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Economy, Place, Access and Transport Scrutiny Committee |
24/09/2024 |
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Report of Director of Finance |
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2023/24 Finance and Performance Outturn
Summary
1. This report provides a year end analysis of the overall finance and performance position. This is the final report of the financial year.
2. Reports to Executive throughout the year have outlined the Council’s serious financial position as we continue to see significant, recurring pressures across both children’s and adults social care budgets.
3. Whilst there have been some improvements in the outturn, due to the significant work undertaken by officers across the Council to reduce spending and carefully control all costs, the underlying position is still a significant overspend that is of serious concern. It remains the case 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. The recurring overspends across both adult and children’s social care are significant and, despite investment made in the 2024/25 budget process, we expect to see a continued pressure into the new financial year.
Financial Summary
5. The draft outturn position is an overspend of £3.7m, compared to a forecast at Monitor 3 of £5.6m. This improvement arises from the significant amount of work undertaken by officers across the Council to identify savings and mitigations across all service areas. In Childrens, for example, this has resulted in a recurring improvement of some £2m in the outturn position.
6. Alongside this, the strict cost control measures implemented at the start of the financial year have also had a significant impact in reducing the overspend. Whilst it is positive that the significant amount of work undertaken by staff across all Council services has reduced the overspend position, it is important to note that there remains a significant overspend across social care that will need to again be carefully monitored with in year savings identified.
7. The underlying position is an overspend of £8.6m, offset by underspends in Corporate and Place. Most of the areas of underspend (parking income and savings due to delaying borrowing) have already been assumed as 2024/25 budget savings, and therefore will not recur at the same levels.
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 to take the necessary action to reduce our expenditure down to a sustainable level.
Financial Analysis
9. The Council’s net budget is £141.6m. 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 Q3 Forecast Variation |
2023/24 Draft Outturn |
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£’000 |
£’000 |
£’000 |
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Children & Education |
32,701 |
3,690 |
2,609 |
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Adult Social Care & Integration |
50,093 |
4,712 |
6,051 |
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Place |
33,206 |
-1,040 |
-2,310 |
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Customers & Communities, Public Health & Corporate Services |
8,935 |
830 |
-89 |
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Central budgets |
17,189 |
-2,600 |
-2,600 |
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Sub Total |
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5,592 |
3,661 |
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Contingency |
-500 |
-500 |
-500 |
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Use of earmarked reserves |
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-4,250 |
-3,161 |
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Target for further mitigation |
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842 |
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Net total including contingency |
141,624 |
nil |
nil |
Table 1: Finance overview
Directorate Analysis
Place
10. The directorate outturn position (excluding Housing) is an underspend totalling £2,215k and the table below summarises the latest forecasts by service area.
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2023/24 Budget £’000 |
Draft Outturn Variance £’000 |
Draft Outturn Variance % |
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Transport |
8,046 |
-536 |
-6.7 |
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Fleet |
112 |
-116 |
-103.6 |
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Highways |
5,340 |
552 |
10.3 |
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Parking Services |
-6,169 |
-1,604 |
26.0 |
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Waste |
16,145 |
-999 |
-6.2 |
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Public Realm |
3,887 |
-66 |
-1.7 |
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Emergency Planning |
137 |
32 |
23.4 |
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Planning Services |
1,387 |
99 |
7.1 |
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Forward Planning |
728 |
-2 |
-0.3 |
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Public Protection |
1,430 |
-168 |
-11.7 |
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Community Safety |
777 |
1 |
0.1 |
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Asset and Property Management |
378 |
-80 |
-21.2 |
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Facilities Management |
1,653 |
317 |
19.2 |
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Commercial Property |
-3,787 |
409 |
10.8 |
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Regen & Economic Development |
477 |
-7 |
-1.5 |
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Management and Support |
55 |
-47 |
-85.5 |
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Place total |
30,596 |
-2,215 |
-7.2 |
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11. The Place Directorate has delivered a larger than forecast underspend which given pressures across Children’s and Adults social care is of benefit to the council position overall. The primary reason for the underspend is continued strong performance from income particularly relating to parking. However other income budgets performed better than expected in the final quarter particularly across Planning fees, Waste income and Transport fees and charges. Cost control measures have delivered savings across all service areas and the Directorate maximised charges to capital where possible particularly across the Highways service.
12. Car park income to the end of the year remained strong across the city at being £643k (8%) ahead of total income in 2022/23 and £1,713k (25%) ahead of budget. There was also further income above budget of £70k from Penalty Charge notices less a shortfall of £72k from Respark. Parking expenditure was broadly on budget which is better than forecast at Monitor 3 as budget was provided for business rates increases from the prices contingency.
13. There was an underspend of (£999k) across waste disposal and collection. Income from selling spare capacity at Allerton Waste Recovery Plan was £526k higher than forecast as overall council waste tonnages remained static. The council also received a further £80k from deductions as the KPI for recycling was not met by the facility operator. There was also additional recycling income due to higher than budgeted commodity prices totalling £351k. There was also additional income from gas sales from Harewood Whin which was £130k higher than budget and HWRC fees which were £69k above budget. It is proposed that a contribution of £500k is made from the Waste Budget into reserve to fund the continued costs of implementing the Garden Waste roll out and associated Customer Relationship Management system.
14. Across Waste Collection operational costs were £397k below budget as vehicle repairs and the cost of hire was below budget as the fleet is relatively new.
15. Within the Highways area there was a year end overspend totalling £552k. This included additional costs of dealing with a significant number of flooding events between December and March which was £286k above budget. The high cost of energy costs also resulted £698k costs above budget. To offset these costs it was possible to charge additional highways works to capital in order to mitigate the overspend.
16. Within Transport there was an underspend of £0.5m across the service. Of this £474k related to there not being a requirement to pay the levy to the West Yorkshire Transport Fund during 2023/24. As the Fund has not yet borrowed the Combined Authority are not in need of levy payments this year. This has provided a saving that is proposed to contribute towards the abortive costs from the Transport programme that are detailed in the Capital Outturn report elsewhere on the agenda (£802k).
17. The Transport budget area has also seen savings against the Concessionary Fares budget £715k as numbers of concessionary passengers have not fully returned to pre pandemic levels. Income levels were higher than budgeted particularly from Traffic Regulation Orders (£-283k). Elsewhere across transport the service was able to offset costs from the use of external grants and contributions to minimise council costs.
18. There was a significant improvement in income from Planning fees with double the budgeted income levels being received late in the year. This led to the year end position being an income shortfall of £100k across planning compared to an estimate of £450k at quarter 3.
19. Across the Commercial Portfolio, whilst rents were broadly in line with budget there were overspends relating to energy costs, repairs and insurances which led to a position £407k below budget.
20. The budget for facilities management assumes full occupation of external partners at West Offices. There remains a void on floor two whilst let is still subject to final completion. This has led to a forecast shortfall of £338k in this service area.
21. In summary the Directorate has seen significant surplus income arising from Parking £1.6m and Waste Services £1m along with the underspend from Concessionary Fares £0.7m has allowed an underspend to be delivered across the Directorate. Strict cost control measures introduced across the autumn have ensured that other overspends (eg flooding and commercial property) have been contained within other directorate budgets.
22. The position will not recur to this level as savings across parking revenue and waste have been agreed as savings in the 2024/25 budget alongside a further general savings target.
Performance – Service Delivery
23. 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
24. 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.
25. 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 all of the core indicator set.
27. There are two types of claimant: those in employment and those not. Both types have been gradually increasing in the last 12 months with the number of those not in employment increasing as claimants of health-related legacy benefits (e.g. Employment and Support Allowance) are migrated across to Universal Credit. The increase in the number of those in employment may be attributed to a higher percentage of part time workers (30.7% in York, 26.5% regionally and 23.8% nationally).
28. Inflation dropped to 3.2 per cent in March from 3.4 per cent in the previous month with food prices being the main reason for the fall, with prices rising by less than a year ago. Higher fuel costs, likely a reflection of a sharp rise in international oil prices over the last months have lessened the fall in inflation. There are tentative signs that the jobs market is beginning to cool, with data available in April 2024 suggesting both a fall in the headline employment rate and a drop in the total number of people on payrolls from HMRC data which has led to a slowing in earnings growth.
29. Earnings gap between the 25 percentile and the median (£) – The earnings gap is the difference between full time workers in the bottom quartile and those earning the median. In York, the latest figures show that this gap has reduced by 7.3%, in 2023, to £152.20. This is the lowest gap since 2018-19. Nationally, there has been an increase of 1.4% to £163.20 and regionally an increase of 4.7% to £139.50. It is worth noting that the difference between workers in low-paying and other occupations and industries are not limited to pay. Part-time work, zero-hours contracts and temporary contracts are more common for those working in low-paying occupations, while small firms are more likely to be in low-paying industries. However nationally, in 2023, 8.9% of all employee jobs were low paid (paid less than two-thirds of median hourly pay), when considered in terms of hourly earnings. This was the lowest proportion of low-paid employee jobs by hourly pay since the data series began in 1997, which coincides with recent increases in the National Minimum Wage (NMW) and National Living Wage (NLW) rates. This also coincides with the additional increase in the NMW for those aged 23 and 24 years, who joined those aged 25 years and over in receiving the NLW in 2021.
31. % of vacant city centre shops – Whilst acknowledging that a number of city centre streets and prime commercial locations seem to be experiencing higher vacancy levels than York's average, overall at the end of March 2024, there were 56 vacant shops in the city centre (two more than the number at the end of March 2023), which equates to 8.9% of all city centre shops. This is much lower than the national benchmark in 2022-23 of 13.8%. The York figures have remained stable for a number of years.
32. Business start ups – Figures for 2022-23 showed 870 new business start-ups for York, which is higher than in the previous year (746 in 2021-22). The York figure is at only a slightly lower level to that seen before the pandemic (932 in 2019-20). The year to date figure up to the end of February 2024 of 767 new start ups is at a similar level to last year. The monthly figures for business start ups in York came from a regionally paid for dataset but this has now come to an end. Alternative sources of this information are being sought.
34. % of working age population in employment (16-64) – In Q3 2023-24, 79.4% of the working age population were in employment, which is higher than the national and regional figures (75.8% and 74.2% respectively) and the York performance gives the city a ranking of second regionally. The figure for Q3 2023-24 in York remains fairly high overall but is lower than the figures seen for the previous two years.
35. % of Total Employees working for an Accredited Living Wage/Good Business Charter employer – 16% of employees worked for an Accredited Living Wage employer and 13% worked for an Accredited Good Business Charter employer in 2022-23, which are both higher than in the previous year (14% and 12% respectively).
36. Survival of Newly Born Businesses post 1 year – Businesses have had a turbulent time over recent years, coping with Covid, the soaring cost of energy, high inflation and high interest rates. The latest business demography statistics suggest that resilience may be better than expected. In York, 175 businesses were created in Q3 2023-24, up 6% on a year ago. There were 160 business closures in the same quarter, down 8% on the year before. The survival rate post 1 year has been consistently above 94% in York for the last 4 years, with the latest figure of 94.4%. The York figures have been consistently higher than the National and Regional rates.
37. The majority of the indicators in this Transport section are annual indicators, therefore data is not yet available for all indicators for 2023-24. As soon as new data becomes available, narrative will be included in future versions of this report.
38. Area Wide Traffic Levels – Between 2011-12 and 2016-17, the number of vehicles on the city’s roads increased year on year to a high of 2.2 million. Following this, the numbers decreased to a low of 1.75m in 2020-21. However, the covid pandemic brought with it numerous national lockdowns and local restrictions so the decrease in traffic levels was to be expected. Since then, figures have been increasing again to the latest figure of 2.08m in 2022-23.
39. Index of Cycling activity – Prior to the pandemic, cycling levels in the city were around 41% (2019) above the baseline taken in 2009. Recently released data shows that cycling levels in 2023 were 13% above the baseline. The pandemic had a huge effect on how people travel around, and how much they travel. Other cities with high levels of cycling have also seen falls in activity. In York, cycling levels appear to have fallen because of a decline in commuting (as a result of more working from home), although travel patterns are still settling down. York has a strong walking and cycling heritage, but if we are to achieve our climate and traffic reduction targets and see a long-term, sustainable increase in rates of cycling, we need to enable more people to choose the bicycle as the primary way of getting around. There is much more to be done to encourage even more people towards riding, wheeling and walking in the future, and we have recently carried out an extensive consultation to better understand what changes we can make to help support residents to make the change to cycling, and how we can support our cycling communities.
40. Index of pedestrians walking to and from the City Centre – From a baseline in 2009-10 (37,278), there has been a 23% increase in the number of pedestrians walking to and from the city centre in 2022-23. This is 19 %pts higher than in 2021-22 and the highest increase seen for a number of years. Data is gathered on an annual basis over the course of one day; it is a count of pedestrians crossing an inner cordon set just beyond the inner ring road and includes off-road routes such as riverside paths.
41. The number of CYC electric vehicle recharging points - There were 103 CYC electric recharging points at the end of 2023-24, which is seven fewer than in the previous year.
42. % of road network that are grade 4 (poor) or grade 5 (very poor) – Data for this indicator is currently being worked on and it is hoped that this will be released to York Open Data, Ward Profiles and Yorkview in May 2024, subject to licensing issues.
43. Net Additional Homes – Between 1st April 2023 and 30th September 2023 there were a total of 152 net housing completions. This represents fewer housing completions compared to the same monitoring period last year. However, several significant housing sites are anticipated for completion over the next six months including the remaining 244 homes at The Cocoa Works, Haxby Road (Phase 1), 62 homes at Eboracum Way, along with the ongoing developments at Germany Beck and Former Civil Service Club, Boroughbridge Road together with several other pipeline sites that should see an improved annual total of completions compared to more recent years.
44. Some of the main features of the housing completions have been;
· 141 (92.8%) homes were competed on (Use Class 3) housing sites;
· A total of 106 new build homes (69.7%) were completed whilst 3 homes were demolished;
· Individual sites that saw the construction of five or less dwellings contributed an additional 21 homes;
· The most significant individual sites that provided housing completions have been 35 flats at the Cocoa Works, Haxby Road (Phase 1, Block C), Germany Beck (27), Former Civil Service Club, Boroughbridge Road (25) and the Former Lowfield School site (24).
45. Net Housing Consents – Planning applications determined between 1st April 2023 and 30th September 2023 resulted in the approval of 324 net additional homes and represents a reduction of more than one hundred compared to last year’s update covering the same equivalent monitoring period.
46. The main features of the consents approved were;
· 247 of all net homes consented (76.2%) were granted on traditional (Use Class C3) housing sites;
· Sites granted approval for traditional (Use Class C3) housing included Os Field South of & Adjacent to 1 Tadcaster Road, Copmanthorpe (158), Land East of Middlewood Close, Rufforth (21) and Clifton Without County Junior School, Rawcliffe Drive (15). A further 38 homes were approved on sites of 5 or less homes;
· Three sites were granted ‘prior approval’ for a net total of 33 new homes, the most significant of which was at Gateway 2, Holgate Park Drive (31);
· 44 net new retirement homes were allowed on appeal at 11 The Village, Wigginton;
· A further 23 homes were approved through a resolution to grant consent by councillors in the previous six months at Morrell House, 388 Burton Stone Lane (13) and 12 Sturdee Grove (10).
48. % of Talkabout panel satisfied with their local area as a place to live - The second biannual resident satisfaction survey taken by the Talkabout panel took place during Q3 2023-24. Results from the Q3 2023-24 Talkabout survey showed that 80% of the panel were satisfied with York as a place to live, and 80% were satisfied with their local area, both consistent with results from Q1 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).
49. Level of CO2 emissions across the city and from council buildings and operations – Carbon emissions across the city have been reducing over recent years, from 936 kilotonnes of carbon dioxide equivalent in 2018, to 816 in 2020. Emissions from councils buildings and operations have also been reducing, from 3,658 tonnes of carbon dioxide equivalent in 2020-21 to 3,462 in 2022-23.
50. Number of trees planted (CYC) – During 2023-24, CYC planted 40 standard trees in the city’s parks and on highways. In addition, 1,200 trees (whips) were planted by the council’s ‘York Green Streets’ project, fully funded by a grant from White Rose Forest (secured in February 2024) including three years aftercare to support successful establishment. This forms part of the Council Plan 2023-2028 commitment to support biodiversity and nature by planting 4,000 new trees. The YGS project team is itself 100% externally funded by a £150,000 Forestry Commission grant to 31 March 2025. A further £40,000 has been secured from DEFRA to plant two new micro-woods in York’s urban area in the 2024-25 planting season and site selection is currently underway following a successful resident consultation for site suggestions in January.
51. In excess of 210,000 new trees and shrubs have now been delivered at York Community Woodland up to March 2024, through the council’s partnership with Forestry England (FE). Local residents and volunteers helped achieve this target during a series of community planting days. The trees, planting and aftercare, as well site infrastructure works has been fully funded by external grants totalling c£1.3m. FE now lease the site from CYC long-term and are responsible for its upkeep and future development, whilst paying an annual rent to the council. In addition, the council will bank the carbon credits generated by the new trees and offset against organisational carbon emissions, assisting in the council’s journey to net zero.
Consultation
54. Not applicable.
Options
55. Not applicable.
Analysis
56. Not applicable.
Council Plan
57. Not applicable.
Implications
58. 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
59. 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.
60. 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
61. The Committee is asked to:
a. Note the finance and performance information.
Reason: to ensure expenditure is kept within the approved budget.
Contact Details
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Author: |
Chief Officer Responsible for the report: |
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Patrick LookerHead of Service FinanceExt 1633
Ian Cunningham Head of Business Intelligence Ext 5749 |
Debbie MitchellDirector of Finance
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Report Approved |
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Date |
10/09/2024 |
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Wards Affected: List wards or tick box to indicate all |
All |
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For further information please contact the author of the report |
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Background Papers: None.
Annexes: EPAT Q4 23-24 Scrutiny Committee Scorecard