Southend-on-Sea City Council’s future viability is in question and “urgent action needs to be taken immediately”.
That’s according to the authority’s latest finance and corporate performance report, which offers a financial forecast for 2023/24 as of the end of July. In it, a net overspend of £14.040m is being projected.
This level of overspending is “unsustainable and puts the authority at serious financial risk”, according to the report, which will be discussed by the council’s cabinet next week (18 September).
Southend’s potential budget gap for future years is also likely to have got “significantly larger” than the £29.8m by 2027/28 projected in February 2023.
The support and care of vulnerable adults, children and their families accounts for the “main proportion” of the council’s total costs, the report stated. A major financial challenge has therefore arisen with rising service costs from high inflation levels, increasing demand on services, and the increased complexity of this type of support.
Adult social care is forecast to overspend by £5.603m in 2023/24, while a £7.055m forecast pressure is expected in children’s services, excluding a one-off £2.5m specific children earmarked reserve for 2023/24.
The report stated that “it is in the best interests of the council for all officers and elected members to work closely and collaboratively together at pace to control all areas of identified overspending and to ensure that any adverse variances are brought back as close as possible to the approved budget for 2023/24”.
While improving efficiency and productivity is “essential”, the report added that the scale of the “continuing unprecedented financial pressures will inevitably lead to a reduction in the range, quality, cost and responsiveness of other discretionary council services as well as challenging our approach to the delivery of our statutory responsibilities”.
Tony Cox, leader of the council, said that Southend-on-Sea was not at the point of needing to issue a section 114 notice, but did “need to take the warning signs seriously and do everything we possibly can to adjust our overall finances to take into account the significant additional pressures so that we operate within our means”.
A number of key actions were outlined in the report to improve and reduce the council’s predicted overspend.
These include intensive budget management for each service area, with responsibility for delivering additional savings and creating extra income. A service transformation programme will also be implemented across the organisation in a bid to improve efficiency.
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Additionally, budget challenge sessions will be introduced for each departmental area to identify options for correcting the 2023/24 budget position, while the current ‘dozen principles’ being used at the council to help contain spending and generate income will be continued.
Southend-on-Sea City Council has engaged Ernst & Young to provide “additional independent challenge and sector insight” to help develop options to mitigate the range of financial pressures that are being faced.
Tougher measures will then potentially be introduced if these measures do not work. These include restricting spending to only that which is essential, a recruitment freeze, demand management for services, increased charges to some services, and removing financial subsidies from some services.
The council could also consider managing to statutory levels, and reviewing current buildings and underused frontline services, such as children centres, libraries and leisure.
“We have a statutory duty to look after our most vulnerable residents, but the number of referrals, costs of services and complexity of needs are causing budgets to overspend,” said Cox.
“The financial pressures and soaring costs that everyone is experiencing individually in their homes is also being experienced by the council, creating extra unprecedented pressure. Urgent review and regular financial reporting will give us a much better understanding of where we are and what we need to do, but more importantly, how we do it.
“As I made clear in my leader’s statement at full council, this is a financial position that we, as a cabinet, have inherited. Now we are challenged with setting it right and this includes lobbying government for a fairer deal and more funding. We have some tough decisions ahead of us, but I truly believe if the council’s members of all political persuasion and officers all pull together, for the greater good of the city, then we can get through this and ride the storm to calmer financial seas.”
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