Cabinet considered the 2022/23 Month 4 Budget Monitoring Report.

Councillor Hilton, Cabinet Member for Asset Management & Commercialisation, Finance, & Ascot reported an adverse movement of £303,000 from Month 2 which moved the year end forecast to an overspend of £2.108m. This reduced to £333,000 after taking into account unused contingency.

Adult social care was forecasting an overspend of £376,000 which was the outcome of a number of movements. Paragraph 4.3 stated that £2.15m of earmarked reserves and Better Care Fund had been used to manage the overspend along with £750,000 of contingency that was included in the budget for demographic growth. In real terms this was an overspend of £3.276m. Appendix G included a table on social care client numbers which provided an explanation. There were 143 more older people in residential and care homes than the 619 included in the budget; an increase of 23% which, assuming an average cost of placements, would predicate a £4.6m overspend.

During the pandemic hospitals were provided funds to support early discharge and they used these funds to moved patients from hospital to care homes. The usual protocol was to use reablement to help patients re-establish their lives in their own homes. The unintended consequence of early discharge was that older people had been admitted to care or residential settings earlier than they might have been, and few returned to their homes but stayed longer in a residential setting, significantly increasing care costs. Optalis were now better managing the process, but it showed the unintended consequences of some actions taken during the pandemic.

The increase in budget for Director & Support expenditure related to the Homes for Ukrainians scheme where the council has received £1.876m for guests arriving in quarter 1, of which £1.1m was committed. Some of the balance was likely to be used on temporary accommodation. Councillor Hilton knew of one host in the south of the Borough who wished the family staying with him to leave in October.

In Housing, income from Hackney Carriage and street performing licenses was down by £140,000 and temporary accommodation was forecasting an overspend of £93,000 to be funded by the homelessness prevention grant. There was concern that the recent increase in the cost of living would impact on numbers.

Children’s services showed an overspend of £649,000, which was driven by the impact of the Children’s National Transfer scheme for unaccompanied asylum seekers where the council would receive 15 more children to bring it up to the 0.07% quota, but the quota was set to increase to 0.1% and push up costs further. Legal services were overspent by £241,000 and the difficulty in recruiting to permanent positions had increased agency staff costs to £260,000.

To manage the Dedicated Schools Grant deficit of £2.467m, apart from the Deficit Management Plan, Achieving for Children was participating in the DfE Delivering Better Value in SEND support programme.

Covid continued to impact on the Place directorate, which, despite support from the Covid reserve, was forecasting an overspend of £1.186m, most of which was associated with pay and display, penalty charge notices and season tickets. However, £171,000 related to VAT arrangements at the Braywick leisure centre. The borough opted to tax the Braywick Leisure Centre as a new build, so that it could reclaim the VAT on the construction costs but as a consequence it must pay VAT on the proportion of the contract payments it received from Leisure First, that was derived from the building.

Resources were reporting a favourable variance of £250,000 and Law and Governance £114,000.

There were a number of budgets virements that required Cabinet’s approval, shown in table 12. None of the virements changed the budget. The first was a movement between two accounts in revenues and benefits and housing to better reflect expenditure and government grants. The second was a transfer of the budget of the Berkshire Records office from Adults, Health and Housing to Governance. The third was an additional government grant to help the council to prepare for the implementation of Adult Social Care reforms.

On capital, following planning approval, £2.708m had been added to the capital programme for Windsor Girls’ School for a new sixth form block and all-weather pitch netball courts and staff car parking.

Councillor Hilton concluded that all councils were facing significant financial head winds and it was crucial that the council took positive action to bring the current year’s budget back into balance. That was not just to achieve a fourth year of budget surplus, but to retain reserves to help create a balanced budget for 2023/24.

Councillor Johnson seconded the proposal. At full Council earlier in the week he had articulated the challenges being faced by all local authorities, particularly in relation to pressures in adult and children’s social care. The council did have a record of getting itself back on track with a modest underspend by year end. There was lots of work underway to get closer to this year’s target.

Councillor Hilton confirmed that season ticket income was down, which was not surprising as more people were working from home. Overall parking income was down by 20%, a figure of around £2m. The Head of Neighbourhood Services explained that, historically the income targets had been unrealistic. A mid-year sale and promotion of season tickets was under consideration.

Councillor Werner commented that he had raised concerns earlier in the year about unrealistic expectations for parking income. He asked if the figures included additional revenue from the Jubilee and State Funeral events in Windsor in recent months and whether Members were still confident the overall figures would rebound. Councillor Werner commented that it felt like a return to the ‘bad old days’ and asked if a proper budget surplus would be identified or would the council rely on donations from the Property Company or government grants.

Councillor Johnson responded that it was not a return to the ‘bad old days’. The council had proactively asked CIPFA to address a number of structural issues. The administration had been the only one to set a balanced budget at the start of the year. He restated the determination to remain on balance and close the year on balance.

Councillor Hilton commented that in his view it was perfectly legitimate to use contingency built into the budget for eventualities such as demographic growth, and earmarked reserves.

Councillor Price asked how much unallocated contingency was left and for further information on the decision related to taxation and Leisure Focus. She commented that quite a few overspends were being mitigated by one-off funds. The savings tracker showed a pattern of difficulties in recruitment with a number of the posts ones that were intended to generate income; she therefore asked about the impact on the budget next year.

Adele Taylor, Executive Director of Resources, explained that the forecast predicted the position at the end of the year therefore all contingency was effectively being allocated to deal with in year issues. However, this did not mean actions were not being taken to identify ways to reduce demand and expenditure. The forecast did not include additional parking income from the last few weeks in Windsor. In relation to the VAT issue, it was acknowledged that the budget had been missed as it had come out quite close to budget setting.  One-off funds were being used to mitigate overspends, however all officers were looking to identify ways not to rely on these going forward. Sometimes one-off use was appropriate, for example funding related to Ukrainian families or where reserves were earmarked. Recruitment was an issue for all employers. The council would prioritise the resources it had where recruitment was difficult.

Councillor Baldwin commented that the £2m underspend at the end of last year had been surprising to everyone, including the administration. Based on the controls and financial probity, the council could equally have found itself overspent by £2m. The drop in revenue from season tickets was predictable. He asked why there was not a plan to discount season tickets for the remainder of the year with a condition they came with a season ticket for 23/24.

Councillor Johnson responded that the head of Neighbourhood Services had dealt with the issue of season tickets in earlier comments.

The Director of Resources stated that if any councillor or member of the public had concerns about the financial probity of the council, which was her personal responsibility, details of the external auditor could be found on the council website. Part of the underspend at the end of last year related to the late notification of funds from government departments.

RESOLVED UNANIMOUSLY: That Cabinet:

i)           notes the forecast revenue outturn for the year is an overspend on services of £2.108m which reduces to £0.333m when taking into account unallocated contingency budgets (para 4.1);

ii)          approves three budget virements (para 12); and

iii)        notes the forecast capital outturn is expenditure of £58.787m against a budget of £60.066m (para 14).