A rise in demand for services and associated costs has left West Berkshire Council facing a significant overspend at the end of the 2023/24 financial year and a “challenging” financial outlook.
In a review of its financial position at the end of Q1, the authority is forecasting an £8.7m overspend against its £166m revenue budget that will reduce to £6.3m with current mitigation actions in place.
West Berkshire has £7.2m in general reserves, which Joseph Holmes, executive director (resources) and section 151 officer, said was “comparatively low”.
A section 114 notice will not be required in the short term, he said, but “can’t be taken off the table” in the long term. “But we do have a strong track record of making savings”, Holmes told a media briefing today (22 August), as he explained that the authority had already taken “early proactive steps” to address the financial position and expected to further reduce overspend in Q2 and the remainder of the year.
He also said the authority was focused on reducing further financial pressure in the medium term and growing its level of reserves to avoid a similar situation in 2024/25.
Actions include setting up a financial review panel which will review all expenditure and investigate ways to reduce agency spend. There will also be opportunities for capital receipts through a potential asset disposal programme.
In terms of impact, Holmes said West Berkshire would now prioritise spend on vulnerable residents. While all services will remain open as usual, there might be some slower response times due to staff cuts.
Holmes noted that there had been a 43% increase in children’s social care demand between March 2021 and June 2023, with a 30% rise in home to school transport. In the same period, demand for adult social care – which accounts for over a third of the budget – increased by 6%.
Children’s and family services currently accounts for £3.7m of the forecasted overspend, due largely to the additional cost of more children being in the system, a rise in the costs of placements, and an increase in agency staff costs. Adult social care accounts for £0.8m of the overspend, and education £1.3m.
West Berkshire Council has a high level of agency workers, with Holmes estimating that the full cost of each agency worker was twice that of a permanent employee. The authority is therefore seeking to recruit more permanent workers and reduce its dependency on agency staff. “Recruitment activity is a really key point. The review panel will have an impact here,” said Holmes. “Already, 11 agency workers have moved across [to full-time employment] since the middle of July.”
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Holmes also noted that better salaries in children’s social care were being offered, while a new talent attraction officer had been appointed with a focus on social workers.
According to Iain Cottingham, executive member for finance and corporate services, the authority is also working to understand why more children are being entered into the system ahead of “corrective action” being taken to reduce demand, and ultimately the associated costs.
“[The new council] has inherited a position where we’ve needed to take immediate action,” he said in the media briefing. “We need to get the finances under control and are looking at this on a weekly basis.”
Lee Dillon, leader of West Berkshire Council, said he would prioritise the long-term financial strength of the council over short-term political gains. “We were surprised by the level of overspend and what this means for our own administration is that our manifesto commitments might have to be delivered later.”
Dillon said “tougher, earlier” decisions could have been made by the previous administration to reduce the level of overspend. “We are committed to making these decisions,” he said.
Dillon added: “Although we are having to make some difficult decisions, we will still be there for people when they need us. The work we are doing will for the most part be focused behind the scenes and we will limit the impact on residents for as long as we can. We will support our most vulnerable residents, continue delivering our frontline services and soon launch a new Council Strategy to set out our priorities and improvement plans for the years ahead.”
Reports on the current financial situation will be considered by the authority’s scrutiny commission on 14 September and by its executive committee on 21 September.
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