Agenda item

The Revenue and Capital Budget monitoring report is attached showing the expected year-end position predicted at the end of August 2017.

Andrew Pate, Strategic Director of Resources introduced the item. He stated that the key issue is that the overspend is being closely monitored and actions are being taken. He also pointed to the recent report to full Council on efficiencies which is relevant.

Panel members made the following points and asked the following questions on the report:

Responding to a query about the 3 month vacancy freeze, the Strategic Director explained that this means a 3 month gap in the spend. He further explained that there are some exceptions to this policy such as some posts in social care and those funded through capital. Councillor Rayment asked if this causes a lottery in that some departments will have higher staff turnover, the Strategic Director explained that there are variations but that departments can apply to be exempt from the policy.

Councillor O Brien stated that she fully understood the overspend in the social care area but queried the Finance and Efficiency portfolio where an overspend is shown and some areas where targets have not been achieved – she asked why this had happened. The Strategic Director explained that the majority of the overspend has been in Human Resources (HR) and there has been a complete review and redesign of the service and rebasing of the budget for next year and this has resulted in staff consultation and major restructuring within the service with two teams from two divisions being combined as part of this. This followed a Peer Review. The new arrangements have been benchmarked and future HR costs will be well below the average. There are other moves to save money in this area such as pulling back HR provided to other parties such as schools. The reasons for the in year overspend are that (1) some costs were previously part funded from reserves, to allow for the extra work arising from staff reductions within the organisation, (2) base budget inaccuracies which are now being corrected and (3) losses made on support for schools.

The Strategic Director also reassured the Panel that this HR overspend had not been taken lightly, action had been taken, but there is a need to fund HR at an appropriate level. He further explained that previous management savings targets elsewhere in the Resources department had been fully delivered but one of those savings was funded from capital so did not fully achieve the expected revenue impact. Councillor O Brien asked if the revenue/capital issue could not have been anticipated and asked if it is clear that the budget will be achieved. The Strategic Director explained this was a small part of a wider saving but that based budget legacy issues, such as this, have been reviewed ready for next year’s budget.

Councillor Barrett stated that he has concerns that virements can be abused and asked for information regarding how much money is vired across headings and who has the authority to authorize this. The Strategic Director explained that there is a budget management scheme and if a virement is over a certain amount, it would have to have Cabinet approval. Councillor Barrett asked that if something is vired across headings, why would it not show in the original budget. The Cabinet member for Finance and Efficiency, Councillor Charles Gerrish explained that the papers do not include the virements report so it is difficult to give a definite sum and that the information being requested is actually the virements at officer level rather than the overall level. The Strategic Director stated that he would respond separately with this information, he drew member’s attention to the link to Appendix 4 in the report. He gave reassurance that money is taken out where there are underspends.

Councillor Anketell Jones noted that (referring to 5.4 in the report) most of the overspend is due to demand led statutory services. The Strategic Director stated that it is a complicated topic and the relevant team could address the issue more widely but he explained that spend patterns and the effectiveness of individual commissioning decisions are being reviewed. The service has significant demand and costs pressures.

Councillor Furse stated that the overspend is sizeable and the pressure regarding social care will continue to grow. He asked why there was an overspend in procurement (page 19), the Strategic Director explained that this is around cross cutting savings targets across the Council and the overspend shows that expectations were probably not realistic as the target tended to double count savings already being made within services.

Councillor Furse asked about the home to school transport savings, the Cabinet Member Councillor Gerrish explained that this report was produced in August and some changes would not have taken effect until the beginning of the school year in September – a number of savings have now come in.

Councillor Furse asked about the income from Sirona and it was explained that under previous arrangements the authority supported IT for Sirona but there has been a reduction in the service needed under Virgin Care.

Councillor Furse asked about the fees paid to Ernst and Young (EY). The Strategic Director explained that the details of this could be provided to Panel members, he further explained that EY have done work on due diligence, business planning, tax advice and priority based budgeting. The Cabinet Member, Councillor Gerrish explained that EY bring experience and expertise from their work with other councils.

Councillor Barrett asked about buying leave option for staff and also about how consultants are paid (a set fee or by percentage of savings they make). The Strategic Director explained that the buying leave option for staff is a way of building flexibility into budgets, it is early days but could save tens of thousands. Regarding consultants, with EY there was a smart procurement which has led to a financial partnership with them. EY are only used on issues where there is no in-house expertise or capacity, they would generally be paid on a set fee basis. Councillor Barrett asked that the Panel be kept informed.

Councillor Rayment stated that when a budget plan is in place, will the impacts be assessed. The Strategic Director explained that there has already been a review of which aspects of the overspend will impact on next year’s budget and this is being allowed for.