Agenda item

This report sets out the Council’s draft capital and revenue budgets for 2023/24. In accordance with the Constitution, Cabinet is required to develop ‘initial budget proposals’ approximately three months before finalising the budget and setting council tax levels at the end of February 2023.

The draft budget is based on the principles set out in the Financial Outlook 2023/24 considered by the Cabinet on 18 October 2022.

Discussion:

The Committee considered a report setting out the Council’s draft capital and revenue budget for 2023/24. The Chief Finance Officer advised that it had been prepared prior to the Chancellor’s Autumn Statement so did not reflect the impact of the announcements made.

When the financial outlook was prepared, it assumed that ringfenced education grants would increase by £5 million. In terms of costs of services, the draft budget reflected additional pressures in children’s social care and education of net £16 million increased budget requirement.

The core schools’ budget in England would increase following the Chancellor’s announcement, £2.3 billion in 23/24 and £2.3 billion in 23/25

Members then raised comments and questions which included:

Safety Valve Intervention Programme - it was asked how the financial issues and impact from the high needs block deficit would affect the general budget, what was charged to the account that the Education Skills Funding Agency (ESFA) say should not have been charged and given that the DfE required yearly reporting why was the charge not picked up earlier.

The Chief Finance Officer said that the high need deficit had been a matter of concern for a long time and was grateful for statutory override as once confirmed, it was highly likely that the government would follow with another form of support. There had been a difference of opinion between the Council and the DfE as to whether the services which had been charged to the DSG (Education Psychology and SEND Social Work Teams) were appropriate charges to that grant, totalling £2.9 million of annual spend. The latest budget monitoring for the current year already reflected the impact of putting this sum back in to the general fund. Medway produced a return to government of the spend on the Dedicated Schools Grant (DSG) every year and so it was not clear how this was not identified by the government following previous years’ returns. Officers were working to further understand the circumstances regarding this.

The Assistant Director Education and SEND added that internally, officers were working to review historic decisions of HNB spend in certain areas, which had increased Medway’s deficit at a greater rate than it otherwise would have, which was done at the time to prevent taking vital funding away from schools and children. Officers undertook to share with Members any findings from that. The safety valve intervention had been submitted to the Secretary of State for approval and it was expected to be signed off in December 2022.

It was clarified that there were two strands of work taking place, one was on the safety valve and the other was a paper that was being taken to the Schools Forum on high needs funding. It was requested that the Schools Forum paper be shared with Committee Members and that an update on the safety valve also be provided, once a final decision from the Secretary of State had been made.

The Finance Business Partner added that the statutory override was expected to come to an end at the end of this financial year. The safety valve programme was important because if Medway was successful in its negotiations with the ESFA, it would allow Medway to continue with the statutory override until the end of the recovery plan.

Aut Even – in response to a question on how Aut Even featured in the new sufficiency plans, the officer said that scoping work was underway to explore whether Aut Even could be reinstated, though it would need refurbishment work to do so.  Sufficiency was a big challenge for children’s social care, in particular for children with disabilities and how best to meet their needs. A bid had been submitted to the DfE for funding for the refurbishment which had unfortunately been unsuccessful and once feedback was received, a challenge or further application may be submitted. Members asked for a briefing to be provided to the Committee on this work and officers agreed to provide an update at a later stage when the way forward was clear.

Efficiencies – it was commented that there were increasing budget demands year on year, and in prior years efficiencies had been identified but had not prevented the service from exceeding its budget. It was asked what was being done to manage spend.

The Chief Finance Officer said it was important to note that the budget was not set in isolation by any one department and was also not set centrally by the finance teams.  Setting the budget involved meeting on a regular basis with services to discuss opportunities and to identify solutions in delivery of demand led services which was extremely difficult.

The comments on it being unusual for a Medium-Term Financial Strategy (MTFS) not to have been produced was acknowledged and the Chief Finance Officer agreed that projections needed to be made as it assisted organisations over a long term period. A commitment had been made for publication of the MTFS in February 2023 and the only reason one had not been produced to date was due to the position the Council found itself in as a result of the Covid pandemic and trying to set budgets during a period of uncertainty. The publication of a Capital Strategy was envisaged for December 2023 which would look at a longer time frame of up to a 10-year period. This set of estimates would assist with the ability to make sensible projections.

The Assistant Director, Children’s Social Care added that part of the improvement journey had been about putting tangible systems in place in order to ensure efficiencies. This was a difficult task that was being done in a changing landscape, in a market driven by extremely high placement costs, with national workforce challenges and pressures on LA finances. The service was working as best as it could to reduce costs of placements where possible and improve commissioning practices through re-negotiation of commissioned placements. Work was also being done to claw back money from the health service as part of health funding for child placements as this would deliver savings. A multitude of work streams were in progress to manage sufficiency and efficiency.

Long term aspirations – it was commented that there was a distinct lack of longer-term projections in the budget and how each decision affected another was not made evident. This did not provide a reflection of the work being done, what the gaps represented, why they occurred and how long they would continue.  The Chief Finance Officer agreed that investment in long term solutions was an aspiration of all staff, and work was underway to develop a tool to assist officers to appropriately articulate the investment business case for such projects. A set of projections for the coming five years would be published alongside the proposed 2023/24 budget going to Cabinet in February, with thought being given to how the gaps in the budget would be presented going forward which may include ranges.

The Assistant Director, Children’s Social Care advised that modelling over five years had been completed on placements as well as forecasting the care leavers service based on the next three years. There was a multitude of collaborative working across the directorate.

Decision:

The Committee noted the contents of the report and requested:

1. A briefing update on Aut Even (when the way forward was clear);
2. An update report to the Committee on the Safety Valve Intervention Programme;
3. A copy of the High Needs Block Funding report submitted to the Schools Forum to be shared with Committee Members; and
4. The outcome of the work officers were undertaking in relation to the High Needs Block historic spend, be shared with Committee Members.