Agenda item

This report sets out the financial forecast for the General Fund revenue budget, the Housing Revenue Account, the Dedicated Schools Grant and the Capital Programme, as at Quarter 3 2024-25.

Cabinet RESOLVED:

(1)        To note the new grant funding received in year, the overall financial position and the actions being taken to manage the issues arising as detailed within the Q3 Financial Forecast.

(2)        To note progress on the savings delivery tracker, as detailed in Appendix A of the report.

(3)    To note the prudential indicators for treasury management, as detailed in in Appendix B of the report.

(4)        To approve the virements set out in section 4.7.13 of the report.

Eligible for call-in: Yes

Deadline for submission of call-in: 6pm on Wednesday 22 January 2025

Councillor Mili Patel (Deputy Leader and Cabinet Member for Finance & Resources) introduced a report which set out the financial forecast for the General Fund revenue budget, the Housing Revenue Account, the Dedicated Schools Grant and the Capital Programme as at Quarter 3 2024-25.

In introducing the report, Councillor Mili Patel highlighted that the current forecast would be the final update on the Council’s financial position in advance of the 2025-26 budget proposals being presented for consideration in February, highlighting that once again, despite the considerable efforts to maintain financial control, the operating environment and wider economic context faced by the Council remained challenging.  In seeking to prioritise key statutory services the ongoing impact of austerity was again highlighted and whilst welcoming the new Government’s promise of future multi-year funding settlements the need for this to be accompanied by urgent wide ranging reform of Local Government Funding arrangements was also highlighted.

In outlining the challenging financial conditions faced by the Council and recognising the efforts made to innovate, identify efficiencies and generate income members were advised these measures alone would no longer be sufficient over the longer term with the latest forecast predicting an overspend of £17.4m in the General Fund budget.  Whilst officers, in seeking to address the pressures identified, had identified in-year savings of £8m members were advised that the potential need to drawn down from unallocated reserves therefore remained a concern especially given the ongoing levels of demand and revenue pressures in relation to Housing Needs.

In focussing on these pressures, members noted that the Housing Needs Service in Brent had experienced a 12% increase in the number of homelessness presentations, with Council’s across London now spending £4m a day in seeking to address the crisis, and solutions to tackle the scale of the housing emergency becoming increasingly limited.  As a result, the government was being urged to increase the funding available to local authorities to cope with the loss in Housing Benefit subsidy to ensure the Local Housing Allowance was truly reflective of the cost of living in London.

Whilst recognising the financial pressures and surge in demand faced by the Council, members also noted the positive outcomes which had been achieved including the delivery of a £1.7m underspend within Neighbourhoods and Regeneration and the contribution through the i4B initiative in generating (on a self-financing basis) annual savings exceeding £4m in terms of cost avoidance relating to Temporary Accommodation costs, with additional proactive efforts in homelessness prevention and relief having also yielded positive results.

Recognising the extent of the significant challenges identified in seeking to manage demand and address the pressures identified, the transparent assessment of the Council’s current position was welcomed, with the need for continued financial discipline and careful stewardship highlighted in order to sustain and ensure the Council’s financial sustainability.

In considering the report, Cabinet noted the specific updates provided by members in relation to the following areas:

·             Children and Young People (CYP) with members advised that the current forecast overspend of £1.3m reflected a shift from the £0.5m underspend reported in Q2, mainly driven by increasing pressure and the unpredictable nature of demand on the placements budget.  In terms of other pressures, members noted the £0.9m overspend being reported within Forward Planning, Performance, and Partnership which reflected the current higher-than-expected level of demand for residential and secure placements and support expressed for the efforts being made to seek better regulation across the sector and address pricing between boroughs with the need for more of these services to be brought within the control of local authorities. Additional overspends of £0.1m were also identified in relation to Business Support (due to staffing pressures) and £0.5m on legal costs and out-of-borough contact services, which it was noted reflected the ongoing costs of legal disbursements related to age assessments for Unaccompanied Asylum-Seeking Children.

Whilst the delivery of underspends in Independent Foster Agency placements had been welcomed (driven by lower client numbers and unit cost reductions) efforts to expand in-house foster car provision and promote independence for care-experienced young people, including access to relevant benefits and sustainable tenancies (being led through the recently established CYP Placement Commissioning Board) were also highlighted as part of the approach in seeking to address pressures identified and improve outcomes for young people.  Whilst highlighting ongoing challenges in the recruitment and retention of social workers support was also expressed for the efforts being made to manage and reduce the use of agency workers as well as the proactive efforts being made to address the inflationary pressures from external providers in terms of the provision of fostering and residential accommodation, including delivery of the new children’s home designed to increase local placement capacity and reduce reliance on external providers.  In recognising the ongoing nature of the demand led risks identified (including the increased level of demand in relation to SEND provision) members welcomed the proactive range of measures identified to monitor and manage these pressures and efforts being made to continue prioritising the delivery of high-quality, wraparound support for children and families across Brent in a fiscally responsible way.

·             Partnerships, Housing, and Resident Services with a focus on the financial pressures being experienced as a result of the ongoing demand for housing and housing emergency, with the current forecast projecting an overspend of £12.9m for 2024-25 contributing towards the overall pressure of £15.2m identified within the Housing Needs and Support service.  Whilst outlining the proactive measures (including £2.3m of in-year savings achieved through vacancy holds, additional income generation, and the reprioritisation of expenditure) which had been taken in seeking to mitigate against the pressures identified, members recognised the significant extent of the challenges being experienced given the ongoing scale of demand including the increase in homelessness presentations as well as Temporary Accommodation (8%) and emergency placements for families (36%) many of which involved more expensive out of borough arrangements due to the scarcity of local options compounded by the strain on the private rented sector and increase in rent levels.

In seeking to respond strategically to the pressures identified, members noted and welcomed the contribution being made through the i4B initiative towards increasing the available supply of affordable and secure homes aimed at reducing reliance on costly temporary accommodation.  In terms of other initiatives being led through the Directorate, reference was made to the positive impact being delivered through the new Community Wellbeing Programme and refreshed Resident Support Fund designed to provide sustainable and impactful support for local residents alongside the Household Support Fund as a means of assisting residents in financial hardship, which it was hoped the new government would continue supporting given the value this provided as an emergency safety net.  In outlining the range of proactive measures being taken to manage the immediate pressures identified, members also recognised the significant nature of ongoing risks including ongoing viability concerns relating to the delivery of housing projects as a result of cost inflation, rising interest rates, and stringent new fire safety regulations and pressures on the Housing Revenue Account (HRA) relating to demand for repairs.  Despite the challenges identified, however, members remained keen to highlight the Council’s ongoing commitment to ensuring every resident had access to a safe, secure and suitable home and in tackling the housing emergency.

·             Community, Health & Wellbeing with the focus once again on the financial pressures being experienced as a result of the growing demand for key services with the current forecast across the Directorate involving a £0.4m pressure, reflecting a change from the £2.1m underspend reported at Q2.  This reflected the strain of rising demand, inflationary pressures, and the complexities of delivering care across a sector facing significant workforce and financial challenges and wider need for urgent reform of the social care system.  In terms of key challenges, members were advised of the current £1m pressure on Strategic Commissioning and Capacity Building budgets, primarily being driven by a 7% increase in homecare service users since Q2, which had been compounded by a delay in the delivery of savings from the Technology Enabled Care programme, currently in the scoping phase.  Whilst noting that Adult Social Care, was still forecast to deliver a £0.9m underspend, this had reduced from the £2.6m previously forecast due to rising costs for residential and dementia placements.

The pressures being experienced in relation to Leisure Services were also highlighted particularly in relation to provision at Bridge Park and Vale Farm, where it was noted fluctuating demand and rising operational costs had contributed to a £0.3m forecast pressure and reflected the current vulnerability of income-dependent services.  In recognising the pressures identified, members also acknowledged the significant level of in-year savings due to be delivered (£1.7m) across the Directorate, including those brought forward from 2025-26 and through changes to the charging policy which it was felt reflected the proactive approach being taken in seeking to manage the overall financial position whilst continuing to provide essential services and in recognising the significant nature of risks identified.  These were noted to include not only demographic changes in terms of the level and range of complex needs requiring support but also seasonal winter pressures and workforce challenges being experienced across the health and social care sector as a whole.  Whilst conscious of the ongoing challenges identified the positive approach being taken towards prevention and targeted intervention was also highlighted alongside the impact of various Public Health funded initiatives including the Supplementary Substance Misuse Treatment and Recovery Grant and the Rough Sleepers Drug and Alcohol Treatment Grant as a means of ensuring the highest standards of care continued to be delivered for Brent residents.

·                 Public Realm & Enforcement with the Council’s ongoing commitment to keeping the borough, clean green and safe outlined despite the financial challenges already identified.  As part of this approach, reference was made to the introduction and monitoring of new contractual arrangements for key services including parking and waste management, with members advised of the specific pressures identified in relation to the new waste management contact as a result of the fluctuation in material prices. Whilst efforts remained ongoing to mitigate these impacts, members were advised the pressures identified had been anticipated with earmarked reserves created to manage such challenges and longer-term performance improvements being introduced to maintain sustainability and ensure the service remained in budget during the current year.  This approach had also been supported more widely through initiatives such as the ‘Don’t Mess with Brent’ enforcement scheme with members also welcoming the recent commitment announced by the government of an additional £1.6b for local authorities (including an allocation of £759k for Brent) to address potholes and maintain roads.

As further updates, the ongoing challenges and risks identified in relation to delivery of the Capital Programme were also highlighted due to the complex nature of schemes included and impact of the increase in build costs affecting viability on a number of projects.

In thanking officers and members for the update provided, Cabinet noted the challenges in seeking to manage demand and address the pressures identified, with members noting the work being undertaken through the Budget Assurance Panel in this respect and outlining their continued commitment to working with their relevant Corporate Directors to ensure ongoing oversight and management of budgets in each service area.

As a result of the update provided, Cabinet RESOLVED:

(1)        To note the new grant funding received in year, the overall financial position and the actions being taken to manage the issues arising as detailed within the Q3 Financial Forecast.

(2)        To note progress on the savings delivery tracker, as detailed in Appendix A of the report.

(3)    To note the prudential indicators for treasury management, as detailed in in Appendix B of the report.

(4)        To approve the virements set out in section 4.7.13 of the report.