Northamptonshire County Council is on track to underspend on its 2019/20 budget, despite a predicted overspend of £7.5m on children’s services.
In August, Room 151 reported that the authority faced a fresh financial crisis after a £34.9m medium term budget gap opened up, with the 2019/20 budget set for a £5.9m overspend.
3rd LATIF NORTH
March 25th, 2020, Manchester
Council treasury investment & borrowing
But the council’s third quarter revenue monitoring report, published this week, said that the council is now set to underspend by £29,000 against its approved budget of £417.7m.
All directorates are estimating underspends apart from children’s services and the technical finance, treasury and insurance team, which is set to go over budget by £700,000.
A report to the council’s cabinet next week said that the “£8.2m pressure is offset by forecast underspends of £7.1m across the other directorates, and additional anticipated funding of £1.1m”.
Last year, a review of the council’s medium term financial plan showed that council’s estimated savings requirement has leapt from £11.2m to £34.9m in the six months since the plan was originally published.
But executive director of finance Barry Scarr, said in this month’s report: “In recent months the council’s identified forecast overspend for 2019/20 has stabilised, and gradually reduced, due to the considerable effort of officers in gripping the financial issues identified early in the financial year and containing and reducing expenditure where possible.
“The council continues to be committed in delivering a balanced budget without the planned use of reserves, therefore directorates will continue to identify further options for cost reduction, and the maximisation of income streams to address the residual forecast overspend position.”
In a section explaining the overspend on children’s services, Scarr said: “Staffing and recruitment remains our greatest challenge, where we are currently forecasting £2.9m of non-delivery of staffing related savings proposals.”
The report said that some teams continue to have a high concentration of agency staff, “such as 96% of agency staff in duty and assessment”.
In addition, spend on transport for families being supported by the council is set to be over budget by £1.1m.
There is also a forecast overspend of £850k on the directorate’s legal budget, made up of £750k non-delivery on savings proposals and an additional £100k demand pressure.
Scarr’s report also said that the council’s decision to borrow £110m from the Public Works Loan Board in August – two months before the Treasury increased the interest rate – had helped its financial position.
It said: “Had the council delayed securing these long-term loans, the savings to be realised within the 2020-21 budget and medium term financial plan [and] beyond would not have been achievable and therefore this borrowing has proved very timely for the council.”
“Although the majority of these PWLB loans were undertaken at rates above those estimated in the 2019/20 budget, they are at rates below those prudently estimated for 2020/21 and beyond had the council continued to rely upon short-term borrowing.”
Scarr said that savings on debt interest servicing costs from 2020- onwards will be incorporated into the medium-term financial plan.
Last year, Northamptonshire turned a projected overspend of more than £30m for 2018/19 into a budget surplus of £1m in a turnaround described by the authority’s executive financial director as “unprecedented”.
