Agenda item

Consider report by the Chief Financial Officer providing budgetary control statements for the Council’s General Fund.  (Copy attached).

2.1       There had been circulated copies of a report by the Chief Financial Officer providing the budgetary control statements for the Council’s General Fund based on actual expenditure and income to 31 December 2018 and provided explanations of the major variances between projected outturn expenditure/income and the current approved budget.  The report explained that the Council was experiencing significant financial pressures, primarily in Assets and Infrastructure and Health and Social Care, attributed to increased costs and delayed delivery of planned savings in the revenue budget.  The underlying pressure in the account indicated that the pressures would result in an adverse variance at year-end of around £1m.  The Corporate Management Team (CMT) had reviewed the position and had taken action through a range of alternative measures to identify savings which, if delivered, would offset the position and deliver a balanced budget by 31 March 2019.  The Chief Financial Officer, Mr Robertson noted that compounding the service pressures were costs associated with national pay agreements for 2018/19.  These costs were projected to be in the region of £2m in 2018/19.  Of this total £1.019m would attract assumed funding from Scottish Government to fund additional teacher pay costs above the original Scottish Government pay offer.  The remaining costs were based on estimates of a complicated and currently evolving position which did not yet have the agreement of the Trade Unions.  The best estimates of the costs of the pay settlement were reflected in the outturn position.  It was increasingly evident that the Council was finding it more and more difficult to balance the revenue budget given the sustained service demands e.g. the number and costs of care packages commissioned by Adult Social Care and the pressures associated with pay and price inflation.  It was essential to ensure the financial sustainability of the Council that the revenue budget was balanced and that this was achieved through the delivery of permanent savings in line with the timescales approved in the financial plan.  CMT had recognised the need to enhance the delivery of service change and savings through a revised approach, which if approved would commence in 2019/20.  This would be designed to deliver savings in a more cross cutting, permanent and sustainable way in the future.

2.2       As shown in Appendix 4 to the report as at 31 December 2018, 100% (£16.414m) of the financial plan savings had been delivered within the current year.  Emphasis during 2018/19 needed to be placed on delivering the savings permanently as planned.  The original plan for £3.3m of savings delivered temporarily in 2018/19 would now be addressed on a permanent basis from new proposals as part of the 2019/20 financial planning process.  These revised plans would result in permanent cost reductions and had been reflected as being delivered on a permanent basis. The remaining £4.650m of planned permanent savings, which were delayed in the current year and required to offset temporary measures, would now be delivered on a permanent basis in 2019/20.  Mr Robertson further reported that the Council continued to experience considerable financial pressures that could result in an adverse variance at year-end of around £1m and CMT had issued further instruction to all budget holders re-emphasising the importance of services operating within revised budgets for the remainder of the financial year.  In response to a concern on the unitary charge in schools, Mr Robertson explained that this included the costs of energy, domestic rates and the school lifestyle maintenance. The forecasted underspend in Customer & Communities would be available to support pressures across the Council.  This was as a result of an overall accrual of housing benefit in previous years.  The Health & Social Care budget pressures continued in the Older People’s Services and People with Physical Disabilities with a long term trend of demand for more complex and expensive packages of homecare.  Mr Robertson reported that plans were in place to deal with the significant increase in older people with the Council providing extra dementia provision of extra care housing and re-provisioning hospital to home services and the discharge to assess centre in Waverley Care.  The new facilities at Crawwood (now Garden View) had played a major part and effort had taken place to plan for increases in demography in the Borders in partnership with NHS Borders.  In response to a concern on the pressures of £0.275m within Neighbourhood Services and Catering Services, Mr Robertson reported that this was as a result of demand pressures in the services following a re-tendering process where Scotland Excel went out to market to achieve the best prices for goods and commodities.  Mr Robertson further explained the details of the budget adjustments going forward in Appendix 3 and the financial plan efficiency progress for 2018/19 as shown in Appendix 4 to the report.

DECISION

AGREED to:-

(a)       note the projected corporate monitoring position reported at 31 December 2018, the underlying cost drivers of this position and the identified areas of financial risk including the position reflected in Appendix 1 to the report;

(b)       approve the virements contained in Appendices 2 and 3 to the report;

(c)       note the progress made and the risks involved in achieving Financial Plan savings shown in Appendix 4 to the report; and

(d)       note the Corporate Management team directive to ensure all  managers operate within agreed budgets therefore ensuring a balanced outturn position was delivered in 2018/19