Agenda item

The Scrutiny Board has asked to receive a report on a review of the Council’s financial position, including the impact of financial pressures in Children’s Services.

The report before the Scrutiny Board arose from a request the Scrutiny Board made to receive a report which provided a review of the Council’s financial position, including the impact of financial pressures in Children’s Services.

The Head of Financial Operations informed the Scrutiny Board that a report detailing the Council’s financial position had been scheduled for submission to the Full Cabinet meeting on 8^th September 2022 detailing the Council’s financial position as at Period 4 (July).  A further report would be submitted to a future meeting of Cabinet addressing Period 6. 

Members attention was drawn to Section 3.2 of the report, which provided background for the next iteration of the MTFS from 2023/24 – 2025/26, specifically providing an early indication of the matters being dealt with .The report before the Scrutiny Board provided summaries of both the local and national challenges the Council faces; for example, the impact of the Covid-19 pandemic, cost of living impacts and energy supplier prices, all of which impact on the MTFS projections. Further pressures identified included growing demand placed on Children’s Services and adult social care reforms planned from 2023 and in future years.  Members were advised that all Cabinet Portfolio areas were facing their own specific cost pressures.

Members were advised of a technical issue relating to the auditors’ sign-off of the Council’s Statement of Accounts for 2021/22.  The technical issue affected all local authorities and meant that the statutory sign-off date for the accounts might not be achieved.

Members were informed that in terms of the revenue forecast outturn for 2022/23, there was an adverse variance on the Core Council of £2.619M in relation to the Children and Education portfolio and an in year adverse variance of £3.585M for the Dedicated Schools Grant (DSG).

The DSG deficit was a potential significant financial risk for the Council with effect from 2023/24 if the statutory override arrangements currently in place are not continued beyond the current year.  The Council responded on 18^th August 2022 to a Department for Education (DfE) consultation across all councils asking for the statutory override arrangements to be continued.

The Scrutiny Board was informed that some UKC re-phasing of Capital funding was likely, which would be reported in further detail to Full Cabinet in December 2022.

It was reported that 93% of projected savings were rated as green.

Having received the introduction to the report from the Head of Financial Operations, Members of the Scrutiny Board raised several questions related to the report, which in summary included the following matters:

Councillor Holt queried what solution was foreseen to the prospective ending of the statutory instrument in respect of the DSG.  The Scrutiny Board was advised that it was hoped that the statutory override arrangements would be continued. If the statutory override arrangement did end, it would be very significant for all local authorities.  For Solihull, the scenario of ending the statutory override arrangement would entail ring-fencing nearly £16.8M of reserves, which would have a serious impact on the MTFS.

Councillor Adeyemo sought further clarification if the statutory override arrangement was discontinued and queried whether the Council, rather than national Government, would have to cover any shortfall.  The Head of Financial Operations advised that the Council would have to cover the shortfall. The Interim Director of Children’s Services and Skills added that the Government was running two programmes – Delivering Better Value and the Safety Valve Programme – whereby the Government assists with local authority deficits.  The Council was awaiting further confirmation as to its status within these respective programmes.

The Interim Director of Children’s Services and Skills outlined the key points detailed in the report addressing the Children’s Services financial position for 2022/23 and the associated implications for the MTFS.  Members were advised that the forecast pressures detailed in the MTFS over the next three years for Children’s Services equated to £20M, arising from an increased demand and the response to the Children’s Services improvement notice. Members were advised that the fiscal implications for the service were also being worked through at the Children’s Services Improvement Board. The improvement journey was estimated to be a period lasting between 3 – 5 years.

Councillor Tildesley noted that the improvement journey was likely to entail a long-term process over a period and would not be a short-term project.  Officers were thanked for the detail and frankness of the report provided for the Scrutiny Board. 

Councillor Parker endorsed Councillor Tildesley’s comments and further stated that he had full confidence in the Children’s Services and Skills Scrutiny Board in continuing to address and scrutinise the financial position of the Children’s Services function. Furthermore, Councillor Parker fully endorsed the recommendation arising from the Children’s Services, Education and Skills Scrutiny Board meeting held on 12^th September 2022, which was:

‘This committee recognises the hugely significant pressures on Solihull Council’s budget from Children’s Services and resolves to call upon the Cabinet to ensure resources are fully aligned with the risks identified in this report’.

Councillor Allen endorsed Councillor Tildesley’s and Councillor Parker’s comments and stated that the Council had to take positive action and persevere to provide an improved Children’s Services function.

Councillor Gibbins informed the meeting that the Children’s Services, Education and Skills Scrutiny Board would continue to address the improvement journey being undertaken by Children’s Services as well as the major risks the service faced. 

Councillor Holt advised Members that the point made at the Children’s Services, Skills and Education Scrutiny Board meeting held on 12^th September 2022 was that a sea change was required across the service. There were many on-going issues to be addressed, the impact of which would be felt for some years to come.

Councillor Parker queried whether Officers were proceeding in anticipating and building in future cost pressures in the financial planning for Children’s Services. The Interim Director of Children’s Services and Skills confirmed that this was the case across the entire service area.

Having considered the report, the Resources and Delivering Value Scrutiny Board:

RESOLVED:

i)  To unanimously endorse the Recommendation arising from theChildren’s Services, Education and Skills Scrutiny Board meeting held on 12^th September 2022, for the attention of Cabinet, which stated:

‘This committee recognises the hugely significant pressures on Solihull Council’s budget from Children’s Services and resolves to call upon the Cabinet to ensure resources are fully aligned with the risks identified in this report’.