The Overview and Scrutiny Committee of Barking and Dagenham Council met on Wednesday 24 January 2024 to discuss the council's budget strategy and work programme. The committee reviewed the significant budget deficit facing the council for the upcoming financial year and agreed to undertake several scrutiny reviews to address concerns about council spending and investment strategies.

Budget Strategy 2024/25 to 2026/27

The committee discussed the council's Budget Strategy for 2024/25 to 2026/27, which highlighted a projected budget gap of £23.335 million for the 2024/25 financial year. This deficit arises from increased cost pressures due to inflation, rising interest rates, and increased demand for services, particularly in social care. The council anticipates a 4.99% increase in Council Tax to help mitigate this gap.

Key points raised during the discussion included:

• Financial Challenges: The council is facing significant financial pressures, with a projected budget deficit of £23.335 million for 2024/25, after accounting for £10.618 million in proposed savings. The net savings after growth are £8.327 million. The cumulative budget deficit is projected to increase to £37.053 million by 2026/27.
• Savings Proposals: The report outlined proposed savings of £10.618 million, which include cuts to services, disbanding services, and potential redundancies to achieve a sustainable budget position. Specific savings proposals mentioned include reductions in consultancy budgets, reviews of community hub performance, and streamlining of IT services.
• Dividend Income from Be First: A potential risk was identified regarding the council not receiving a £10.3 million dividend income from its subsidiary, Be First. While assurances were given that the dividend was expected, uncertainty about its delivery date could increase the budget deficit to £33 million if not received.
• Borrowing Levels: The council's borrowing levels were noted as being significantly higher than neighbouring councils, with a total debt of £1.275 billion in September 2023. While some borrowing has funded housing development, bringing in income, the current financial situation means no new borrowing for building schemes is anticipated.
• Council Tax: An increase in Council Tax of 4.99% is expected for 2024/25, in line with government guidelines.
• Community Hubs: The committee discussed the varying performance of the borough's 11 community hubs, with those partnered with faith or voluntary organisations showing higher performance. Factors influencing performance include size, location, service range, and advertising.
• Subsidiaries and Value for Money: The council's approach to ensuring value for money from its subsidiaries was discussed. While the council reviews data and risks before investments, future outcomes cannot be predicted. The council, as the sole shareholder, would incur costs for any losses from its subsidiaries, though Key Performance Indicators (KPIs) are regularly monitored.
• Redundancy Strategy: A redundancy strategy is in place and under discussion with trade unions, with a £2 million reserve and a central budget of over £1 million set aside for redundancy costs.
• Section 114 Notice: While there was no definitive answer on whether a Section 114 notice would be issued, the council is working to mitigate its circumstances and aims to deliver a balanced budget.
• Long-Term Changes: To balance the budget long-term, the council is considering resizing to a smaller organisation, reducing services, and decreasing demand for services, particularly in social care, which has seen an overspend of £14 million in the current financial year. Streamlining procurement processes is also being explored.
• Legacy Budget Corrections: These corrections primarily relate to resetting recharges between the Housing Revenue Account (HRA) and the General Fund.

Following the discussion, the committee resolved to approve several recommendations:

1. Scrutiny Review of Investment and Acquisition Strategy: An investigation will be undertaken to assess the strategy's fitness for purpose, including its associated costs and returns.
2. Scrutiny Review of Adult and Children's Care Spending: Following benchmarking, which indicated excessive spending compared to other boroughs, a review will be conducted to seek assurance on expenditure in these areas.
3. Quarterly Budget Monitoring Reports: These reports will be presented to the committee from the new municipal year.
4. Member Briefing on Council Companies: A briefing will be held to provide a more in-depth understanding of how the council's companies operate.

Work Programme

The committee noted the council's work programme for the upcoming months, which includes reports on topics such as compliance updates, the housing offer for vulnerable people, and OFSTED's improvement plan for schools.