The Scrutiny & Overview Committee met on 12 February 2024 to review the council's financial performance and budget proposals for the upcoming year. Key discussions focused on the Period 8 Financial Performance Monitoring Report, which indicated an overall underspend in the General Fund, and the 2024-25 Budget Scrutiny, where the committee considered the Mayor's proposed budget, including savings, demand pressures, and the council's significant debt burden. The committee also reviewed the Capital Programme and Capital Strategy, noting ongoing concerns about the council's overall financial sustainability despite improvements in governance.

2023-24 Period 8 Financial Performance Monitoring Report

The committee reviewed the Period 8 Financial Performance Monitoring report for the 2023-24 budget. The report indicated an overall underspend in the General Fund, with departmental budgets showing improvement compared to the Period 7 forecast. While the Children's Service still had a forecasted overspend, it had reduced, and this was expected to be balanced by underspends elsewhere. The council anticipated not needing to use its £5 million Corporate Contingency Fund, with a possibility of further improvement in the financial position.

During the discussion, Councillor Jason Cummings, Cabinet Member for Finance, and officers provided updates. It was confirmed that the Adult Social Care budget's predicted underspend had increased due to a reduction in placement costs, attributed to transformation work aimed at managing placement expenses. Reassurance was given that this transformation was focused on providing the right level of care, not on restricting access to services. The committee also discussed a proposed £2.1 million transfer from the Adult Social Care budget to the Housing budget to address pressures in emergency accommodation, funded by additional grant funding.

Concerns were raised about the budgeting for upcoming elections, but it was confirmed that costs would be recoverable from the GLA and Cabinet Office. The council's bad debt provision was noted as stable. The committee agreed to defer its conclusions on this item until it could review the full Period 7 report at its next meeting.

Budget Scrutiny 2024-25

The committee scrutinised the Mayor's proposed budget for 2024-25, noting that Croydon was in a position to present a balanced budget, unlike some other local authorities. The budget setting process was described as smoother this year, with a previously identified £6 million gap being closed through a combination of factors, including a higher-than-forecasted Local Government Settlement and lower anticipated Freedom Pass costs.

A proposed £1.1 million saving related to the Children, Young People & Education directorate's staffing budget was removed as it was deemed undeliverable. To address the remaining £5 million gap, the Economic Pressures Fund was removed, increasing the budget's risk profile but with potential mitigation from other contingency funds.

Discussions covered the £3.8 million Adult Social Care Grant, which is split between supporting hospital discharge and managing market pressures. The council's significant debt burden was a key concern, with ongoing negotiations with the Government for solutions beyond capitalisation, such as a debt write-off. The committee was informed that a £9.4 million legacy capitalisation request related to a contractor claim from 2019-20 had been submitted.

The council's commitment to not increasing council tax above the 4.99% referendum cap was reiterated. The £11 million allocated for demand pressures in 2024-25, increasing to £14 million in future years, was explained as being based on departmental calculations and a cautious approach for future years. The committee noted the removal of the £5 million Economic Pressures Fund increased budget risk.

The committee heard that the scale and pace of transformation were not yet at the desired level, but recent recruitment of a Director of Transformation and the forthcoming Transformation Strategy indicated a growing ambition. The reduction in the Hardship Fund from £2 million to £500,000 was noted, with the excess reallocated to the Council Tax Support Scheme.

The committee concluded that while the council's financial challenges remained significant, particularly its debt burden, the proposed budget was balanced. They commended the work of officers and the Cabinet in preparing the budget and noted the need for continued monitoring of savings and transformation efforts. The committee recommended increased awareness of the Hardship Scheme, quantification of financial risks, and further explanation of the legacy capitalisation direction in future reports.

Capital Programme and Capital Strategy 2023-29

The committee reviewed the capital programme and capital strategy for 2023-29. The principal driver for the capital programme was cost reduction, with investment only being made if it delivered savings. Areas critical for preventing future costs, such as highways maintenance, were protected. The capital budget for 2023-24 and 2024-25 would be funded by capital receipts from asset disposals, with subsequent years projected to require additional borrowing.

Concerns were raised about the council's overall debt burden and its compliance with the Prudential Code. While the Housing Revenue Account (HRA) capital budget was considered healthier, the General Fund capital budget's reliance on capitalisation and asset disposals was noted as a concern for long-term sustainability. The committee supported the proposal to use reserves rather than borrowing for the HRA capital programme in 2024-25. Improvements in transparency and governance processes were acknowledged, but the £38 million annual budget gap remained unresolved without further government support.

The committee recommended exploring untapped external funding sources for capital projects and investigating the business case for extending or establishing new Growth Zones to retain more business rates.

Quarterly Procurement Plan Update

The committee received an update on the delivery of the Procurement Plan. Progress had been made in improving the service, but challenges remained, particularly concerning contract variations and the quality of data. The council was working towards a complete list of contracts and aimed to avoid automatic renewals, focusing on best value. The Procurement team was being restructured to prioritise higher-value contracts and build contract management skills within services. A new Procurement Act in October 2024 would introduce more mandatory reporting requirements. The committee agreed to revisit procurement later in the year to monitor progress.

Scrutiny Recommendations

The committee reviewed the Mayor's response to previous recommendations. They expressed disappointment that two recommendations regarding notifying ward members and community groups about asset disposals had been rejected, despite community feedback suggesting this was not consistently happening. The committee agreed to revisit communication around future disposals.

Scrutiny Sub-Committee Appointments

Councillor Tamar Barrett was appointed to the Children & Young People Sub-Committee, filling a vacancy.

Scrutiny Work Programme 2023-24

The committee noted the most recent version of the work programme for itself and its sub-committees. An additional meeting in March 2024 was mentioned for a specific review of crime and disorder, and a review of the Borough of Culture programme was requested for a later date.