To receive a verbal update on the Council’s current financial position.

Councillor Jones stated that in May 2023, after 16 years of continuous Conservative administrations, residents voted overwhelmingly for Liberal Democrats and Independent Councillors to take charge and to bring back accountability and transparency. She said that the new administration knew they would be inheriting a challenging financial position. To put the debt into context, it was now almost twice the total annual revenue spend and the forecasted borrowing costs were £8m in the current year and £14m in the 2024/25.

Councillor Jones said that the spending decisions on council tax and borrowing over the last 10 years combined with weak financial management and low financial resilience, had put the borough in a situation where it lacked the resilience to cope with increased borrowing costs and increases in demand. She referred to schemes such as Vicus Way Car Par that had failed to bring in money weekly. She then added that in 2019 the previous administration had dismissed the concerns of opposition Councillors on debt and been told that the borough would be ‘debt free including the pension deficit by 2024’. She used the phrase of ‘kicking the can down the road’ as one to describe the situation that the Council now found itself in.

Councillor Jones admitted also that there was currently a disconnect between central and local government. Reduced funding from central government and increased local demand for services had contributed to the situation. She admitted that tough decisions would need to be made, however the Cabinet were fully committed to sorting out the financial situation, and that it would remain their top priority, to avoid issuing a Section 114 notice.

Elizabeth Griffiths, Executive Director of Resources and s151 officer, outlined the forecast in-year position for 2023/24 (at month 5), which showed an overspend on service budgets of £7.3m. The available in-year contingency was £3.3m and that the forecasted underspend on non-service budgets, would reduce the net overspend to £3.6m. General fund reserves were currently at £10.2m. Reserves would be reduced to £6.6m, following this, which was below the minimum requirement set by the s151 officer. She added that the process for setting the budget for the year 2024/25 continued, with a draft budget being brought to Cabinet in November 2023. However, the scale of the budget gap for 2023/24 and 2024/25, put the borough at significant risk of having to issue a Section 114 notice, unless further significant action was taken.

Elizabeth Griffiths then outlined some of the main causes of these increased budget pressures, which were as followed:

·       Inflation, that has remained higher than expected, for longer.

·       The increased costs of goods, services, transport, premises, and utilities.

·       Higher than budgeted inflation has added a £1m pressure to large contracts within the Place directorate.

·       Increased interest rates have increased the cost of Council borrowing.

·       Increased cost of Adult Social Care services has added a total pressure of £5m in 2023/24.

The Council’s current borrowing amount stood at £203m. Borrowing costs were forecasted to reach £8m in 2023/24 and £14m in 2024/25. Demand was increasing for a range of statutory services including temporary accommodation and children’s services referrals.

Kevin McDaniel, Executive Director of Adult Social Care and Health, outlined the growing pressures that Adult Services were currently under. This included the increased number of cases where persons had multiple complexed needs, which in turn was increasing service costs. Older people clients were also 36% more than originally budgeted, causing a £2.7m overspend against the Adult Social Care budget in 2023/24. The number of people who were receiving mental health support was also 56% over budget, which in turn had created an added pressure of £1m in 2023/24.

Lin Ferguson, Executive Director of Children’s Services, echoed the comments that had been made by Kevin McDaniel and stated that the cost of agency staff was also a huge contributor towards the increased cost of services, particularly in the Childrens Services area. The salaries of RBWM staff compared to that of neighbouring authorities were also lower, which had led to greater dependency on agency staff.

Stephen Evans, Chief Executive, added to the words of fellow officers by stating that officers were working very hard to address the challenges that laid before them. He said that the situation had been caused by a range of both national and local issues, which went back many years. Fundamentally, the Council’s level of financial resilience, remained weak. In April 2020, the Council warned of its risk of a Section 114 notice, however, were able to build up reserves since that time. However, now at £10.2m, this was now too low.  In the past, the Council had relied on one off grants in order to balance the budget, however with the current macroeconomic challenges that the Council faced, this was no longer viable. The Council’s spending power was also significantly lower compared to neighbouring local authorities. Per dwelling, the borough’s spending power was £1,500, compared to the borough’s closest neighbours’ amount of £1,760. This compared to England’s median amount of £1,885. Historic low Council tax was a key factor in this.

Councillor Hill asked Councillor Jones where all of the money had gone over the last 14 years as it was around £50m and was now £203m. Councillor Jones stated a number of projects that had been completed during this time, including the Braywick Leisure Centre and the Vicus Way car park, had contributed to this. Extensive capital expenditure had been spent in recent years on the maintenance of Council property that had not been regularly carried out and therefore this had led to added costs.

Councillor Reynolds asked if there were issues with the current budget, that had caused the Council to be in the position that they were currently in.

Councillor Werner, Leader of Council and Cabinet Member for Community Partnerships, Public Protection and Maidenhead said that in February 2023, he and Councillor Jones had raised these issues, however they had not been listened too. He labelled it as a ‘fake budget’. He then outlined 3 reasons as to why he believed it to be so.

These were:

·       Inflation rates being included to cover contract inflation. Therefore, the correct inflation rates were not used, leading to an underestimate in the budget.

·       The large debt burden was made worse by underestimating the potential interest rate rises.

·       A large number of the savings that were proposed, were marked as being almost impossible to achieve, and yet they were still included. 

Councillor Jones believed that it was not just the effects of the February 2023 budget, but also a number of previous budgets. She labelled it as ‘kicking the can down the road’.

Councillor Coe asked in relation to large unmaintained structures, requiring capital investment, if revenue expenditure had been turned into capital expenditure. It was his belief that this should not be the case. Councillor Jones replied by stating that the policy of the previous administration, appeared to be to borrow once large repair works were required, instead of conducting regular maintenance.

Councillor G Singh asked a question as a non-cabinet member. He asked if an investigation would occur into the previous administration’s spending, as he was concerned as to where all of the money had gone and stated that it was borderline criminality. Councillor Werner thanked him for his comments and said that he was sure that the Chair of the Audit and Governance Committee would look into this, as well as Councillor Jones in her role as the relevant Cabinet Member.

Councillor Bermange asked about the following year’s interest rates and if a large amount of the Council’s debt needed to be re-financed in 2024/25. Councillor Jones replied with and said that officers had taken this into account and that treasury specialists advised the Council on this process. Elizabeth Griffiths confirmed that a close eye would be kept on it, with it being constantly being kept under review.

Councillor Del Campo said that the forecasted budget numbers were almost spot on and praised Council officers and their ability to negotiate, which had saved the Council a lot of money over the years. In terms of her Cabinet Member portfolio, she added that she was increasingly worried about the large numbers of persons that were in need of housing. She discussed some properties that could potentially have been utilised in the past, such as Ceder Tree House, however she was unaware of their status.

Councillor Price stated as a non-cabinet member, that Ceder House needed to be investigated. She believed that when bought, no survey was conducted and then asbestos was discovered. Due to the urgency of this, special exemptions were made so that the decision was not brought back to Council, and then the highest price was paid for it. She then went on to say that there had been a general relaxed approach to spending other person’s money in the borough, and that this had to be addressed. Additionally, having engaged in the last 2 budget setting processes, she was left extremely unhappy with the one for 2023/24. She added that no transformation had been made by the Cabinet at all in the past.

Stephen Evans continued his presentation by stating that everything needed to be done to avoid the issuing of a Section 114 notice, as this would be detrimental to the Council. He was confident that by month 6, a downwards trajectory would be shown for the current year 2023/24. He then outlined the actions that were needed to reduce the deficit.

These were as followed:

1. Service challenge sessions to go through forecasts, pressures and opportunities line by line.
2. Removal of budget lines which had historically underspent.
3. Review all earmarked reserves to help in-year position.
4. Establish a Spending Control Panel to control all non-essential spend, including recruitment.
5. Reduce agency staff costs. 
6. Maximise income from discretionary fees and charges.
7. Explore opportunities to maximise external funding.
8. Review all services to develop proposals for transformation.
9. Review capital programme to determine which schemes can be deferred, re-phased or stopped to reduce borrowing costs and maximise use of CIL/S106.
10. Review Treasury Management Strategy.
11. Review all council assets to maximise income and look at options to sell assets to reduce borrowing (final decisions to be taken by Cabinet).
12. Formally write to and meet partners and contractors to identify ways of reducing costs.

Elizabeth Griffiths then outlined the details of the Spending Control Panel that would launch in October 2023, meeting weekly and what it would involve. Practically the rationale of making the spend would need to be provided by officers, including the risks that existed if the spend did not occur, this included that of staff recruitment.

Councillor Werner thanked officers for the update. He said that it was important that real transformation occurred, which transformed and improved services, and did not just cut them as this would not necessarily solve the problem and address the budget gap. He also added about the selling of assets, with there being no fire sale of assets, such as selling off land for cheap to developers. Maximum prices and revenues would be obtained.

Councillor Price asked about the communications that would be distributed to residents and how this would be reported to them in a way that they would understand. Councillor Werner confirmed that a press release would go out to residents, and that it was extremely important to keep them informed on the difficult journey.