Agenda item

Financial Planning and Medium Term Strategy 2020/21 to 2024/25

Contact for information: Hamant Bharadia, Assistant Director of Finance, Financial Planning and Management, Tele: 0207 926 9153,



Councillor Maria Kay, Cabinet Member for Finance & Performance, introduced the report and made the following points:


  • Since the coronavirus lockdown, council income from sales, fees and charges had fallen while spending had increased, including on food packages, care homes, personal protective equipment and support for local businesses. This had led to a significant budget shortfall
  • The Government had stated at the beginning of the pandemic that councils would be fully recompensed but currently reimbursements covered less than half of the deficit. While an additional £3.5m had just been announced, this still left the Council £24m short
  • Prudent financial management in recent years meant this could be covered with reserves; a Section 114 notice would not have to be issued
  • Local government was already faced with a lack of financial clarity prior to the pandemic, due to uncertainty over the fair funding review, business rates and adult social care funding, leading to a series of one-year settlements. These issues, along with Brexit, were still firmly on the horizon
  • The Council had tried to do what was necessary during Covid-19 and would continue to work on a recovery which worked for everyone, including investing in jobs, affordable workspace, cultural facilities and digital infrastructure


In response to questions from members, Councillor Maria Kay, Cabinet Member for Finance & Performance; Councillor Jack Hopkins, Leader of the Council; and Christina Thompson, Director of Finance & Property, stated that:


  • It was unclear currently which of the scenarios set out in the report was the most likely. Ongoing planning was taking place involving finding mitigations and savings for all three scenarios. The Chancellor’s autumns statement may offer some clarification
  • In order to help visualise the level of deficit, it was explained that the total mental health budget was £15m, as was the fostering and parenting service
  • In response to a query from members, the Director of Finance and Property stated that she was happy to hold a briefing for members on the overall ‘big picture’ in terms of the Council’s finances
  • The majority of the unavoidable growth set out in the report did not relate to Covid-19 but was identified as part of the closure of the 2019/20 accounts. Temporary accommodation was a particular issue, which was expected to continue into next year, while the Council was reducing the number of court cases brought in relation to council tax arrears, meaning the income target was not being met. There was also an ongoing problem with the way the Electoral Services budget was set which was being rectified
  • With regards to the irrecoverable loss of income figure, it was clarified that the Council was now expected to receive compensation for loss of income but further details were being awaited from Government
  • While it was always a last resort to use reserves, it was likely to be necessary on this occasion. It was also possible to use some balances and earmarked reserves. Any reserves used would need to be replaced to bring them back up to a prudent level
  • With regards to income streams, the performance in respect of parking and licensing had been encouraging since lockdown restrictions began to be lifted
  • It was necessary to keep a watching brief regarding the extent of additional spending pressures and this would involve all members
  • The governance process in relation to the emergency spending involved a Gold management board, decision reports being produced in the usual way, and the oversight of the OSC chair in respect of approving the need for urgency. In response to a point of order raised by Cllr Bartley querying whether this amounted to a conflict of interest for the Chair, the Legal Officer stated that he was satisfied there was no such conflict as the Chair had no decision-making powers in this process
  • As per Government instructions, the Council had redeployed staff who were unable to do their usual duties – into areas such as enforcement, call handling and the food hub – as opposed to using the furlough scheme. The furlough scheme had been used for some school staff whose work involved income activities they could not carry out
  • The report set out the medium term financial situation with respect to the potential funding gaps. Work would then commence over the summer to identify ways to achieve the necessary savings, involving the usual equalities impact assessment process
  • The senior leadership was looking at identifying lessons from the last few months via the New Beginnings programme, on which a report was going to Cabinet on 20 July
  • The Infrastructure and Capital Delivery Studio was an initiative aimed at bringing together all capital spend into one place to align projects around broader outcomes
  • It was necessary to look at new ways of doing things to manage the Children’s Services budget, including more collaborative working with other councils. It was noted that the new Director of Children’s Services had experience of adopting framework models to successfully manage placements and move children from residential care into fostering
  • It was necessary to build more homes to reduce reliance on temporary accommodation


The Chair thanked the Leader of the Council, the Cabinet Member for Finance & Performance and the Director of Finance & Property for their contributions and summarised the discussions on this item, resulting in the following recommendations:



  1. That a briefing be arranged for committee members regarding an overall ‘big picture’ view of the Council’s finances
  2. That the need to maintain a level of reserves commensurate with the Council’s spending plans and the current high level of financial risk be highlighted, especially in light of the potential need to use reserves to address the in-year budget gap
  3. That the committee be updated regularly on income generation performance, including mitigations in the event that income falls below expected levels
  4. That clarity be provided regarding the shortfall between Covid-19 related costs (incorporating additional expenditure and lost income) and compensation levels from Government as and when figures become known
  5. That the committee is concerned about the potential impacts of the Council’s financial position on the borough’s most vulnerable residents, especially those with protected characteristics under the Equality Act, and wishes to be kept informed regarding the process of identifying savings measures, with a particular focus on the related Equalities Impact Assessments
  6. That an evaluation of the cost and performance of Covid-19 specific measures put in place during the lockdown period, such as the food hub operation and actions to tackle homelessness, be carried out and reported back to the committee, in order that lessons can be learned and implemented in case of a second wave of Covid-19
  7. That the committee urges greater co-operation between boroughs on addressing Children’s Services budget pressures
  8. That the assumptions underpinning the Children’s Social Care budget be reviewed to ascertain whether any revision is necessary, in light of consistent overspends in recent years
  9. That clarity be provided on temporary accommodation spend and how it envisaged this will change over time
  10. That the committee notes the unprecedented nature of the current situation in terms of budget pressures and risks, and stresses the need for robust governance underpinning decision making processes, including greater engagement with members
  11. That the committee wishes to monitor the Capital Investment Programme and therefore requests that this be included in future budget-related reports
  12. That the committee expresses concern at the level of additional budget pressures unrelated to Covid-19 which have been identified since the budget was passed in February, and requests further information regarding how these arose and why they were not foreseen


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