Agenda item

The Assistant Director of Finance and Strategy presented the report which set out the draft outturn for 2023/24.  The report set out the material financial issues which had been identified since the budget had been set in February 2023.

The overall outturn reflected an overspend for the General Fund of £7.120m against a budget of £336.590m and due to strong financial management, the Council had been able to absorb most of the pressures arising from the Children’s Trust.

The Children’s Trust contract value was £150.938m, of which the Council’s share was £66.654m.  The Children’s Trust were forecasting an overspend of £20.579m, of which the cost to the Council would be £9.087m.  If these pressures were not mitigated this would pose a significant financial risk to the Council.  Whilst the Trust were looking at potential mitigations, there was a risk that this position could worsen before year end.  A key risk was the delivery of efficiency savings of £7.632m which formed part of the contract sum.  The Trust was presently forecasting that £6.653 of these savings were at risk of non-delivery.  Additional mitigations of £1.114m had been identified, however there remained a residual financial risk of £5.539m which could increase the overall pressure from £20.578m to £26.117m.

The Executive Director of Children’s Services announced that the Council had now issued the Trust with a Rectification Notice as part of the contract arrangements.  A response from the Trust was awaited about how they proposed to deal with the Notice and the Committee would be kept informed.

The Council’s overall outturn forecast for the Housing Revenue Account was a forecast overspend of £93k against the approved budget of £38.752m.

During discussion on the report, the following key points were made:

i.     The Council was being run well and it was clear where the main overspend was coming from.  It was disappointing that the Trust was not delivering in line with their contract, including promises on efficiencies not being delivered.  Could the contract with the Trust be referred to the Scrutiny Management Board for Scrutiny’s work plan?

ii.    It was acknowledged that the Trust had been imposed on the two councils by Central Government and urgent representations needed to be made to Ministers about the situation and the requirement for financial action.  In response, the Executive Director of Children’s Services advised that outcomes for children were being monitored and for the financial issues, the rectification notice had now been issued.  The Council was working closely with the Department for Education.

iii.   The Executive Director for Finance and Performance confirmed that every effort was made to minimise overspending and each directorate was asked to look at mitigation.

iv.   It was noted that a number of legacy audits for 2020/21 were still outstanding, including Northamptonshire County Council.  Members asked for clarification as to what, if any, were the risks of these accounts not being closed.  The Executive Director for Finance and Performance explained that the final balances and disaggregation from the County Council were still outstanding, for example the final assets and debts.  It was hoped that both outstanding accounts would be signed off in September.

v.    The bad debt provision was noted, and Members sought clarification as to what the majority of the debt was for.  In response, it was confirmed that a number of bad debt provisions were held and covered a number of areas.  The £870k detailed in the report related solely to the General Fund.

vi.   The pressure of £272k on agency costs within Growth & Regeneration was noted and Members questioned when the proposed restructure of the service would be completed.  In response, the Executive Director of Place and Economy advised that the restructure was ongoing and that some senior roles were being appointed to.

RESOLVED:

To note the draft outturn report 2023/24.