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Contact: Timothy Andrew Email: (firstname.lastname@example.org)
Resolved: that Councillor Mallory be confirmed as Chair and Councillor Krupski be confirmed as Vice-Chair of the Public Accounts Select Committee.
1.1 Timothy Andrew (Scrutiny Manager) invited the Committee to confirm Councillor Jim Mallory as Chair of the Committee and Councillor Louise Krupski as Vice-Chair of the Committee.
1.2 Resolved: that Councillor Mallory be confirmed as Chair and Councillor Krupski be confirmed as Vice-Chair of the Public Accounts Select Committee.
Resolved: that the minutes of the meeting held on 21 March 2018 be agreed as an accurate record.
2.1 Resolved: that the minutes of the meeting held on 21 March 2018 be agreed as an accurate record.
3.1 Councillor Ingleby declared a non-prejudicial interest as a member of the Board of Lewisham Homes.
Responses from Mayor and Cabinet
There are none.
4.1 There were none.
Resolved: that items on communicating the Council’s budget position and the annual complaints report be removed from the agenda – and – that the items on social care and income generation be added to the agenda for the September meeting. It was also agreed that income generation would be considered at every meeting, instead of an in-depth review. The work programme was agreed with the acknowledgement that it would need to change during the course of the year.
This item was moved to the end of the agenda.
5.1 The Committee discussed the work programme for the coming year – Members highlighted the importance of focusing Committee time on areas of overspending and possible sources of income generation.
5.2 Resolved: that items on communicating the Council’s budget position and the annual complaints report be removed from the agenda – and – that the items on social care and income generation be added to the agenda for the September meeting. It was also agreed that income generation would be considered at every meeting, instead of an in-depth review. The work programme was agreed with the acknowledgement that it would need to change during the course of the year.
· That the report be noted.
· That additional information be provided about the loss of income from volume purchasing in children and young people’s services.
· That advice be provided by officers about the attendance of Cabinet Members at scrutiny meetings and that the Chair of the Audit Panel should continue with his enquiries in this regard.
· That further information be provided to Members about the interim management structure in children and young people’s services.
· That the Committee receive additional information about the underreporting of over expenditure in the first three quarters of 2017-18.
6.1 Selwyn Thompson (Head of Financial Services) introduced the report, the following key points were noted:
· The report provided the financial results for 2017-18 and highlighted the key areas of the Council’s activity – including the general fund, the dedicated schools grant, the housing revenue account, council tax collection business rates collection and the capital programme.
· The financial year finished with an overspend of £16.5m, which was reduced to £15.2m after applying an amount held in the budget for contingencies and risks.
· The overspend represented a 7.1% variance on the general fund, which was significantly higher than in previous years and indicated that the pressures on Council budgets were of an order that had not been previously seen.
· The Children and Young People (CYP) directorate had overspent by £15.6m, which was higher than had previously been seen.
· Additional resources and management attention had been allocated to reviewing finances in the CYP directorate in the final quarter of 2017-18.
· Children’s social care had overspent by £12.6m. There were also pressures in placements budgets, including fostering and residential care for looked after children. This was a result of the weekly costs being higher than had been budgeted for and higher than expected volumes of cases.
· The main causes of the £2.2m overspend in the Partnerships and Targeted Services budgets were as a result of the costs of assisted transport as well as pressures in the budget for the Youth First contract. Further work was taking place to explore the reasons for the pressure in the Youth First budgets.
· In the Community Services budget, the majority of divisions had spent to budget or had underspent. An exception was in the adult social care budget, which had overspent by nearly £1m. The main costs related to pressures in the deprivation of liberty safeguards (DOLS) and placements budgets, which were compounded by increasing costs as a result of cases transitioning from children’s social care.
· The Customer Services budget was overspent by £5m. Strategic housing was overspent by £0.2m and public services was overspent by £0.3m. These overspends related to staffing costs and underachievement of budgeted income.
· The main pressures in Customer Services were in Environmental Services as a result of the late introduction new waste collection services and increased vehicle hire costs.
· The technology and change division was overspent by £1.3m – the service delivered £1m in savings in 2016-17 in 2017-18 the reduction in the budget, combined with the costs of new software licenses and unachieved savings resulted in the overspend.
· The Resources and Regeneration budgets were underspent by just under £2m.
· There were pressures on schools budgets. Nine schools ended the year with licensed deficits. Three schools were granted loans in excess of £0.5m.
· The Housing Revenue Account reported expenditure to budget - after transferring surpluses to reserves in preparation for the funding of the new homes programme.
· The Council tax collection fund was slightly lower than target.
· Business rate collection was also lower than expected.
· The Capital Programme spent £87m, representing 86% ... view the full minutes text for item 6.
· That the report be noted.
· That further information would be provided (before the budget round in November) about the lobbying (mostly being carried out by the LGA) on funding for care services.
· That additional written information would be provided about research on local government finance.
· To note that Children and Young People Select Committee was due to hold a briefing on children’s social care finance and that the Chair would seek to have Public Accounts Committee members attend that as part of a joint briefing.
· That the Overview and Scrutiny Committee be asked to consider the Council’s financial position post 2020.
7.1 Selwyn Thompson introduced the report, the following key points were noted:
· The report presented the Council’s financial position at the end of May 2018 - projected to the year end. It set the tone for subsequent reports to members during the year.
· The current reported overspend in the Council’s budget was £14.8m.
· Forecasts early in the year tended to be worse than the final outturn.
· Work would take place during the year to control areas of overspend.
· The Council was currently transitioning to the new Oracle Cloud finance system, which would be used by budget holders to examine expenditure.
· Officers intended to use the new Oracle Cloud reporting tool to re-examine expenditure and produce a new financial forecast report for the Committee (and Mayor and Cabinet) after the summer.
7.2 Selwyn Thompson responded to a question from the Committee about the Oracle Cloud financial system:
· The new Oracle Cloud system would amalgamate financial and human resources information and provide more robust and accurate information about expenditure. The system was already being used but the reporting functions had not yet been rolled out across the organisation.
· It was anticipated that the reporting tool would successfully be rolled out by the end of July.
7.3 Ian Thomas (Chief Executive) was invited to address the Committee with his thoughts about the Council’s financial position and to provide a summary of actions he had begun to implement since joining the organisation, the following key points were noted:
· The Council had saved a great deal of money over the past eight years of austerity but more would be required.
· It was understandable that, in order to protect frontline services, decisions had been made to reduce support services in the back office.
· Reductions in human resources and finance (in particular) had diminished the support offer that was available for frontline service departments.
· Specifically, the strategic corporate support from human resources, finance and organisational development needed to identify cost drivers in directorates and help deliver savings initiatives had not been available.
· A major programme of transformation would commence. It was recognised that the most straightforward to achieve savings had been made. Further minor changes within the organisation would not deliver the £30m of reductions in the budget that would be required in the next two years.
· Significant changes in the Council’s operating model would be necessary and would need to include: changes in the relationship between the Council and citizens; substantial ‘channel shift’ to promote digital services; further work on demand management; and a review of the relationship between spending and investment.
· Work would also take place to deliver strong commissioning strategies for the medium to long term.
· Nationally, many councils were struggling with the same issues.
· Councils were lobbying through the Local Government Association (LGA) to ensure that local government would achieve a better deal from the comprehensive spending review in 2019.
· The National Audit Office had reported that spending cuts in local government were in danger of damaging services to the most vulnerable in ... view the full minutes text for item 7.
· That the report be noted.
· That the recommendation to Mayor and Cabinet about the removal of the corporate and departmental expenditure panels be noted.
8.1 David Austin (Head of Corporate Resources) introduced the report, the following key points were noted:
· The strategy was the starting point for setting the 2019-20 budget.
· It set out the basis for the Council to set a balanced budget as well as the assumptions that were being made, including: funding streams from government (revenue support grant, better care fund, public health, new homes); future projections for Council tax (in consultation with colleagues in Planning) as well as collection, discount and inflationary increases;
· Further updates would be provided as assumptions reduced and information about the budget became clearer.
· The strategy also considered the role of pay and non-pay inflation and the business rate pooling pilot.
· Work had also been carried out to assess demand and review budget pressures to ensure that the budget setting process was sound.
· The revised prudential code required officers to provide additional information about the risks that were being taken with commercial activity. Further updates would be provided to the Committee later in the year.
· There were a number of changes on the horizon, including: a health and social care green paper in the autumn, likely consultations on the fair funding review and the comprehensive spending review in 2019.
· It was likely that the Council would need £54m of savings over the next four years, however, given the uncertainty (outlined above) it was only the £30m of cuts that would be needed over the next two years that could be predicted with any certainty.
8.2 David Austin responded to questions from the Committee, the following key points were noted:
· All of the assumptions about changes in the financial climate had been integrated into the report.
· Optimistic and pessimistic views of the Council’s finances had been set out.
· The medium term financial strategy was reviewed each year with new information and new assumptions.
· The removal of the departmental and corporate expenditure panels for all services would allow officers to focus their attention on areas of overspending.
8.3 In the Committee discussion the following key points were also noted:
· The Committee challenged the narrative that government debt was too high and that this necessitated increasing austerity.
· The level of cuts required in the next four years would present a significant challenge for the Council’s leadership.
· Members were concerned about the period of the Council’s finances after 2020.
· That the report be noted.
That the recommendation to Mayor and Cabinet about the removal of the corporate and departmental expenditure panels be noted.
Referrals to Mayor and Cabinet
9.1 There were none.