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Children, Culture and Communities Scrutiny Committee |
5 March 2024 |
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Report of Richard Hartle, Head of Children and Education Finance |
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2023/24 Finance and Performance Monitor 3
Summary
2. The previous monitor report outlined the Council’s serious financial position with a forecast overspend for 2023/24 of c£11m gross, mitigated down to £941k. There has been a small improvement for Monitor 3, with a forecast overspend, after mitigation, of £842k. However, the underlying gross overspend remains at c£11m.
3. This is still a significant overspend that is of serious concern and it remains very clear that the Council cannot afford to keep spending at this level. The general reserve is £6.9m and, whilst we have other earmarked reserves that we could call on if required, continued spending at this level would quickly see the Council exhaust its reserves.
4. Given the scale of the forecast overspend, a series of actions was agreed previously to bring spending down to an affordable level, both within the current financial year and over the next 4 years, to safeguard the Council’s financial resilience and stability.
Background
Financial Summary and Mitigation Strategy
5. The latest forecast is that there will be an overspend of £11m. This is despite action being taken by managers across the Council to try and reduce expenditure. If the Council continues to spend at the current level, and no action is taken, then we will continue to overspend and will exhaust our reserves and any other available funding. The current level of expenditure is unaffordable and therefore we must take immediate action to reduce expenditure. If we do not start to see an improvement in the forecast, there will need to be further measures implemented to ensure that the required impact is seen by the end of the financial year.
6. As outlined in reports to Executive throughout the previous financial year, we have continued to see recurring overspends across both Adult and Children’s Social Care. However, the underspends and mitigations that have allowed us to balance the budget at year end have generally been one off. Whilst the use of reserves to fund an overspend is appropriate as a one-off measure, it does not remove the need to identify ongoing savings to ensure the overall position is balanced. The budget report considered by Executive in February 2023 also included an assessment of risks associated with the budget, which included the need to secure further savings and effectively manage cost pressures.
7. Members will be aware that the financial position of local government is a national challenge and that the pressures being seen across both Adult and Children’s Social Care are not something that is unique to York. Many Councils are experiencing significant financial pressures and struggling to balance their budgets now, so it is vital that we take immediate action to reduce our expenditure down to a sustainable level both within the current financial year and over the medium term. Taking decisive action now will safeguard the Council’s financial resilience and stability and prevent York being in a position where it is unable to balance its budget in future years. This means that, in addition to the actions proposed in this report, there will be a need to continue to identify further mitigations and savings for future years.
8. Given the scale of the financial challenge, and the expected impact on budgets in future years, it is vital that every effort is made to balance the overall position. It is recognised that this will require difficult decisions to be made to protect services for vulnerable residents.
9. Corporate control measures are being implemented but they will not deliver the scale of reduction needed within the year. Other savings proposals, including service reductions, are also needed. A full list of these was included in the monitor 1 report considered by Executive in September.
10. Alongside these actions, officers will continue to carefully monitor spend, identify further mitigation, and review reserves and other funding to make every effort to reduce this forecast position. However, it is possible that it will not be reduced to the point that the outturn will be within the approved budget. The Council has £6.9m of general reserves that would need to be called on if this were the case. As outlined in previous reports, any use of the general reserve would require additional savings to be made in the following year to replenish the reserve and ensure it remains at the recommended minimum level.
11. It must be a clear priority for all officers to focus on the delivery of savings plans during the year. Corporate Directors and Directors will keep Executive Members informed of progress on a regular basis.
Financial Analysis
12. The Council’s net budget is £141m. Following on from previous years, the challenge of delivering savings continues with c£6m to be achieved to reach a balanced budget. An overview of the latest forecast, on a directorate by directorate basis, is outlined in Table 1 below.
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Service area |
Net Budget |
2023/24 Net Q2 Forecast Variation |
2023/24 Net Q3 Forecast Variation |
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£000 |
£000 |
£000 |
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Children & Education |
25,083 |
3,727 |
3,690 |
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Adult Social Care & Integration |
45,329 |
3,407 |
4,712 |
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Place |
22,605 |
-1,363 |
-1,040 |
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Customers & Communities, Public Health & Corporate Services |
26,437 |
1,000 |
830 |
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Central budgets |
22,670 |
-1,000 |
-2,600 |
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Sub Total |
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5,771 |
5,592 |
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Contingency |
-500 |
-500 |
-500 |
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Use of earmarked reserves |
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-4,250 |
-4,250 |
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Target for further mitigation |
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-1,021 |
842 |
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Net Total Including Contingency |
141,624 |
Nil |
Nil |
Children, Culture & Communities
13. The forecast directorate outturn position is an overspend totalling £4,880k and the table below summarises the latest forecasts by service area.
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2023/24 Monitor 2 Variation £000 |
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2023/24 Latest Approved Budget |
2023/24 Projected Outturn Variation |
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Gross Spend £000 |
Income £000 |
Net Spend £000 |
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£000 |
% |
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Children & Education |
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+3,138 |
Children’s Safeguarding |
23,192 |
2,494 |
20,698 |
+3,113 |
+15.0% |
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+1,377 |
Education & Skills |
20,735 |
5,223 |
15,512 |
+1,641 |
+10.6% |
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+83 |
School Funding & Assets |
170,894 |
178,536 |
-7,642 |
+119 |
+1.6% |
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+39 |
Director of C&E & Central Budgets |
3,276 |
5,996 |
-2,720 |
+7 |
+0.3% |
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-910 |
Mitigations |
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-1,190 |
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+3,727 |
C&E Directorate Total |
218,097 |
192,249 |
25,848 |
+3,690 |
+14.3% |
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-34 |
Culture & Communities |
14,761 |
7,091 |
7,670 |
-30 |
-0.4% |
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+3,693 |
CC&C Scrutiny Total |
232,858 |
199,340 |
33,518 |
+3,660 |
+10.9% |
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+ Indicates increased expenditure or reduced income / - Indicates reduced expenditure or increased income
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C&E Mitigations to Reduce Forecast Overspend |
£000 |
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Direct Payments Review |
-200 |
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Removal of budget contingency held within service |
-100 |
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Use of unallocated budget growth |
-150 |
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Grant income received in excess of amounts accrued |
-150 |
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Use of Supporting Families Reserve |
-100 |
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Redirection of Unspent Grant Monies |
-390 |
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Additional cost control savings prior to year end |
-100 |
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Total Children & Education Mitigations |
+1,190 |
14. There has been significant progress made in reviewing and reducing the expenditure across Children & Education, with a substantial reduction in the use of agency staff and the cost of placements. This is extremely positive and is against the national trend of ever increasing overspends in Children’s Services. However, costs are increasing due to inflation, an increase in safeguarding activity reflecting greater complexity of needs and the challenges of a dysfunctional children’s social care market.
15. As previously reported, the number of Children Looked After (CLA) in York has consistently been at a higher level than the budget was built to accommodate. The number at the beginning of the financial year was 267, at the end of October it was 247. Placement budgets are predicted to be overspent by a total of £2,858k, which is a significant improvement from the 2023/23 outturn which was £5,651k overspent. However, the pressure on this budget continues and is partly due to the limited market for children’s placements and the statutory requirements placed on local authorities to meet children’s needs, coupled with inflationary pressures which could worsen the position.
16. In addition, there is a predicted overspend in the Corporate Parenting Staffing Teams of £167k as the staffing budgets make no provision for the extra costs of agency staff. Nearly all the agency staff have now left.
17. An overspend in Disabled Children’s Services of £730k is mainly overspends on direct payments and home support for a specific young person. A specific project for reviewing historic direct payments is being investigated, which will clawback some of previous payments made and reduce ongoing costs.
18. Home to School Transport shows a forecast overspend of £618k. This continuing overspend is due to an increase in numbers for post 16/19 plus the provision of more specialist education provision locally. This is a much more cost-effective alternative to expensive out-of-city provision but has a consequent effect on this budget as we have had to provide more transport to establishments such as York College, Askham Bryan, Choose 2 and Blueberry Academy. The change in legislation to allow EHCPs up to the age of 25, resulting in significantly more students accessing this option, has also significantly increased our transport spend.
19. Staff resourcing issues and turnover in the SEND Statutory Services Team, and the need to resource this work to progress the Safety Valve targets has resulted in a small number of agency staff being appointed into this team over the period under consideration, resulting in a projected overspend of £130k (a significant improvement on the £405k overspend in 2022/23). The Educational Psychologists Service is predicted to underspend by £62k mainly due to vacancies in the team.
20. The Effectiveness and Achievement Service is predicted to overspend by £217k, mainly due to one-off unexpected expenditure, and also a delay in the implementation of a saving.
21. An overall underspend of £104k is predicted to be achieved within the Virtual School and Inclusion service, due to one-off savings in non-staffing expenditure.
22. There is a requirement to write-off the deficit balance, currently estimated at £150k, following the sponsored (DfE directed) conversion of Naburn Primary School to academy status.
23. The Dedicated Schools Grant (DSG) is currently projected to be on track to meet the targets set out in the Safety Valve recovery plan agreed with the DfE.
24. The main pressure continues to be experienced within the High Needs Block and is due to the continuing increase in High Needs numbers, and increasing complexity, requiring expensive provision, especially in Post 16 and Post 19 provision and the education element of Out of Authority placements.
25. The brought forward balance on the DSG at 1 April 2023 was a deficit of £2,723k, following the first payment of additional funding under the Safety Valve agreement in March 2022. The net position in 2022/23 would have been an overspend of £1,380k, however a further £4,500k of additional DSG was paid during the year as the LA successfully met the targets set out in year one of the agreed management plan. The result is a revised cumulative deficit of £2,723k to carry forward to 2023/24.
26. The Safety Valve agreement commits the local authority to bring the DSG into an in-year balanced position by 2025/26. Further payments are conditional on the local authority meeting the targets set out in the Management Plan, and reporting quarterly to the DfE on progress, with the eventual aim of eliminating the in-year deficit by the target date, with additional payments by the DfE eliminating the historic deficit at that point.
Performance – Service Delivery
27. This performance report is based upon the city outcome and council delivery indicators included in the Performance Framework for the Council Plan (2023-2027) which was launched in September 2023. This report only includes indicators where new data has become available, with a number of indicators that support the Council plan being developed. Wider or historic strategic and operational performance information is published quarterly on the Council’s open data platform; www.yorkopendata.org.uk
28. The Executive for the Council Plan (2023-2027) agreed a core set of indicators to help monitor the Council priorities and these provide the structure for performance updates in this report. Some indicators are not measured on a quarterly basis and the DoT (Direction of Travel) is calculated on the latest three results whether they are annual or quarterly.
29. A summary of the city outcome and council delivery indicators by council plan theme, based on new data released since the last report, are shown below.
30. Number of children in temporary accommodation – at the end of Q1 2023-24, there were 41 children in temporary accommodation in York, which is a large decrease from 63 at the end of 2022-23. The majority of these children are in stable family setups, do not show evidence of achieving worse outcomes, and York continues to report no households with children housed in Bed and Breakfast accommodation.
31. %pt gap between disadvantaged pupils and their peers achieving 9-4 in English and Maths at KS4 – In 2020 and 2021, all GCSE, AS and A Level exams were cancelled and replaced by a combination of teacher assessment, mock exam results, course work and a standardised calculation. Summer 2022 saw a return to the familiar testing methods.
32. Provisional data shows the gap at age 16 widened in York and Nationally to 43% in summer 2023. A legacy of Covid-19 is that school attendance of disadvantaged groups has been slower to recover, and has been worse than for the same group nationally. The work currently being undertaken through the Attendance Graduated Response is seeing improvements in attendance.
33. Reducing the attainment gap between disadvantaged pupils and their peers is a key priority in all phases of education across 0-19 years. Our long-term strategy re closing the gap is linked to the early identification of speech, language and communication needs in the early years through Early Talk For York (ETFY). Early communication and language development is particularly important in helping to tackle inequalities between disadvantaged children and their peers. Data shows that the ‘gap’ between non disadvantaged children nationally and disadvantaged children in the ETFY area reduced by 32%, from 34.5% (2018) to 2.5%, during the pilot. The scale up of the programme is designed to reduce the long-standing attainment gap and will focus on supporting the transition of children from the early years in to school.
34. % of reception year children recorded as being overweight (incl. obese) – The participation rates for the National Child Measurement Programmes (NCMP) in York for 2022-23 were 97.2% for reception aged children and 95.1% for Year 6 pupils.
· The 2022-23 NCMP found that 19.9% of reception aged children in York were overweight (including obese), compared with 21.3% in England and 22.5% in the Yorkshire and Humber region. York has the second lowest rate of overweight (including obese) for reception aged children in the Yorkshire and Humber region.
· Of Year 6 children in York, 32.5% were overweight (including obese) in 2022-23 compared with 36.6% in England and 38.1% in the Yorkshire and Humber region. York has the lowest rate of overweight (including obese) for Year 6 children in the Yorkshire and Humber region.
36. Children subject to a Child Protection Plan – 125 children were the subject of a Child Protection Plan at the end of November 2023. This is within York's expected range (111-141 child protection plans) and has been stable for the past four months. As a rate per 10k population, York is below the most recently released comparator averages.
37. % of working age population qualified – In 2022-23, 94.2% of the working age population in York were qualified to at least L2 and above (GCSE grades 9-4), which is higher than the national and regional figures (85.8% and 84.5% respectively). This result ranks the city of York first regionally. The 2022-23 figure has increased from 2021-22 (87.9%), although it should be noted that there has been a slight change in methodology for 2022-23.
38. In 2022-23, 60.3% of the working age population in York were qualified to at least L4 and above (certificate of higher education or equivalent), which is higher than the national and regional figures (45.7% and 38.9% respectively). This result ranks the city of York third regionally. The 2022-23 figure is a small increase from 2021-22 (59.3%).
39. % of pupils achieving 9-4 or above in English and Maths at KS4 – Provisional data shows that 70.2% of York’s Year 11s achieved grades 9-4 in English and Maths (considered a standard pass), compared to 65.3% Nationally. Results were broadly level with 2018-19 which is considered the last comparable year of marking due to different processes during the pandemic (e.g. teacher assessment). Finalised results are expected early in 2024.
40. % of children who have achieved a Good Level of Development at Foundation Stage – 69.7% of our 5-year-olds achieved a Good Level of Development compared to 67.2% Nationally, and 66.2% in Yorkshire and Humber.
41. Performance in York and nationally has not yet returned to 2019 levels. Studies which are analysing the impact of the pandemic on Early Years Development broadly suggest that we could see similar performance for several cohorts whilst the children “catch up” following the disruption of the pandemic.
42. Number of homeless households with dependent children in temporary accommodation – Although the overall number of households in temporary accommodation continues to increase, and reached 73 at the end of Q1 2023-24, the number with dependent children has decreased. The latest available data shows that there were 28 households with dependent children in temporary accommodation at the end of Q1 2023-24, which is a decrease from 35 at the end of 2022-23. Generally, the households with children rise and fall in line with the total households and make up around half of the total, however this has reduced in Q1 where 38% were households with children.
43. Of the 28 households at quarter end, 27 were recorded as accommodated in hostels and 1 within Local Authority housing stock. York continues to report no households with children housed in Bed and Breakfast accommodation. The number of children across the households was 41, down from 63 the previous quarter.
44. The increase in overall numbers can also be seen nationally, and when looking at the total number of households in temporary accommodation per households in area (000s), York continues to perform positively compared to benchmarks (0.83 in York compared to 4.41 Nationally, 1.09 Regionally and 16.69 in London). It should be noted that these figures are snapshot figures and therefore may fluctuate between the snapshot dates.
Consultation
45. Not applicable.
Options
46. Not applicable.
Analysis
47. Not applicable.
Council Plan
48. Not applicable.
Implications
49. The recommendations in the report potentially have implications across several areas. However, at this stage
· Financial implications are contained throughout the main body of the report.
· Human Resources (HR), there are no direct implications arising from this report.
· Legal the Council is under a statutory obligation to set a balanced budget on an annual basis. Under the Local Government Act 2003 it is required to monitor its budget during the financial year and take remedial action to address overspending and/or shortfalls of income. Further work is required to develop and implement proposals that will allow the Council to bring its net expenditure in line with its income. There may be legal implications arising out of these proposals that will be considered as part of the development and implementation of those proposals. If the Council is unable to set a balanced budget, it is for the Chief Financial Officer to issue a report under s114 of the Local Government Finance Act 1988 (‘a section 114 notice’).
· Procurement, there are no direct implications arising from this report.
· Health and Wellbeing, reductions in spend in some areas could impact on the health and wellbeing of both our staff and residents. The impact of any reductions in spend will continue to be carefully monitored so that implications can be considered and mitigated where possible.
· Environment and Climate action, there are no direct implications related to the recommendations.
· Affordability, are contained throughout the main body of the report. Where decisions impact on residents on a low income these impacts will be recorded in the individual Equalities and Human Rights analysis referred to below.
· Equalities and Human Rights, whilst there are no specific implications within this report, services undertaken by the Council make due consideration of these implications as a matter of course.
· Data Protection and Privacy, there are no implications related to the recommendations.
· Communications, the information set out in this report necessitates both internal and external communications. With ongoing interest in the current state of Local Government funding, we anticipate this report will attract media attention. A comms plan has been prepared to help make the information about the forecast overspend and the controls proposed clear and understandable, with opportunities to facilitate staff discussion arranged.
· Economy, there are no direct implications related to the recommendations.
Risk Management
50. An assessment of risks is completed as part of the annual budget setting exercise. These risks are managed effectively through regular reporting and corrective action being taken where necessary and appropriate.
51. The current financial position represents a significant risk to the Council's financial viability and therefore to ongoing service delivery. It is important to ensure that the mitigations and decisions outlined in this paper are delivered and that the overspend is reduced.
Recommendations
52. The Committee is asked to:
· Note the finance and performance information.
Reason: To ensure expenditure is kept within the approved budget.
Contact Details
Author
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Name: |
Richard Hartle |
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Job Title: |
Head of Children and Education Finance |
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Service Area: |
Finance |
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Telephone: |
Ext 4225 |
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Report approved: |
Yes |
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Date: |
03 November 2023 |
Co-author
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Name: |
Ian Cunningham |
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Job Title: |
Head of Business Intelligence |
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Service Area: |
Governance |
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Telephone: |
Ext 5749 |
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Report approved: |
Yes |
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Date: |
03 November 2023 |
Annexes
Background Papers: None.
Annexes:
Annex A: CCC Q3 2023/24 Scrutiny Committee Scorecard