooked…or perhaps they weren’t?

The new Labour Administration has a headwind to deal with. This problem is only going to be solved by some serious and competent talks with Central Government – tightening discretionary spending or increasing Council Tax won’t bridge the gap for the long term.