The Brent Corporate Director of Finance and Resources has issued a grim warning on the Council's financial situation following a significant over-spend on the housing service caused by a high level of demand due to increased homelessness, reduced supply of suitable temporary accommodation and subsequent higher costs. The forecast spend of £16.3m is nearly five times the original budget.
Extracts from the report (Full Report that is available HERE)
The Council’s revised General Fund revenue budget for 2023/24 is £291.2m. The revised budget includes planned revenue savings in-year of £13.5m and the status of these are set out in Appendix A. There is a forecast overspend of £13.4m against the revised revenue budget at Quarter 2. If sustained until the year end, this would require a transfer from unallocated reserves.
Equally, any overspending not dealt with in 2023/24 would, potentially, carry over into 2024/25 thereby increasing the requirement for further savings in that year whilst at the same time providing reduced scope to draw on the Council’s reserves.
The seriousness of the Council’s financial position cannot be understated.
The scale of the financial challenge for 2023/24 and 2024/25 is such that, in addition to work currently underway to implement savings in 2023/24 and to identify new savings proposals for 2024/25 and 2025/26, the Council will need to implement further measures to control expenditure in order to address the underlying issue that the Council’s net expenditure is significantly greater than available sources of in year funding. Further details on these measures are set out below.
Local government is facing the most challenging financial environment for many decades. Many councils are overspending and depleting their reserves; most are experiencing the adverse effects of high inflation, high interest rates and significant increases in demand due to demographic changes. Some are even declaring bankruptcy by issuing s114 notices. Concerns about future levels of government funding are widespread. Against this backdrop, Brent has maintained a strong position in terms of financial resilience and sustainability with a good track record of delivering savings and balancing the overall budget. However, the position for 2023/24 has worsened significantly and the current forecast will require the Council to take urgent actions in the short and medium term to maintain financial control.
The main cause of the forecast overspend is within the Housing Service, where high levels of demand due to a rise in homelessness and reduction in supply of suitable accommodation are expected to result in an overspend of over £13m. Section 3.8 of this reports sets out the Council’s strategy in dealing with the significant increase in costs of providing temporary accommodation for those homeless people to whom the Council owe a legal duty. While Brent is not in the financial situation of those Council’s that have recently issued, or threatened to issue, a Section 114 notice (legally required when the council cannot balance its budget, unlike the NHS and other parts of the public sector councils are not allowed to carry a deficit) all efforts must be focussed on positively changing the financial position.
In addition to these actions and the additional oversight provided by the Budget Assurance Panel, further measures are considered necessary to prevent the situation worsening. These will include, but are not limited to, controls on new spending decisions, limits on new recruitment, reduction in the use of agency workers, bringing forward in year savings and other mitigations to reduce expenditure. These sensible, proactive and prudent measures will provide more assurance over the Council’s spending decisions and reduce the risk that the budget position deteriorates further. These measures will remain in place until the end of the financial year, and updates provided to the Cabinet in future forecast reports and budget reports.
The report also includes updates on the viability of two major projects:
The Wembley Housing Zones project is expected to experience a viability pressure when updating the project plans to meet potential fire safety regulations. Work is already underway with the contractor, Wates, to reduce the impact of any changes required. The Morland Garden project is experiencing significant viability challenges whilst also being subject to a significant delay in the project delivery timescales dependent on the outcome of the public inquiry in relation to the stopping up order.
