£6.4m over budget but city finance chief says there’s light at end of the tunnel
‘INCOME WILL INCREASE WHEN ECONOMY BOUNCES BACK AND EVENTS RESTART’
DERBY’S cabinet member with responsibility for the city council’s finances says its predicted £6.4 million overspend for the current financial year is reflective of an “extraordinary year” but that “there is light at the end of the tunnel”.
Councillor Nicola Roulstone was reacting to figures relating to the first quarter (April to June) of the 2021-22 year and their discussion at a cabinet meeting.
She says she is hopeful council income will start to increase once again as footfall returns to venues and the city centre.
A cabinet report revealed the council has an overspend of almost £11.68 million against its revenue budget of more than £255 million for 2021/22 but the use of reserves has reduced it to £6.4 million.
The situation was described as “challenging” by Simon Riley, city council director of financial services, at the meeting but he optimistically reminded everyone there are “still another seven months of the financial year”.
The budget forecast provided an ideal platform for a stinging attack by Labour group leader Councillor Baggy Shanker, who criticised the reduction in the budget reserves, a council tax rise at the maximum of 4.99%, replacing staff such as an assistant for Derby’s mayor and also questioning whether the cost of an additional cabinet member was necessary.
Mr Shanker said: “We are reporting a £12m overspend which doesn’t stack up well. Only three months ago, you said ‘we have set a remarkable balanced budget for 2021-22,’ which doesn’t stand the test of time, does it?
“The budget risk reserve is massively down from £35m-plus previously and in the next few years it will be less than £5m and I don’t think that is sustainable.
“There are two explanations for this. Either it shows a lack of competency or the cabinet is competent and deliberately set the budget aiming to rely on reserves.”
He suggested the council would benefit from cross-party collaboration on finances.
The council was able to set a balanced budget in April despite the costs of the pandemic and leader Councillor Chris Poulter responded to Mr Shanker by saying: “We worked hard to achieve the balanced budget and we will do everything possible to reduce any deficit this year if there is to be one. We said last year we would keep the council tax increase to a minimum but in the event we had to go for the maximum because of the situation.”
Ms Roulstone spoke at the meeting and said: “In responding to the needs of the city, we are forecasting an overspend of £6.4 million for the current financial year.
“It’s extremely important that we act now to protect the future finances of the council and we have mitigation plans in place across the board.”
Afterwards, Ms Roulstone said: “2020 was an unprecedented year for the world, and we’ve felt that locally in Derby. 2021 has been no
different, and as a result, organisations and local authorities have had to meet emerging needs following Covid 19 making it particularly difficult to plan to deliver services as they usually would.
“Covid-19 has changed lots of things, like the way in which services are delivered, the numbers of people needing our support and intervention, and the way we generate our income.”
Ms Roulstone agreed recovery was a challenge and the city has to continue to support those people in Derby who cannot, for whatever reason, support themselves.
She said: “This is why we invested an additional £12 million into people’s services. We also knew that the economic impact of the loss in confidence in the high street and the closure of shops, hospitality and leisure sectors, would result in a loss of approximately £4 million in income.
“The current overspend is mainly in those services where we are providing support and safeguarding children and young people. This is happening across the UK and we’re sadly no exception.
“The forecast position is reflective of the extraordinary year we’ve had – but there is light at the end of the tunnel.”
Ms Roulstone says the bounceback of the economy, local events and regeneration schemes, as well as the return of day-to-day footfall within the city suggest council income will return to 90% by end of the year.
She said: “It’s extremely important that we act now to protect the future finances of the council and we have mitigation plans in place across the board. It’s our duty to review and work with children and families to be stronger and more resilient. We’ll be continuing to reduce our costs throughout 2021/22, as well as working to lobby Government to help resolve the funding difficulties for social care, which is an issue nationally too.
“Even with the pressures we’re currently facing, we’re committed to providing the best service we can for Derby residents.
“This year is going to be a difficult one. We will scrutinise and challenge every pound spent to ensure that we are able to protect our financial position.”