Minutes:
The Executive Member for Finance presented an overview of her portfolio which included her responsibilities, relevant service areas and objectives.
Until November 2024 the Executive Member’s remit included Finance and Governance. However, the Governance element of the portfolio moved to the Mayor. The Executive Member was also the Members’ communications champion.
The Executive Member’s targets for 2023 to 2024 included the avoidance of issuing a Section 114 notice and an improvement in the culture and governance of the Council. This included more Members becoming involved in the budget setting process.
The Executive Member’s targets for 2024 to 2025 included delivering within budget for 2024/25, to achieve a balanced budget for 2025/2026 and to deliver a Members enquiry system.
As part of the Mayor’s Recover, Reset, Deliver initiative the Executive Member commented she had inherited the financial position of 2023 to 2024 of which the external auditors had identified significant overspend. To balance the Council’s budget there was a need to use £4.7 million of Exceptional Financial Support (EFS). It was clarified that EFS was not a grant, as Councils were not permitted to borrow to offset their revenue budgets. Instead, the EFS allowed the Council to borrow up to £4.7 million to achieve its saving requirements. Members were also advised the Council’s reserves had dropped from £16 million to £4 million between 2019 and 2023 and were deemed to be critically low.
There had been significant improvements in the Council’s financial position by 2024/25, which had been recognised by external auditors. At the end of Quarter one 2024/25 the forecasted overspend was £3.7 million which had been reduced to £1.4 million by the end of Quarter two 2024/25, with further actions planned to reduce this further.
There was the possibility of investment growth for services for the first time in many years.
After use of the Collection Fund, it was estimated the Council’s reserves would stand at £18.9 million. Overall, the Council’s financial position remained fragile but there were signs of improvement. The Executive Member explained the graph displayed on her presentation entitled “need to build our reserves.” She explained that as overspend occurred the levels of reserves had been reducing and that Middlesbrough had the 5th lowest level of reserves in the country.
The Chair commented that since the Council’s creation in 1996 it had, largely, produced a balanced budget and that it was very difficult to keep to within set budgets. The Executive Member commented there was a need to set a balanced budget that was signed off by the Council’s Section 151 officer. A previous Section 25 report, created by a previous Section 151 Officer, had included warnings about the Council’s financial position and that setting a balanced budget was challenging. It was also clarified that the Council’s low levels of reserves should be taken in the context of Middlesbrough being the second smallest unitary Council in the country, and that they were a proportion of the revenue budget.
A Member stated that reserves were required to deal with unexpected events. A significant risk facing the Council was the Transporter bridge and its current condition, especially as there was water traffic continuing to pass under it. It was presumed that if an incident occurred that required remedial action the Council would be obligated to step in. The Executive Member stated that in such a case, capital funding would be used to undertake any remedial works, but if this was not available revenue funds would be used. The Director of Finance and Transformation provided the example of Redcar and Cleveland Council’s information security breach, which without government assistance, would have required the use of its reserves. Another example of reserve usage included the council becoming responsible for the Dedicated School’s Grant which, should this become the case, would severely deplete the general fund reserves. As such, there was a need to maintain a healthy level of reserves. In terms of the Transporter bridge it was agreed that its position on the Corporate Risk Register be clarified.
Members queried how the reserves could be built up if there was a projected overspend of £1.4 million. It was clarified that while there was a projected overspend of £1.4 million there were planned actions to reduce this further. If the Council were to meet its savings targets, and work within budget, there would be no need to draw down on reserves. It was reiterated that additional reserves would be built up using the Collection Fund.
Concern was expressed that, given Middlesbrough’s high levels of deprivation, efforts to build up reserves could be to the detriment of services facing budget constraints. It was clarified that should the reserves be used for revenue purposes, such as reducing budget gaps in frontline services, they could only be used once. If reserves were used there needed to be a plan to replenish them going forward. All the Council’s peers had advised that Middlesbrough’s reserves were critically low. Conversely, there was also a need to spend allocated budgets to ensure effective service delivery.
The Executive Member made progress in her presentation and drew Member’s attention to her work on Councillor communication and the Councillor Gateway system. The Councillor Gateway system had gone live in July 2024. There were still improvements to be made regarding information requests and responses. A Member suggested the system may have gone live too early as some services were understaffed to adequately fulfil some enquiries.
A Member remarked it would be beneficial to know usage statistics of the Councillor Gateway System versus its predecessor, the OneStop Service.
A Councillor Communications working group was set up on 9 October 2024 where several issues were raised. These included Members preferring more direct communications relating to issues that were also reported in the press, such as Planning outcomes. The working group also suggested the establishment of a training calendar so Members could review training offers over a 12- month period. Overall, it was important Members interacted with officers but used the most appropriate mechanism to do so.
A Member queried how they could see their own training records during a specific timeframe. The Democratic Services Officer clarified this was possible via Modern.Gov and that instructions on how to do this would be circulated to Members.
The Executive Member advised the Board that on 28 October 2024 a report was approved by Executive which agreed support to pensioners who were no longer eligible for the Winter Fuel Payment. The payments for that support would commence in January 2025 and the details of the support offered were shown as part of the presentation.
It was agreed clarification would be sought regarding the timing between the Household Support Fund being announced and the government’s decision to cease the Winter Fuel Payment. In terms of the mechanism by which applications could be made for Household Support Fund, it was commented that residents in receipt of Council Tax Reduction would be paid directly or contacted by the Council. For residents whose records were not held by the Council a press release and other communications would be issued asking people to contact the Council.
At this point in the meeting Councillors Hubbard and Saunders withdrew.
ORDERED that:
1. The Transporter bridge’s position on the corporate Risk Register be clarified.
2. Councillor Gateway usage statistics be provided to the Board.
3. Instructions on how Members can access their training records be circulated to all Members.
4. Clarity be sought around the timings of the Household Support Fund and the ending of the Winter Fuel Payment.