The financial situation ‘continues to worsen’

Royal Borough: Risk of emergency measures to protect services is ‘very real’

Windsor and Maidenhead council has said its financial position ‘continues to worsen’ this year for reasons outside the council’s control – and the risk of an S114 notice ‘remains very real’.

RBWM faces ‘significant financial challenges.’ An S114 notice is an emergency measure to protect the services the council is legally obliged to provide, when its finances are in a dire state.

An S114 bans all new council expenditure, except for statutory services for protecting vulnerable people.

In a cabinet meeting in September, officers updated councillors to say the council’s reserves would be ‘significantly depleted’ by the forecast overspend and gap in next year’s budget.

Since then, ‘a huge amount of work has been done’ and the council was able to issue a balanced 2024/25 draft budget in December.

Children’s services have found ways to mitigate hundreds of thousands of pounds of cost.

Adult’s services have managed to maintain the number of people requiring long-term residential care – but the number of people discharged from hospital over the last year has doubled.

Because of such ‘unexpected pressures’, the overall financial position ‘remains extremely vulnerable,’ reads a new report, set to be discussed at cabinet next Wednesday (January 24).

While there are transformations being made, these take time to manifest any efficiencies and savings, meaning they ‘inevitably carry an element of risk.’

“The current year position continues to worsen,” wrote report author Andrew Vallance, deputy director of finance for Windsor and Maidenhead council. RBWM started the year with ‘already low’ level of resilience. At month eight, its financial position has deteriorated by a further £659,000.

“[This] … reduces our current level of reserves to significantly below the minimum level set at February 23,” Mr Vallance continued.

Despite the balanced 2024/25 budget, the reserves going into 2024/25 are ‘likely to be minimal.’

That, in turn, leaves RBWM ‘increasingly vulnerable’ to unexpected costs and decreases its ‘already fragile’ financial resilience.

“The majority of the increases are either beyond our control or relate to past events,” wrote Mr Vallance.

Increasing overspend each month is due to the cost of statutory services RBWM is obligated to deliver – and

‘the complexity of need drives the cost ever upwards.’

Adult social care overspend has increased from £2.85million to £6.36million and children’s services overspend has increased from £50,000 to £585,000.

However, increased work in some areas ‘has reaped benefits.’

The ‘place’ directorate has found compensating savings, and as such, its overspend has reduced from £2.5million to £1.7million.

Resources have also absorbed impacts from ‘unexpectedly high audit fees’, increasing its underspend by about £120,000.

The cost of servicing debt ‘remains a key concern’ and the forecast increase in interest costs is ‘a large contributor’ to next year’s budget gap.

“The council faces considerable financial risks that could have a significant and immediate impact on its finances,” concluded Mr Vallance.

“The expectation is that reserves will fall below the minimum level set out in the February 2023 budget papers.

“Whether the remaining level of reserves can be deemed adequate will depend on whether the authority can transform its ongoing financial position sufficiently to continue to reduce its expenditure and significantly reduce the current debt liability.”