Lead Member – Councillor Gwilym Butler, Portfolio Holder for Finance, Corporate Resources and Communities

Lead Officer - Ben Jay

RESOLVED:

That Cabinet Members:

A.    Direct the Chief Executive to lead all Officers in urgently taking the necessary actions to improve the Quarter 1 forecast of a projected spend over budget of £38.5m (30th June 2024), by year end, predominantly focussing on remaining savings or mitigating actions to be delivered in 2024/25.

B.    Discussed the impact of the projected expenditure forecast on the General Fund Balance and noted the risk of further service pressures (savings required) in next year if financial performance in the current year is not improved.

The Portfolio Holder for Finance, Corporate Resources and Communities presented the report which provided a detailed review of the Council’s financial position as at the 30 June 2024, which had been discussed at length at the Transformation and Improvement Overview and Scrutiny Committee earlier in the week.

Members were advised that the senior officer team had been instructed to take measures to ensure the council lives within its means and brings in a sustainable budget for the long term. A collaborative budget with the opposition has been proposed to work together for the benefit of Shropshire residents, staff, and the council's future.

It was acknowledged that the council has an expenditure of over £700 million a year and is facing a projected overspend against reserves.

Concerns were raised regarding the overspend in various departments, with all 10 portfolio holders exceeding their budgets, some by millions of pounds. In response, it was emphasised that by the difference between overspending and not achieving savings, and the need for strict financial control.

In response to a question regarding what could trigger the ‘adverse’ financial situation and any unknown pressures which could impact the budget, it was hoped that there would be a mild winter with no rain to avoid additional pressures. The impacts of winter fuel payments, the possibility of taking away bus passes, the single person discount on council tax, and the rising energy cap on the people in Shropshire were highlighted.

Members were advised that the council will bring forward contingency plans to ensure it stays within budget. The importance of unity and working together was emphasized to ensure the council's sustainability.

Members of the opposition were invited to work together with the administration for the benefit of residents, staff and the council. In response, group leaders expressed concerns about transparency and access to information, however would consult with their members.

RESOLVED:

That Cabinet Members:

A.    Direct the Chief Executive to lead all Officers in urgently taking the necessary actions to improve the Quarter 1 forecast of a projected spend over budget of £38.5m (30th June 2024), by year end, predominantly focussing on remaining savings or mitigating actions to be delivered in 2024/25.

B.    Discussed the impact of the projected expenditure forecast on the General Fund Balance and noted the risk of further service pressures (savings required) in next year if financial performance in the current year is not improved.

To scrutinise financial performance at Quarter 1 and identify issues that may require further investigation by an overview and scrutiny committee, report to follow

The Executive Director for Resources introduced the corrected report which provided a detailed review of the Council’s financial position as at the end of June 2024, which showed an anticipated overspend of £38.5million. He drew members’ attention to table 4 which provided a breakdown across various service areas and expressed concern that the general fund balance was insufficient to be comfortable with the anticipated level of overspend.

Members noted the three scenarios, (favourable, central, and adverse) for the financial risk, with the favourable scenario projecting an overspend of £25.5 million, central with £38.5million and adverse with £73.75million.

Members were advised that the resizing exercise, estimated to be around £5.5 million, would be allocated to reduce the overspend figures by period 6.

Concern was expressed about the lack of up-to-date information and a query was raised as to why period 4 data was not available for scrutiny. The Executive Director for Resources responded by clarifying that the period 4 report had not been produced and signed off by the Chief Executive Team. He assured that a verbal update based on the latest information would be provided later in the meeting.

A query was received regarding the organisational savings and the initiatives proposed to mitigate the shortfalls. The Assistant Director for Finance and Technology explained that some savings were simple to deliver, while others were more complex and took longer than anticipated. He mentioned that a cross-cutting group of officers was working on savings delivery and thematic leads had been assigned to support service areas. He also highlighted the importance of scrutinising individual transactions to ensure necessary spending only.

Members expressed concern about the slow progress in delivering savings and the large number of yet-to-be-realised notes in the report. Further information on the state of play and specific areas like green waste management and the pyrolysis plant were requested. Members were advised that the green waste charging had just gone live, and they could only account for six months of income in the current financial year. The Assistant Director for Finance and Technology added that the delay in the pyrolysis plant was due to issues with the group structure around delivery.

Members questioned the forecasted adverse position of £73.75 million and what factors could tip the central scenario to the adverse scenario. Members were referred to Table 3, which showed the breakdown of figures for the adverse scenario and noted that the adverse scenario considered unknown risks and potential failures in savings delivery.

A recommendation was received to direct the Chief Executive to attend the first meeting of the Transformation Task and Finish Group with a plan to reduce 3^rd party spend by 10% and provide a plan to deliver savings within the Place directorate. An amendment was requested to include members’ disappointment at the lack of information concerning risks facing the Council and concern that arrangements were only now being put in place to secure tighter control over all aspects of spending. Upon a vote, the amendment fell and it  ...  view the full minutes text for item 30