Children, Culture and Communities Scrutiny Committee	1 October 2024
Report of Richard Hartle, Head of Children & Education Finance and Ian Cunningham, Head of Business Intelligence

2024/25 Finance and Performance Monitor 1

Summary

1. This report sets out the projected 2024/25 financial position and the performance position for the period covering 1 April 2024 to 30 June 2024, together with an overview of any emerging issues. This is the first report of the financial year and assesses performance against budgets, including progress in delivering the Council’s savings programme.

2. This report outlines the Council’s challenging financial position with a forecast overspend for 2024/25 of £3.4m. This is a huge improvement on the £11.4m forecast overspend we have previously seen at this stage in the financial year and is a direct result of the significant work undertaken by officers across all parts of the Council to identify savings and mitigations.

3. However, there is still a forecast overspend and therefore, whilst it is incredibly positive that the position is much improved, there remains a great deal of work still to do. It remains 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 overspending will quickly see the Council exhaust its reserves.

4. The existing cost control measures remain in place, and further action is needed to bring spending down to an affordable level, both within the current financial year and over the next 3 years, to safeguard the Council’s financial resilience and stability. The impact that this work is having can be clearly seen in this latest forecast and the Council’s track record of delivering savings, along with robust financial management, provides a sound platform to continue to be able to deal with future challenges.

5. If we continue to take action and make any difficult decisions now, this will ensure the future financial stability of the Council and that we can continue to provide services for our residents. It is vital that mitigations are delivered, and the forecast overspend is reduced.

Background

Financial Summary and Mitigation Strategy

6. The current forecast is that there will be an overspend of £3.4m. This is despite the additional budget allocated through the 2024/25 budget process and ongoing 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 continue the work started in the previous financial year to identify and take the necessary actions to reduce expenditure.

7. 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 2024 also included an assessment of risks associated with the budget, which included the need to secure further savings and effectively manage cost pressures.

8. 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 continue the work started last year to reduce our expenditure down to a sustainable level both within the current financial year and over the medium term.

9. 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.

10. Corporate control measures are in place, but it is unlikely they will deliver the scale of reduction needed within the year. Other savings proposals, including service reductions, may also be needed. 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. The delivery of savings plans continues to be a clear priority for all officers 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 £149m. Following on from previous years, the challenge of delivering savings continues with c£14m to be achieved to reach a balanced budget. Early forecasts indicate the Council is facing net financial pressures of £3.4m and an overview of this forecast, on a directorate by directorate basis, is outlined in Table 1 below.

Service area	Net budget £’000	2024/25 Forecast Variation £’000
Children & Education	28,659	1,359
Adult Social Care & Integration	45,307	2,361
Transport, Environment & Planning	23,464	-547
Housing & Communities	6,614	792
Corporate & Central Services	44,724	-69
Sub Total	148,768	3,896
Contingency	500	-500
Target for further mitigation
Total including contingency	149,268	3,396

Table 1: Finance overview

Detailed Analysis

Children, Culture & Communities

13. The forecast outturn position is an overspend totalling £1,692k and the table below summarises the latest forecasts by service area.

2023/24 Outturn Variation £000		2024/25 Latest Approved Budget			2024/25 Projected Outturn Variation
		Gross Spend £000	Income £000	Net Spend £000
					£000	%
	Children & Education
+2,863	Children’s Safeguarding	25,628	1,149	24,479	+1,396	+5.7%
+272	Education & Skills	21,095	5,039	16,056	+3	+0.0%
-103	School Funding & Assets	170,894	178,535	-7,641	-19	-0.2%
-423	Director of C&E & Central Budgets	1,616	5,851	-4,235	-22	-0.5%
+2,609	C&E Directorate Total	219,233	190,574	28,659	+1,359	+4.7%
-286	Culture & Communities	13,262	6,479	6,783	+333	+4.9%
+2,323	CC&C Scrutiny Total	232,495	197,053	35,442	+1,692	+4.8%

14. 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 243, at the end of May it was 246. Placement budgets are predicted to be overspent by a total of £1,363k. The pressure on this budget 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 continue to worsen the position. Total growth of £1,647k has been allocated to the placements budgets in 2024/25.

15. Safeguarding Interventions is predicted to underspend by 59k due to staffing vacancies. In addition, legal fees are predicted to overspend by £135k.

16. An overspend in Disabled Children’s Services of £473k is mainly overspends on direct payments. A specific project for direct payments is being carried out, and this is predicted to clawback some of previous payments made and reduce ongoing costs.

17. Innovation and Children`s Champion is predicted to underspend by -£187k (-£137k in 2023/24). This is due to the ability to fund some expenditure from the Family Hubs grant & Family Seeing Grant.

18. The Home to School Transport budget, which has been in an overspend position for a number of years, has been allocated £730k of growth for demographic pressures and contract inflation.

19. At this point in the financial year, no variance is predicted, however, the projected outturn includes an estimate of likely contractual inflation from 1st September 2024, and the final increase will be dependent on the relevant indices at that point. In addition, at this point in the financial year, the financial impact of changes for the new academic year are not known until all eligible pupils have their travel arrangements confirmed in September so this position could change once all new academic year information on cost is available.

20. Staff resourcing issues and turnover in the SEND Statutory Services Team, and the need to resource work to progress the Safety Valve targets have continued and resulted in the need to appoint a number of agency staff and also increase supporting resources, resulting in a predicted overspend of £52k based on current staffing assumptions.

21. The Educational Psychologists Service is predicted to underspend by £65k, mainly due to continuing vacancies in the team.

22. The Effectiveness and Achievement Service is predicted to overspend by £18k in 2024/25 (+£125k in 2023/24) mainly due to unachieved vacancy factors.

23. An overall underspend of £12k is predicted within the Virtual School and Inclusion service, due to a vacancy and one-off savings in non-staffing expenditure.

24. The Dedicated Schools Grant (DSG) is ahead of the target position set out in the Safety Valve recovery plan agreed with the DfE. The local authority is now in the third year of this four year agreement and has exceeded the financial targets for the first two years.

25. The brought forward balance on the DSG at 1 April 2024 was a deficit of £291k. The initial year end projection for 2024/25 is for a cumulative deficit of approximately £780k, although this is subject to change as new academic year details of provision are confirmed. This increased deficit is despite the LA expecting to receive almost £1.5m of further Safety Valve funding during the year and is indicative of the increasing pressures and demands being placed on LAs to provide for High Needs pupils.

26. In common with the national picture, York is continuing to experience an increase in High Needs pupils together with an increasing complexity of need, often requiring expensive provision, especially in Post 16 and Post 19 provision and the education element of Out of Authority placements. In particular York is facing a significant increase in demand for special school places, often exacerbated by tribunal decisions.

27. In addition, due to the significant pressures on mainstream school budgets, it is becoming increasingly difficult for High needs pupils to be supported in these settings. This situation is particularly difficult in York due to the low level of school funding which has a significant impact on these schools ability to adequately meet the needs of High Needs pupils.

28. 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.

29. As a result of the above, this third year of the Safety Valve agreement is likely to be the most difficult to date, with an increasing risk of the LA being unable to meet the target of eliminating the cumulative deficit by the end of 2025/26 as set out in the original agreement. Officers are working hard to avoid this position but it is becoming increasingly challenging to achieve.

30. Within Communities the main potential pressure relates to the £300k library saving. The council is undertaking due process to work with Explore to consider options that can be included into the contract that will deliver a saving. The process does require time to review provision levels as well as consultation and agreement from the partners. There remains an aspiration to gain a full saving from the process but the timeline and level of in year saving is in question.

Performance – Service Delivery

31. 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. Wider or historic strategic and operational performance information is published quarterly on the Council’s open data platform; www.yorkopendata.org.uk

32. 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.

33. A summary of the city outcome and council delivery indicators by council plan theme are shown in the paragraphs below along with the latest data for the core indicator set.

34. Number of children in temporary accommodation – at the end of 2023-24, there were 45 children in temporary accommodation in York which, although an increase from 39 children the previous quarter, is a reduction 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.

35. %pt gap between disadvantaged pupils and their peers achieving 9-4 in English and Maths at KS4 – 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. Data for 2023-24 will be available in December 2024.

36. % 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. Data for 2023-24 will be available in November 2024.

· 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.

37. % of adults (aged 16+) that are physically active – The latest data from the Adult Active Lives Survey for the period from mid-November 2022 to mid-November 2023 was published in April 2024. Data for 2024-25 will be available in April 2025. In York, 515 people aged 16 and over took part in the survey, and they reported higher levels of physical activity, and lower levels of physical inactivity, compared with the national and regional averages. Positively:

· 69.8% of people in York did more than 150 minutes of physical activity per week compared with 63.4% nationally and 61.7% regionally. There has been no significant change in the York value from that 12 months earlier.

· 18.8% of people in York did fewer than 30 minutes per week compared with 25.7% nationally and 27.7% regionally. There has been no significant change in the York value from that 12 months earlier.

38. Children and young people in care per 10k, excluding short breaks – At the end of June 2024, 245 children and young people were in York’s care, with a steady reduction from 262 in March 2023. As a rate per 10k population, this is just below the national average and within York’s expected range. Unaccompanied Asylum Seeking Children (UASC), a sub-group of children in care, are expected to increase in number in York. At the end of June, 19 of York’s children in care were UASC, compared to 14 in March 2023. The National Transfer Scheme now mandates that “the Home Office will not transfer UASC to an authority that is already looking after UASC in line with, or greater than, 0.1% of their child population”. For York, this is equivalent to approximately 34 young people.

39. Children subject to a Child Protection Plan – 138 children were the subject of a Child Protection Plan at the end of June 2024. As a rate per 10k population, York is currently below the most recently released National average. The number of children subject to a Child Protection Plan in York has been within our expected range (133-150 for 2024-25) for over a year.

40. % of working age population qualified to at least L2 and above – In 2023-24, 90% 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 (86.5% and 85.1% respectively). This result ranks the city of York first regionally. This latest figure is a slight decrease from 2022-23 (94.2%). It should be noted that there has been a slight change in methodology from 2022-23. Data for 2024-25 will be available in May 2025.

41. % of working age population qualified to at least L4 and above – In 2023-24, 53.8% 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 (47.3% and 41.2% respectively). This result ranks the city of York fourth regionally. The 2023-24 figure is a decrease from 2022-23 (60.3%) but higher than in previous years. Data for 2024-25 will be available in May 2025.

42. % of pupils achieving 9-4 or above in English and Maths at KS4 – DfE data shows strong performance for York pupils when compared with National averages. In 2022-23, 70.2% of York’s Year 11s achieved grades 9-4 in English and Maths (considered a standard pass), compared to 65.3% Nationally. Data for 2023-24 will be available in December 2024.

43. % of children who have achieved a Good Level of Development at Foundation Stage – In 2022-23, 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. Data for 2023-24 will be available in December 2024.

44. Number of homeless households with dependent children in temporary accommodation – The overall number of households in temporary accommodation has reduced during 2023-24, from 73 in Q1 to 63 at the end of Q4. The number of those with dependent children has fluctuated between 26 and 30 households throughout the year and was 29 households at year-end. Although the council would like these to reduce further, some progress has been made from the peaks seen at the end of 2022-23.

45. Of the 29 households with children in temporary accommodation at quarter end, 27 were recorded as accommodated in hostels and two within Local Authority or Housing Association housing stock. York continues to report no households with children housed in Bed and Breakfast accommodation at quarter end.

46. During 2023-24, an upward trend in overall numbers can be seen both nationally and regionally, however York has been moving in the opposite direction. When looking at the total number of households in temporary accommodation per households in area (000s), York continues to perform positively compared to benchmarks (0.71 in York compared to 4.9 Nationally, 1.4 Regionally and 17.8 in London). It should be noted that these figures are snapshot figures and therefore may fluctuate between the snapshot dates.

47. % of Talkabout panel satisfied with their local area as a place to live - The first biannual resident satisfaction survey taken by the Talkabout panel took place during Q1 2024-25. Results from the Q1 2024-25 Talkabout survey showed that 85% of the panel were satisfied with York as a place to live, up 5% from the previous survey. 81% were satisfied with their local area, consistent with results from Q3 2023-24. A slight decline in satisfaction with the local area can be seen over recent years but York continues to perform well against the latest national figure of 76% (Community Life Survey 2021-22).

48. % of Talkabout panel who give unpaid help to any group, club or organisation - Results from the Q1 2024-25 Talkabout survey found that 64% of panellists had given unpaid help to any group, club or organisation within the last 12 months. This is a slight increase from Q3 2023-24 (60%), and higher than the latest national figure of 55% taken from the government's Community Life Survey 2021-22.

Consultation

49. Not applicable.

Options    

50. Not applicable.

Analysis

51. Not applicable.

Council Plan

52. Not applicable.

Implications

53. 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. The actions and recommendations contained in this report should ensure the continued financial stability and resilience of the Council both in the current year and in future years.

· Human Resources (HR), there are no direct implications related to the recommendations.

· 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.

· Procurement, there are no specific procurement implications to this report.

· Health and Wellbeing, there are no direct implications related to the recommendations.

· Environment and Climate action, there are no direct implications related to the recommendations.

· Affordability, there are no direct implications related to the recommendations.

· Equalities and Human Rights, there are no direct implications related to the recommendations.

· Data Protection and Privacy, there are no implications related to the recommendations.

· Communications, there are no direct implications related to the recommendations.

· Economy, there are no direct implications related to the recommendations.

Risk Management

54. 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.

55. 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

56. The Committee is asked to:

i. Note the finance and performance information.

ii. Note that work will continue on identifying the savings needed to fully mitigate the forecast overspend.

Reason: to ensure expenditure is kept within the approved budget.

Contact Details

Author:	Chief Officer Responsible for the report:
Richard Hartle Head of Children and Education Finance Ext 4225 Ian Cunningham Head of Business Intelligence Ext 5749	Ian Floyd Chief Operating Officer
	Report Approved	ü	Date 20 September 2024
	Ian Floyd Chief Operating Officer
	Report Approved	ü	Date 20 September 2024
Wards Affected: List wards or tick box to indicate all				All	ü
For further information please contact the author of the report

Background Papers

None.

Annexes

Annex A: CCC Q1 24-25 Scrutiny Committee Scorecard