Agenda item

The Interim Director of Finance introduced this report and in doing so explained that the Council was able to make additional savings of circa £1 million accounted for over the 2023-24, 2024-25 and 2025-26 financial years as a result of the favourable outcome of the triennial pension fund valuation. The next valuation was to be undertaken in the 2026-27 financial year. Other savings areas were highlighted. For example, savings stemming from service reviews were expected over the current medium term financial plan period, however, the implementation of the digital customer front door was a risk that would need continuing monitoring. Additionally, one-off savings were expected from recovering old debt (engaged capacity grid). The Council had around £6 million in uncollected debt, and it was expected that around 10 per cent of that figure might be recovered.

It was reported that the full year overspend position amounted to £788,000. Around three quarters of that overspend was due to pressures within the Environmental Services. This imbalance was mainly due to the staff pay award and the fact that the majority of the staff employed by the Council were employed within Environmental Services. Officers commented that a pay award offer for the local government sector was 6.8 per cent for the current financial year. It was commented that following last year’s pay award of over 6 per cent, if confirmed, this offer would represent another year of pay awards in excess of 2 per cent, which was unprecedented.

To offset the impact of this, it was proposed in the Q1 Finance and Performance Monitoring Report going to Cabinet that the assumed yearly drawdown of £351,000 from the Utilities Reserve be made, given the lower-than-expected impact of utilities inflation, to mitigate the overspend position. This would leave a £437,000 overspend position. The ongoing 2023/24 pay increases position, once finalised and ratified later this year, would then need to be resolved as part of the 2024/25 Medium Term Financial Plan (MTFP) process. It was proposed that in the budget the percentage increase anticipated for ongoing pay awards be raised to 3 per cent.

In response to a question about the risk to the Council resulting from equal pay claims, especially in the context of the situation at Birmingham City Council, it was commented that the Human Resources team at the Council had been contacted to compile a response. It was noted that in Birmingham the issue seemed to result from bonuses being paid to some categories of workers but not others.

It was clarified that the Council presently had an estimated £5.226 million in General Fund Reserves to cover one off issues, and a further £5.502 million in Earmarked Reserves for specific purposes. Accessing these was the only recourse available to the Council, apart from additional reductions in spending/additional income, that the Council had to mitigate the present overspend position. It was also reported that in net terms the overspend position was £437,000 but in addition there was an ongoing overspend issue due to the pay award of around £800,000.

It was reported that tranche 1 report on the Medium Term Financial Plan 2024-25 to 2026-27 would be reported in December 2023 this year and this would be looking at identifying further sources of possible revenue including Council Tax and Fees and Charges.

RESOLVED that progress on 2023-24 Departmental Savings be noted.