Agenda item

To consider quarter 2 budget monitoring. 

Consideration was given to the forecast budget position of individual directorates as at 30 September 2021 (Quarter 2 2021/22).

Services were projecting an overspend of £10.337m against allocated budgets, however, after adjusting for reserves, corporate resources, revenue to fund capital costs (RCCO) and the application of centrally held Covid-19 grant funding, the adjusted projected outturn was an underspend of £4.490m.

Services continued to experience the financial impact of Covid,

most significantly a loss of income due to suspended or significantly reduced services. Pressures of £12.133m were expected to be managed through the centrally held Covid funding which was from the unused balance of grants received in 2020/21 and additional grants received or anticipated for part of 2021/22.

In addition to the Covid related issues, services were reporting a number of significant ongoing operational pressures which would need to be incorporated into the next refresh of the Corporate Medium-Term Financial Strategy.

The main change in budget position was noted in Adult Social Care budget, which had changed from a projected underspend of approximately £2m at Quarter 1 to a projected overspend of £0.409m. The main reason for this related to placements costs, in particular placements for people with mental health concerns, which had shown a 4% increase (139 placements) between Q1 and Q6. Also, the number of older people homecare placement numbers had increased by over 3,115 hours per week since April 2021 and this was likely to generate an overspend at year-end. These budget pressures were being offset by vacancies across the directorate along with brought forward balances from previous years. Staffing costs relating to Covid-19 were being offset by the use of Covid-19 grant income.

There were also cost pressures relating to Children’s Services. Delays in implementing the Oracle Fusion project were also causing cost pressures but these were offset by the use of reserves.

Expenditure on the Council’s Capital Programme was forecast to be £169,276m. There was a decrease of £1.103m in the Adults Social Care budget mainly in respect of slippage of Adult Social Care Grant resources into 2022/23. This slippage would now be used to fund improvements to the Walker Grange facility as agreed by Cabinet on 18 November 2021.

Approval was sought for the revised treatment of earmarked balances and earmarked reserves and the Treasury Management Mid-Year Review, which confirmed that the Council was meeting the requirements of the CIPFA Code of Practice and Treasury Management and the Prudential Code.

Reasons for Decision

Section 151 of the 1972 Local Government Act required the Chief Financial Officer to ensure the proper administration of the Council’s financial affairs. Budgetary control, which included the regular monitoring and reporting of budgets was an essential element in discharging this statutory responsibility.

Alternative Options

Cabinet could vary the proposed transfer of Covid funding to the Sandwell Children’s Trust or the requested virements within Public Health which reflected increases in the available resources since the 2021/22 budgets were approved.

Agreed: -

(1)          that financial monitoring for individual directorates as at 30 September 2021 (Quarter 2 2021/22) be received and referred to the Budget and Corporate Scrutiny Management Board for consideration and comment;

(2)          that the projected financial position of services projecting an overspend of £10.337m against allocated budgets and an underspend of £4.490m after adjusting for the movement on reserves, use of corporate resources and the application of centrally held Covid-19 grant funding, be noted;

(3)          that the following budget virements above the higher of £0.250m or 1% of the Gross Budget of the service area be approved:

(4)          that an allocation be approved of £0.112m to Sandwell Children’s Trust to fund Covid-19 pressures which would be funded from the Covid-19 emergency funding which would be an addition to the £0.514m that was approved at quarter 2;

(5)          that the revised treatment of Earmarked Balances as Earmarked Reserves, be approved;

(6)          that a Revenue Contribution to Capital Outlay of £0.318m from the ICT revenue budget to support and progress ongoing capital projects be approved;

(7)          that the proposed spend against the Contain Outbreak Management Fund ICOMF) totalling £680,812, be approved;

(8)          that the Treasury Management Report be approved.