Agenda item

Report RES11084

Consideration was given to the second budget monitoring report for 2011/12 based on expenditure and activity levels up to June 2011. The report also highlighted any significant variations which would impact on future years as well as any early warning that could impact on the final year end position.  The Finance Director advised that he would give more detailed information on future cost pressures as part of the discussions on the following item. 

The Executive noted that overall a projected underspend of £305,000 was forecast based on estimates as at June 2011.  However, the main cost pressure in year related to the Children and Young People Portfolio which had a £622,000 overspend.  The CYP Portfolio Holder, Councillor Noad, spoke on the serious difficulties faced by the Department in trying to manage the unavoidable cost pressures on children’s placements and special needs where the Council was statutorily responsible to provide services for these young people.  The matter had been discussed by the CYP PDS Committee at its meeting the previous evening when it had been agreed to request the Executive to approve the setting up of a contingency fund to cater for such cost pressures rather than continuing with the present arrangements. 

The Resources Portfolio Holder commenting on the proposal referred to other departments who had had to deal with unforeseen situations arising during the year such as Environment and Adults and Community Services. In principle if this was agreed for one service then it should apply to others. However he had some concerns with the proposal and felt that there were other ways to deal with the situation.  The Chairman was of the view that the problem should be looked at overall as to how to pull budgets together in the future and stressed the need for good ‘gate keeping’ as had been the case in Adult & Community Services.  Councillor Smith felt that more information/evidence was needed as to why the cases had not been identified earlier or were they all because families had moved into the borough.  The Director of Children and Young People services explained that very rigorous management action had been taken to reduce costs but the situation was different this year to last year.  This year the department had less flexibility in redirecting monies as a result of the considerable reduction in government grants yet at the same time the Council still had a duty to provide such services.  There were four children’s cases in particular which had arisen (one of whom had moved into the Borough), three of the children had severe autism and had to be placed in specialist accommodation outside of the borough.  The costs of this ranged from in excess of £125,000 up to £200,000 per placement because of their very specific needs.  The Director also responded to questions on the action taken to reduce the levels of locum staff and the progress that had been made.

Councillor Carr referred to the ongoing work being done to look at possible provision being made in borough and that discussions were taking place with Bexley and Croydon to draw up longer term plans to tackle the situation.  Councillor Noad advised that he would be reporting on this matter to the Working Party very shortly. 

The Finance Director drew attention to the existing arrangements for requesting draw down from the Contingency fund set up to deal with the recent recession.  Any requests had to show that all other alternative options had been fully explored particularly as the effects would not only be felt this year but would have on going implications.

The Executive generally took the view that no changes should be made to the current budget arrangements but that work should be undertaken to look at ways to more accurately reflect the costs of placements in future years.  The Chairman asked that Councillors Arthur and Noad take the lead, together with the Finance Director in examining the situation in more detail.

RESOLVED that 

1)  the latest financial position be noted including the projected net underspend of £305,000 forecast, based on information as at June 2011, which consists of a £164,000 overspend on services offset by additional grant income of £319,000 and a projected underspend on the Central Contingency provision of £150,000;

2)  the comments by the Directors of Children & Young People and Adult & Community Services in respect of cost pressures within their departments be noted; and

3)   no action be taken in respect of the request for a special contingency fund for children’s placements but the respective Portfolio Holders and the Finance Director consider the matter in more detail and if necessary report back to members with any proposals.