This meeting was for the Cabinet of Newham Council to consider a number of finance reports. It included updates on the Council's spending and income, how well it is doing at delivering savings, and the money it holds in reserve. It also considered reports on the financial positions of the Dedicated Schools Grant and the Housing Revenue Account.

Temporary Accommodation

The report pack included for discussion the high level of spending on Temporary Accommodation (TA), which the report says is significantly above the money allocated for it in the budget. This is largely due to a higher than expected number of people entering TA, as well as the high cost of nightly paid TA, especially self-contained accommodation. There were on average 68 new cases per month between April and November 2024. The report states that the average nightly rate was £83.56 in November 2024. This compares to an average rate of £74.26 in November 2023 and an average of £81.74 over the whole of the 2023/24 financial year.

The report pack included for discussion the efforts to manage the high cost of TA, including securing accommodation outside of the borough, exploring options like modular housing, negotiating with providers to reduce prices, and implementing a Homelessness Response Programme that aims to prevent homelessness and maximise the availability of accommodation. The report pack included for discussion the impact of the high cost of TA, which is likely to result in a budget gap of between £24.0m and £29.5m depending on future trends. It is likely to result in the Council needing to spend money held in reserve to balance its books.

Children and Young People

The report pack included for discussion the overspending within Children and Young People's Services (CYPS). It states that CYPS is forecasting an overspend of £8.8m, which is unchanged from Quarter 2, but highlights areas of particular pressure within the service.

The report pack included for discussion the rising cost of placements for Looked After Children. The report suggests that this is due to a significant increase in the cost of placements. It included for discussion a table showing the weekly cost of the 25 most expensive placements, which amount to a total weekly cost of £261,300. The report pack included for discussion measures that CYPS is taking to manage this, such as strict review processes, an Edge of Care Offer, and the scrutiny of costs by the Access to Care and Resource Panel.

The report pack included for discussion the cost of providing support to unaccompanied asylum-seeking children (UASC), especially those aged 18 or over. It says that for 18+ UASC, the overspend is due to a high number of over 21s (33) remaining in accommodation which is either fully funded or partially funded by the Council due to the lack of affordable accommodation within Newham / surrounding areas.

The report pack included for discussion the cost of providing support to Care Leavers. It suggests that this is due to a high number of over 21s (59) remaining in accommodation due to the lack of affordable housing in the borough.

The report pack included for discussion the £2m overspend in the Home to School transport service, which is caused by an increase in the number of pupils requesting or requiring transport, and the high cost of providing this using private taxi operators. It included for discussion the work that is being done to manage this overspend, including engaging external consultants to review and implement the necessary changes.

The report pack included for discussion the overspending within the 0 to 19 Health Service. It suggests that this is due to additional cost of agency staff and the reduction in Public Health Funding. It included for discussion the fact that funding in 2024/25 has been reduced by £0.1m and that the impending pay uplift is not covered by the grant. It included for discussion the steps that are being taken to manage this overspend, including exploring service model options, a review of how the service could operate within budget constraints and a staff consultation on a revised service model which was concluded on 29 November 2024.

Adults and Health

The report pack included for discussion the overspending within Adult Social Care, which is forecast to be £10.1m, an increase of £3.1m since Quarter 2. The report says that the main driver for this is an increase in demand for services, which has risen by 3.3% since last year, coupled with increased costs.

It included for discussion a breakdown of expenditure within Adult Social Care, showing that the greatest area of spend is on residential and nursing care (£32.9m), followed by direct payments (£29.2m) and home care (£29.5m).

It included for discussion the impact of cost inflation and increased demand on a range of Adult Social Care services, including: Day care, home care, residential and nursing care, supported accommodation, and direct payments. The report pack included for discussion a table that shows how much the average weekly cost of providing these services has risen since last year. The largest increase was in home care, which has risen by 14.5%.

Inclusive Economy & Housing - Community Wealth Building & Chief Planning Office

The report pack included for discussion the financial position of the Inclusive Economy & Housing directorate, which includes Community Wealth Building (CWB) and the Chief Planning Office (CPO). CWB is forecasting an underspend of £0.51m due to savings and increased use of external funding. However, the CPO is forecasting a shortfall of £0.4m on planning income. This is an improvement on the Quarter 2 position and is based on the assumption that current income activity continues for the remainder of the financial year and includes income from the London Legacy Development Corporation (LLDC).

The report pack included for discussion the fact that the CPO is not on target to meet its planning income target of £3.7m, which was agreed by Cabinet in February 2024. It states that If the income decline continues, spending cuts will be necessary.

Housing Acquisitions

The report pack included for discussion the fact that the Council plans to sell buildings and land that it owns to raise money to cover budget pressures. The report pack included for discussion the fact that the target is to raise £16m from sales this year. It included for discussion a table that shows the progress of the programme, with the sales split into categories depending on what is being sold and who it is being sold to.

Spending Controls

The report pack included for discussion the extra financial controls that the Council is taking to manage its spending, including: Approval of all recruitment requests by a Directorate Expenditure Control Panel, a reduction in agency staff, approval by Directorate Panels of all overtime and additional staff payments, approval of all purchase orders by a Directorate Panel, approval of all requests over £10k by the Corporate Leadership Board, and the cancellation of purchase cards.

It included for discussion a series of graphs and charts that show how the Council's spending has changed, for example the number of agency staff and the total spend on purchase orders.

MTFS Savings Tracker

The report pack included for discussion the savings that the Council has made towards its Medium Term Financial Strategy (MTFS) target of £32m, which was agreed by Full Council in February 2024. It states that £27.5m in savings have been delivered, leaving a shortfall of £4.5m. It included for discussion a breakdown of these savings by Directorate. The Directorate with the largest shortfall is CYPS which has delivered £1.578m against a target of £4.678m.

Reserves

The report pack included for discussion the Council's reserves, which are the money that it holds in reserve. The report pack included for discussion the fact that as of 1 April 2024, Newham Council held £11m in unallocated reserves and £185m in earmarked reserves.

The report pack included for discussion a breakdown of the earmarked reserves and how they are being used this year. The largest single use of earmarked reserves is to cover the General Fund overspend, with £45.5m being used for this.

Dedicated Schools Budget (DSB)

The report pack included for discussion the Dedicated Schools Grant (DSG), which is the money that the Council gives to schools to cover their costs. The DSG is currently in deficit, with the deficit standing at £12.7m as of 1 April 2024.

The report pack included for discussion the fact that the Council is expecting the DSG to reduce by £2m this year. It included for discussion a breakdown of the DSG, showing how the funding is allocated to the different parts of the service.

Housing Revenue Account (HRA)

The report pack included for discussion the Housing Revenue Account (HRA), which is the money that the Council receives from tenants to cover the cost of providing council housing.

The report pack included for discussion the fact that the HRA is forecasting a breakeven position for the year. However, there are various budget pressures, the main ones being: Council Tax on Empty Properties, Building Safety Waking Watch costs, and the ongoing cost of dealing with the dilapidations relating to the Bridge House lease, which is estimated at £1.8m.

The report pack included for discussion a breakdown of the HRA budget. The largest area of spend is on Housing Income Collection (£122.7m), followed by Business Initiatives (£45.2m), Housing Improvement (£26.3m), and Residential Services (£15.0m).

Capital Programme

The report pack included for discussion the Council's Capital Programme, which is the money that it is spending on large projects such as building new schools and homes.

The total budget for the year is £775.3m, but it is currently forecast to be underspent by £313.4m. The report pack included for discussion a detailed breakdown of the capital programme, including:

• Adults & Public Health: This area is forecasting an underspend of £12.6m. This includes an underspend of £9.9m on the Health Venture programme, which is intended to create new health and care space in the borough. The main reason for the underspend is that the Hartley Health Care Centre is not expected to be completed until 2025/26.

• Children and Young People: This area is forecasting a small overspend of £0.2m. This is due to delays in the Youth Zones programme, which is intended to improve youth facilities in the borough.

• Environment and Sustainable Transport: This area is forecasting an underspend of £2.3m. This is due to a number of factors, including slippage on the Folkestone Road Depot project and delays in implementing the adaptive lighting policy.

• Inclusive Economy and Housing: This area is forecasting an underspend of £23.2m. This is due to delays in the Carpenters and Custom House regeneration schemes.

• Populo Living: Populo is the Council's wholly owned housing company. They are forecasting an overspend of £67.3m. This is mainly due to the fact that the budget for many intended schemes has not yet been approved. The report states that these schemes include The Rex in Stratford (£88.2m), Pier Road (£149.2m) and Cyprus (£101m).

• Housing Revenue Account: The HRA is forecasting an underspend of £78.2m. This is due to a number of factors, including delays in the Affordable Homes programme and the Building Safety improvement programme.

The report states that the primary risk to the capital programme is delays and slippage on key schemes. It also mentions the high cost of borrowing money for capital projects, and the uncertainty in the construction industry due to factors such as high inflation and material shortages.