Agenda item

Report by the Chief Executive.

13.1     The Assistant Chief Executive introduced the report. He outlined that there was still considerable uncertainty around the Government’s Spending Review which was due to be announced later in the day. It was likely that the Council would not receive full details of the financial settlement of funding from central Government until later in December.

13.2     The Committee discussed the report and commented on several aspects. A summary of the points raised is given below.

Medium Term Financial Plan (MTFP)

13.3     The Committee noted the projected budget deficit of £11.548 million for 2021/22 in the updated MTFP and the scenarios outlined in the report. It asked for further details of some of the larger budget pressures described in the table on pages 39 and 40 of the report namely:

• Looked After Children (LAC) placement costs (MTFP reference Z)
• Adult Social Care (ASC) future demand modelling (MTFP reference AD); and
• Council Tax collection fund deficit (MTFP reference AF)

13.4     The Chief Finance Officer explained that the financial planning process keeps budget pressures under review during the course of the year. Some of the cost pressures identified through the MTFP are related to increased costs due to Covid19. The approach to the current year’s budget (2020/21) is to identify Covid19 costs and non Covid19 costs separately and they will be reported through Council Monitoring reports. It is assumed that the Council will be compensated by central Government for the majority of Covid19 related expenditure. 

13.5     The growth in LAC placement costs reflects the situation that a number of children are being placed in settings due to Covid19 that are more expensive and that this cost pressure will reduce over time. The ASC future demand modelling takes into account an anticipated increase in the percentage of people being discharged from hospital with care needs that will become the responsibility of the Council initially (around 60%). The Council is working with the District and Borough councils to understand the impact on Council Tax collection rates. It is anticipated that there will be a downturn in collection rates as the number of people claiming support increases.

13.6     The Council is seeking financial certainty after the announcement of another one year financial settlement in the Spending Review 2020. The Council would like to see a return to longer term financial settlements where the Government announces revenue funding for three financial years and capital funding for four financial years.

Covid19 costs and current year deficit

13.7     The Committee asked if there was a Covid19 expenditure funding deficit at present. The Chief Finance Officer outlined that around £40 million has been paid so far to the Council in Covid19 expenditure payments from central Government. The Council has also submitted a claim for the loss of fees and charges totalling £1.6 million for the first four months of the year and there will be opportunities to make further claims. It was confirmed that the financial situation is manageable, and any funding deficit will be reported through the quarterly Council Monitoring reports. The funding gap reported in quarter 1 was around £2 million, which can be covered by reserves if necessary. This is the only potential draw on reserves in the current financial year.

Reserves and Contingency

13.8     The Committee asked if there was a major budget shortfall whether the level of reserves held is sufficient to cope with the financial pressures placed on the Council. The Council has a robust reserves position and holds £10 million as a general contingency reserve in line with the Chartered Institute of Public Finance and Accountancy (CIPFA) guidance. It holds a total of around £100 million in reserves, the majority of which are ringfenced for specific purposes (e.g. schools, public health, waste contract, capital programme and insurance reserves).  Around £32 million is available as financial management reserves. In addition to reserves, there is a budgeted contingency of 1% (around £3.9 million) built into the revenue budget to manage in year changes in expenditure and savings.

13.9     The Chief Finance Officer added that a number of scenarios had been modelled for the MTFP, such as the continuation of an ASC precept. The exact impact on the budget will not been known until details of the Council’s funding settlement are available. Consequently, the need to draw on reserves to manage the predicted budget deficit in the next financial year may be lower.

Savings Plan

13.10   The Committee noted the savings target for the Library and Information Service contained in the savings plan and commented on the important role that libraries play in providing access to the internet and information technology support. It asked whether the savings would mean further library closures. The Lead Member for Communities and Safety clarified that there are no plans for further library closures and there would be no library closures in the next financial year. The planned savings will be achieved from other areas such as the book stock fund where demand for physical books has reduced and e-books increased.

Core Offer and Priority & Delivery Outcomes

13.11   The Committee made a number of comments on the updated Core Offer, Priority Outcomes and Delivery Outcomes.

• Social care and health integration.  East Sussex County Council (ESCC) is working with partners to integrate social care and health services but this positive work is not referred to specifically.

• Public Health. Whether there is sufficient prominence given to Public Health in the updated Core Offer in the context of work involved in dealing with Covid19.

• Increased reliance on the internet and Information Technology and whether this is reflected in delivery outcomes.

• Working with the community and voluntary sector. In the wording of the 4^th bullet point after “As one Council we will…” in the Core Offer, it would be preferable to use the word ‘minimise’ instead of ‘avoid’ so that it would read:

We will:

·         work effectively with the community and voluntary sector, including to minimise the need for statutory services;

• Archives & Record Service. The Core Offer should allow the Council to continue to receive archive material even if it is not possible to catalogue and make it available immediately, otherwise there is a risk of damaging the historic record.

RPPR Board

13.12   The RPPR Board meeting will be held on Tuesday 22 December 2020 and it was noted that Cllr Rodohan will join the RPPR Board. The Chair invited other members of the Committee to join the RPPR Board should they wish.

13.13   The Committee RESOLVED to note the information in the Cabinet RPPR report of 2 October 2020 (appendix A) and the updated Medium Term Financial Plan (MTFP).