Agenda item

Resolved: to note the report. The Committee agree to refer its views to Mayor and Cabinet, as follows:

·         The Committee asks for additional information about the level of the Council’s reserves. It would like to better understand the different types of financial reserves held by the Council.

·         The Committee recommends that the contingency put aside in the budget should more closely relate to the level of risk of achieving savings put forward each year in the Lewisham Future Programme.

·         The Committee also requests further information about school deficits. Specifically, it would like to know how many primary and secondary schools are in deficit, how many are projected to be in deficit in the future and whether or not Lewisham is an outlier in London and in England, in relation to the number of schools in financial difficulty.

7.1      This item was considered after the update on the work of the Lewisham Poverty Commission under item eight.

7.2      Selwyn Thompson (Head of Financial Services) introduced the report. The following key points were noted:

·           For 2016-17 there had been an overspend of 4% of the Council’s general fund, which was higher than previous years.

·           Pressures were documented throughout the year (and reported to PAC) and included overspending on children’s social care - particularly in placements budgets. There were also placement pressures in adult social care as well as overspending in environmental services because of waste disposal costs.

·           There were an increasing number of schools facing financial difficulties (as outlined in the previous item). The Council’s financial services team was working on improving the support it provided to schools.

·           The capital programme for 2016-17 had been underspent. Further work needed to take place to revise budgets for capital projects when timetables for delivery slipped.

·           Numbers of looked after children were decreasing as were numbers of children using Council transport services.

·           The corporate expenditure panel was still in place to scrutinise spending.

·           The financial results for the first quarter 2017-18 were due at the Committee’s next meeting. It would be reported that the year had started with pressure on budgets.

7.3      Selwyn Thompson responded to questions from the Committee, the following key points were noted:

·           Services were not punished for underspending their budgets by having their allocation for the following year reduced. The Council’s budget was considered as a whole at the end of the year. In year, executive directors could move sums between services in their directorate.

·           Some of the cuts were difficult to deliver. There were some pressures mounting in services that were unable to reach their existing targets.

·           There were still significant sums of savings to find in the years 2018-19 and 2019-20. The level of cuts was outpacing the speed of organisational change.

·           There was £7.5m set aside each year to manage budget pressures.

·           There was also £3.7m put aside last year for risks and other budget pressures.

·           The Executive Director for Resources and Regeneration gave service managers the first opportunity to control their budgets before allocating additional funding.

·           The Council was working with finite resources. Increasing contingencies would require more cuts to be made to fund the spare capacity.

·           The £7m overspend in 2016-17 was taken from reserves. The Council had a number of different reserves, which were allocated to different service areas. The general fund balance was £13m - which was unallocated to any service budget.

·           There were funds that could be used for a major incident or emergency in the borough.

·           Some landlords were given financial incentives in order to sustain the tenancies of families at risk of being evicted. This saved the Council money on families requiring emergency accommodation.

·           Some progress had been made on generating income from wireless concessions but this had been below initial expectations.

·           Lewisham home receive a management fee to act on behalf of the Council, this fee is drawn from the housing revenue account. There was a separate allocation for the Brockley PFI.

7.4      Resolved: to note the report. The Committee agreed to refer its views to Mayor and Cabinet, as follows:

·           The Committee asks for additional information about the level of the Council’s reserves. It would like to better understand the different types of financial reserves held by the Council.

·           The Committee recommends that the contingency put aside in the budget should more closely relate to the level of risk of achieving savings put forward each year in the Lewisham Future Programme.

·           The Committee also requests further information about school deficits. Specifically, it would like to know how many primary and secondary schools are in deficit, how many are projected to be in deficit in the future and whether or not Lewisham is an outlier in London and in England, in relation to the number of schools in financial difficulty.