Nottingham introduces spending freeze to head off £9m overspend
0Nottingham City Council is implementing a range of in-year spending controls including a hiring freeze and a halt to non-essential spending to deal with a projected £9m overspend.
The authority said it was committed to balancing its 2019/20 budget but said its actions are not being underpinned by the rare step of issuing a section 114 notice halting spending on non-statutory services.
Fellow East Midlands authority Northamptonshire Councy Council last year issued an unprecedented two s114 notices in the face of a projected £64m overspend in its 2017/18 budget, with the second an acknowledgement of continued difficulties for the 2018/19 financial year.
A city council spokesperson said the authority had not issued a s114 notice because it was confident that planned remedial measures would mean a its in-year spending commitments could be met despite a decade-long backdrop of cuts imposed by Westminster.
“We have not served a section 114 notice, because while we have had to make £271m of savings over the past nine years and like all councils face significant ongoing funding problems due to a huge drop in government funding, we have an action plan in place to address the projected overspend this year,” they said.
“The plan includes a vacancy freeze, stopping non-essential spending, ongoing restrictions on travel and conference attendance, a further review of reserves and scrutiny of spending by senior officers and councillors on a monthly basis.”
A report to Nottingham’s most recent executive board meeting accepted that balancing its books would be “increasingly challenging given the sustained financial context within which the council is operating”.
Last year Nottingham had a £1.7m overspend, down from the previous year’s £4.2m and 2016/17’s £2.5m.
Spending related to the children & young people (CYP) portfolio accounts for the bulk of the 2019/20 projected £9.0m overspend – some £5.0m.
A further £1.3m of the total comes from the early years, education & employment portfolio budget.
The executive board report, written by head of strategic finance and deputy section 151 officer Theresa Channell, said higher-than-anticipated children-in-care costs, higher agency staff costs and reductions in other income streams were the principal drivers for the CYP overspend.
Channell said the early years, education & employment portfolio overspend was caused by “unmet historical targets” and income projections from schools services that were now described as “unachievable”.
The remainder of the projected overspend related to other portfolios and were in the hundreds of thousands of pounds, typically the low hundreds of thousands.
With a new projected outturn of £56.3m, Nottingham’s CYP portfolio is the council’s second-largest area of service spending after the adult services & transport portfolio – which has a projected outturn for the year of £98.2m – £283,000 under budget.
In addition to what the executive board report describes as “vacancy freeze controls” Nottingham’s plan includes ending non-essential maintenance spending.
Channell’s report said the council had set a minimum level of general fund opening reserves at £10.6m for 2019/20 at the start of the financial year, a figure which required a medium-term financial plan increase of £1m during the year.
Her report said the 2019 overspend of £1.7m meant the revised opening balance for the year had been £9.0m and that “management action” was being undertaken to ensure that the general fund balance was “restored to the required level”.
