Agenda item

Financial Update - Quarter 1 2022/23


The Interim Director of Finance introduced the report and stated that it had been written before the intervention had begun, which was why the intervention was only briefly mentioned. He explained that the situation was moving quickly, but the Quarter 2 2022/23 finance report would include more detail on the situation, and would outline any capital loss and wider impacts, for example the Minimum Revenue Position. He stated that the financial position was fluctuating, which meant that there was currently a limited level of certainty, but regular reports would be brought forward to ensure regular monitoring.

The Interim Director of Finance felt that some service pressures within the Council were significant, but the Council and commissioners were working through a variety of solutions to these pressures that could be implemented next year. He stated that in the short-term, there was a pressure to balance the 2022/23 budget, but explained that this had been a challenge before the commissioners had started working with Thurrock. He explained that some of these pressures were being seen at a national level, for example pressures within Adults Social Care and Children’s Social Care, although stated that this pressure was at a lower level compared to previous years. He added that there were also service pressures in areas such as home to school transport and employee cost pressures. He summarised and stated that the commissioners were working with the Council to assess the financial position and the Minimum Revenue Position (MRP).

Councillor Muldowney felt that refinancing debt at a higher interest rate might have implications on services already experiencing budgetary pressures. She asked if other pressures, such as an increase in inflation which was currently at approximately 10%, would affect the Council. She also asked how the Council would cover the cost of rising inflation, as central government had not committed to covering this rise. The Interim Director of Finance explained that central government would be providing a funding indication at the end of October, which would be finalised in December. The Interim Director of Finance added that a service review had started at the beginning of the year, which had identified service pressures and was working to reduce these. He stated that at the beginning of the financial year, there had been a budget gap of £13million, and explained that £9million of funding to bridge this gap had been agreed, and £3million was in the process of being agreed. He explained that the Council were in the process of setting the budget for 2023/24 with the commissioners, although DHLUC needed to fully understand the scale of the problem before they could act. He explained that any savings made needed to be sustainable and deliverable to ensure that statutory services were maintained. He added that the commissioners would be working with Thurrock for three years. Councillor Muldowney questioned how long the issues would take to resolve, as the approximate figure appeared to be 20 years. The Interim Director of Finance explained that the Council, commissioners and DHLUC were working to find a sustainable solution, but 20 years was the usual first approximation. He explained that this was a historic methodology and could therefore be longer or shorter.

Councillor Kent highlighted the budget presented to Council in February 2022, which outlined that £3million of reserves would be used to bridge the gap. He queried if this figure was still correct. The Interim Director of Finance stated the reserves outlined in February 2022 still needed to be used, but additional service specific reserves would also need to be used, for example the Adult Social Care reserves, to support the service as there was significant demand. Councillor Kent queried how the home to school transport service would be affected, as he felt that some young people were no longer able to access this service, particularly those young people with special educational needs and disabilities. The Interim Director of Finance explained that home to school transport was experiencing pressures due to an increased caseload as there were now more SEND facilities in Thurrock. He stated that the rules and regulations regarding home to school transport were specific, and Thurrock had to meet their statutory duty, which meant Thurrock had limited control over who to offer the service. He explained that this budget was funded through the general fund, rather than the Dedicated Schools Grant. The Interim Director of Finance stated that although it was a statutory duty, the Council periodically reviewed the service. Councillor Kent felt that asset sales were not a sustainable way of increasing income, and asked if the £3.3million of asset sales in the budget had been achieved. The Interim Director of Finance confirmed that the asset sale figure of £3.3million had been achieved.

Councillor Kent highlighted that this was the first public meeting that had discussed the intervention, and sought clarity on how the Council had reached this position. He felt that Members had little understanding of the finance and investment strategy, but felt that an apology should be issued to residents and Members. Councillor Muldowney echoed Councillor Kent and felt that the investment strategy and Council finances needed to be thoroughly scrutinised, and questions asked. The Portfolio Holder for Finance stated that the Council would now be trying to bring forward as much information as possible to Committee’s and Members to ensure increased transparency. He stated that the Council were still trying to find out how the financial situation had occurred, and this would not be reported on until the BV report in January 2023. He commented that reports or briefing notes would be brought forward regularly so all Councillors could see the process and make decisions.

RESOLVED: That the Committee:

1. Noted the Department of Levelling Up, Housing and Communities have put an intervention package in place and nominated Essex County Council as the Commissioners as set out in Section 2.

2. Commented on the forecast revenue and capital outturn positions for 2022/23.

3. Noted that additional action will be required to identify further savings to manage the reported General Fund budget pressures.

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