Norfolk County Council’s cabinet has agreed to increase its savings target to £40m for the 2020-21 financial year – at the same time as backing proposals for a £13.2m new finance IT system.
This week’s decision seeks to put the authority on the front foot in dealing with an anticipated funding gap of £70.8m by the 2021/22 financial year, but follows an almost £4.5m shortfall in the £30m targeted savings for 2018/19.
In a report to cabinet members, executive director of finance and commercial services Simon George said the county council had agreed its 2019/20 budget in February in the knowledge that further savings would be required to deal with the funding gap identified for the following two years.
Norfolk’s current medium-term financial strategy has identified £31.6m in savings for the current financial year, £31.1 for 2020/21 and £16.7m the following year.
But George, who is Norfolk’s section 151 officer, said uncertainty over the county’s Spending Review-derived funding for 2020/21 and the Ministry of Housing, Communities and Local Government’s ongoing Fair Funding Review meant it was prudent to increase savings targets.
“Following [Chancellor Philip Hammond’s] Spring Statement, it remains the case that the council will not know its detailed funding position for 2020/21 until autumn 2019 at the earliest,” he said.
“It therefore continues to be appropriate to plan for a slightly higher level of savings than our base case assumptions in the MTFS.
“A target of circa £40m has been proposed for 2020/21 to both reduce the risks to savings delivery and to provide members with options to close the budget gap.”
Earlier this month, Hertfordshire County Council was presented with proposals to bring forward its budget-setting process for the next financial year to deal with uncertainty over the Spending Review and the Fair Funding Review.
At £22.7m, Norfolk’s adults’ services department delivered the bulk of the authority’s savings for 2018/19, however the figure was £4.6m less than had been targeted.
Children’s services also failed to hit its target of £2.6m, finishing the year off by £142,000. The overspends were partially offset by £220,000 in additional savings in the environment, development and transport budget.
“Maintaining a strong focus on the delivery of savings will be critical to supporting the achievement of the council’s budget plans for future years,” George noted.
Under the existing county council financial strategy, adult social services has a savings target of £17.9m for 2019/20 and £17.3m in 2020/21, while children’s services has a current-year savings target of £6.8m and £3.5m next year.
George’s proposal, backed by the cabinet, seeks additional savings by adopting a “slightly different” strategy that targets the £40m of savings from three core streams, or “building blocks” as his report describes them.
They are savings of £10m from business transformation projects, including smarter working and a “buildings rationalisation” programme; £10m from a corporate finance review including central-financing costs; and £20m from departmental budgets.
Of those departmental budgets, £9m in savings would come from adult services, £5m from community and environmental services, £4.5m from children’s services, £1m from finance and commercial services, and £500,000 from strategy and governance.
Separately, cabinet members on Monday approved the £13.2m procurement of a new HR and finance IT system for the authority.
They were told that a six-month investigation had concluded that the 14-year-old core system, a version of Oracle E-Business Suite, and various peripheral systems, were an obstacle to delivering the council’s transformation plans.
“The systems as they stand constrain transformation of services and delivery of savings – a new approach is essential to provide a key enabler for the business transformation programme and associated savings and benefits,” councillors were told.
“In the near-term, the current core HR and finance system will have to be replaced as a legacy system that is no longer fit for purpose, and the market tested to assure most effective value for money.”
The report said that post-implementation – from 2022/23 – the replacement IT system could deliver £20m of savings, after the recovery of the £13.2m project cost, and that “further potential savings of up to an additional £11m over the 10-year period” could come from wider business-transformation programmes.
All but £500,000 of the IT system cost would be from capital funding, the report said.
