3 days ago
£5m year end overspend 'better than forecast' but council warns of more choppy waters ahead
A council says a £5m overspend on its budget for day to day costs in the last financial year was better than forecast.
A financial 'outturn' report summing up Redcar and Cleveland Council's fortunes come the end of the 2024/25 period said the £5.075m it went over its allocated revenue budget had been an improvement of £1.56m on the figure it predicted in the final quarter.
Without any cost saving measures the £5m plus figure would have been £12m.
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The recent report for council cabinet members admitted the stated overspend was still 'substantial' and pointed out a number of 'key drivers' that have been repeatedly cited over the past several years, including high demand and complexity for children in care cases; increased home to school transport costs; use of agency workers due to children social care worker recruitment challenges, and increased fleet hire and waste management costs.
It said steps were taken in year to implement a package of control measures, including a focus on stopping non-essential recruitment, non-essential expenditure and optimising the use of external funding. These helped mitigate the pressures faced and reduced spending, although 'significant amounts of reserves' were still required to fund the residual overspend position - in order to balance the books as legally required.
The report said a remaining reserve for use over the term of the council's medium term financial plan - typically five years - stood at just £2m, which was 'extremely low'. It also referenced a previous warning of how the next two years would be a 'critical period' where the council must be extra vigilant regarding its financial position.
Meanwhile, the council's 'transformation programme' aims to save £8.8m in 2025/26 with 88% of the £7.5m savings targeted in the previous 12 months being achieved. The council said that delivering the programme while eliminating unnecessary spending would help protect the jobs of current staff, minimising the need for service reviews and potential reductions in numbers.
The report went on: 'With regard to the most significant pressures currently being experienced with children's care placements, initiatives continue aimed at trying to address the causes of children needing to be taken into care in the first instance, with a particular focus on more complex needs that often result in high-cost placements being required.
'A key theme of the transformation programme is focused on increasing the level of in-house provision available whilst the authority continues to work closely with local suppliers to identify further opportunities to enhance the provision of locally based solo and dual placements to negate the need to incur a high premium cost for these types of placements, whilst seeking to minimise the length of time these placements are required for individual children.
'Whilst these plans are progressing, it is now envisaged they will take a little longer to implement leading to a forecast delay in the associated savings.'
It suggested Government funding reforms which prioritise deprivation and need would be of benefit to the local authority, although there would be a limit to the scale and pace of any funding distribution arising as a result.
The report highlighted how every council department bar children and family services spent less in 2024/25 than their allocated budget. However these gains were wiped out by the £12.8m budget deficit in the children and families directorate, driven by expensive residential and supported care placements with the number of children in such placements rising from 75 to 82 in the last financial year.
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