Agenda item

Revenue Financial Update Q1 2019/20

Decision:

(a)  That the reported underlying financial position of the Council, including the Slough Children’s Services Trust (SCST), as at the first quarter of the year be noted;

 

(b)  That the management actions being undertaken by the officers to reduce the budget pressures be noted;

 

(c)  That the Council’s request to the Department for Education (DfE) to provide additional financial support relating to the Slough Children’s Services Trust (SCST) be noted;

 

(d)  That the potential impact on the Council’s general reserves and associated implications for the Council based on the latest financial projections, be noted;

 

(e)  That further updates regarding the Council’s financial position be provided to Lead Members on a monthly basis and to Cabinet on a quarterly basis; and

 

(f)  That the write offs as requested in Section 10 of the report be approved.

Minutes:

The Lead Member for Governance & Customer Services and the Director of Finance & Resources introduced a report that updated on the Council’s revenue position for the first quarter of the year to the end of June 2019.

 

The forecast end of year position for all Council run services was an overspend of £1.641m which was 1.5% of the revenue budget.  This was in line with previous years and management actions were in place to address the areas of overspend.  However, recent information had been received from Slough Children’s Services Trust (SCST), which the Director, as Section 151 Officer, had decided needed to be included in the budget monitor as it potentially had a significant material impact on the Council’s financial position.  SCST had reported a forecast £3.7m overspend in 2019/20 due to increases in staffing, placement and legal costs attributed to a spike in referrals in October/November 2018 and January 2019.  The Council had made an advanced payment of two months when the Trust was established in 2015 for cashflow purposes.  The Officer stated that given the risks, provision for this further sum of £4.3m should be included which resulted in a total potential deficit of £8m.  Taken together with the Council run services, the total projected overspend was therefore reported as £9.641m which was 9% of the revenue budget.

 

The Cabinet was concerned about the position regarding the Trust’s finances and the potential impact that it could have on other Council services.  During the course of the discussion on the position, Lead Members noted that detailed work and discussions were taking place between the Council, SCST and Department for Education (DfE), who had established the Trust, to urgently address the situation.  The Local Government Association (LGA) would be conducting a detailed review of the SCST finances to understand the reasons for the overspend and identify actions that the Trust could apply.  The Council was in an otherwise strong financial position and had sufficient reserves to cover the maximum liability, if required, however they would be significantly depleted.  The contract with SCST was in place until 2021 and it was recognised that it was in the Council’s interests that the Trust was in a stable financial position at the point the future arrangements for managing children’s services were in place.

 

Members expressed surprise and concern about the position and commented that it was unsatisfactory that the contract with the Trust had not included sufficiently transparent financial reporting to the Council.  It was also confirmed that when the DfE established the Trust it had a fixed budget and did not require it to have or provide its own reserves to increase its financial resilience.  The Cabinet asked about the approach that was being taken with regards to discussions with the Trust and Officers confirmed that their senior management was working with the Council, including on the LGA review.  It was in the interests of all parties to stabilise the finances and understand the reasons for the overspend.  Lead Members emphasised the importance of  carrying out this work comprehensively and as quickly as possible to establish the financial implications for the Council.  Strengthening the governance of the Trust board, including the Council’s level of representation which was currently one non-executive director, would need to be reviewed to ensure there was sufficient transparency.

 

At the conclusion of discussion, the Cabinet noted the revenue financial update and agreed the write off requests.  In terms of the financial position of the Trust, it was agreed that monthly updates would be provided to Lead Members & Directors and quarterly to the Cabinet in future revenue budget monitoring reports.

 

Resolved –

 

(a)  That the reported underlying financial position of the Council, including the Slough Children’s Services Trust (SCST), as at the first quarter of the year be noted;

 

(b)  That the management actions being undertaken by the officers to reduce the budget pressures be noted;

 

(c)  That the Council’s request to the Department for Education (DfE) to provide additional financial support relating to the Slough Children’s Services Trust (SCST) be noted;

 

(d)  That the potential impact on the Council’s general reserves and associated implications for the Council based on the latest financial projections, be noted;

 

(e)  That further updates regarding the Council’s financial position be provided to Lead Members on a monthly basis and to Cabinet on a quarterly basis; and

 

(f)  That the write offs as requested in Section 10 of the report be approved.

Supporting documents: