The meeting was intended to provide an overview of the council's current financial position and budget pressures. The sub-group was also scheduled to discuss its work programme.

Medium Term Financial Strategy 2025/26 to 2028/29

The sub-group was to receive a report on the Medium Term Financial Strategy (MTFS) for 2025/26 to 2028/29, which had been reported to Public Cabinet on 28 November 2024. The MTFS report outlined the budget gap faced by Bexley Council for the years 2025/26 to 2028/29, as well as various government announcements and policy papers about local government financing. The report also summarised the outcome of a number of deep dive service reviews which had been carried out to model the impact of various pressures on the council's spending, and the possible mitigating actions. The MTFS reported a revised budget gap of £34.825m in 2025/26, rising to £62.207m by 2028/29.

The report listed a number of challenges facing the council in setting its budget, including:

The Russian invasion of Ukraine and economic factors has impacted on the budget and continues to generate risk in 2024/25 and beyond. There is unprecedented increasing demand, particularly in social care, SEN transport and housing.

The report stated that the council had set aside funding to cover contract inflation of £4.089m for 2025/26. The service reviews had identified additional contract inflation pressures, and the report noted:

The contract inflation funding is a cash limit for the Council to stay within for 2025/26... The revised requirement for 2025//26 equates to approximately 2.60% of the 2024/25 budgeted estimate for supplies and services and third party contacts. The equivalent amount for 2024/25 is 5.72%...

The report also described the council's approach to Dedicated Schools Grant funding. In March 2023, Bexley Council entered into a safety valve agreement with the Department for Education (DfE). Under this agreement, the DfE committed to provide £29.890m funding to address a projected deficit in the Dedicated Schools Grant budget. This was in return for Bexley Council agreeing to implement various measures to reduce costs, including:

...delivering additional early intervention measures to address needs before they escalate, continue to expand local special school provision to reduce reliance on out of borough and independent sector placements and continue to promote an inclusive approach within mainstream schools...

The report noted that the forecast for the Dedicated Schools Grant had continued to increase as a result of an unexpectedly high number of requests for new Education Health and Care Plans during the summer resulting in new funding commitments. The report stated that it will be necessary to do further extensive work to update the Safety Valve plan, taking account of:

...the need to allow for a higher number of Education Health and Care Plans, the scope for new mitigations to address the resulting increased costs and the possibility of extending the timescale for eliminating the deficit to March 2030.

The report also discussed the council's capital programme, noting that it is necessary to review the existing capital programme across the medium term. A capital bid was being made to replace 31 of the council's refuse collection vehicles which were due for replacement. The report noted:

The fleet is owned by the Council and leased to Countrystyle, who are responsible for repairing and maintaining the fleet to a roadworthy standard.

Another capital bid for £1m was being made to carry out improvement works at Thames Road Depot. The report stated that:

Thames Road Depot is an important Council asset and the base of various core front-line services of waste & recycling, street cleansing, ground maintenance etc... The infrastructure of the depot is outdated, in some instances dating back to c1960...

Budget Monitoring Period 6

The sub-group was also scheduled to review a report on the council's revenue and capital budget monitoring for Period 6 of 2024/25. The budget monitoring report showed a forecast revenue overspend of £4.705m against the current net budget of £215.028m. The report noted that the overspend is after the assumption that £2.700m of the contingency budget and £1.401m of centrally held budgets will be fully utilised to cover forecasted service overspends. The main factors contributing to the forecast overspend included:

• Contract inflation was assumed in the Medium Term Financial Strategy at £11.090m... The current forecast across all services includes £1.051m of contract inflation over and above that set aside. • Demographic pressures £6.097m has been allocated to fund growth identified from the deep dives carried out in 2023... The current forecast across all services includes £8.528m (£7.199m in August 2024/Period 5) of demographic growth over and above that set aside. • Income Pressure Several of the income generating services experienced difficulties in achieving their targets in 2023/24 and this has continued in 2024/25. £1.878m (£1.838m in August 2024/Period 5), of unachievable income is forecast in the current year.

The report included a section on the council's spending on agency staff. It showed that the total spend across all directorates to September 2024 was £4.629m, which is a reduction of £1.221m compared to September 2023. The forecast outturn for agency staff costs for 2024/25 was £7.811m - a projected decrease of £3.724m compared to 2023/24. The report noted:

There have been ongoing recruitment challenges in the Social Care workforce that have led to many vacancies resulting in reliance on agency staffing to meet demand across the service.

The report showed that Children and Education are forecasting a spend of £1.988m on agency staff for 2024/25, a projected decrease of £1.671m compared to the 2023/24 outturn. The report stated:

Following success in recruitment in recent months and the conversion of a number of agency staff to permanent contracts the number of agency staff has fallen from its peak of 54 at the end of August 2023 to 23 across the directorate in September 2024/Period 6.

The forecast capital budget for 2024/25 was £45.665m, a decrease of £0.562m compared to the revised budget. The report stated that:

Places and Communities are reporting a forecast of £20.478m, which is a decrease of £0.730m against the revised budget. The main movements are slippage of £0.818m for Homeleigh and an addition of £0.240m for the Replacement of Waste and Recycling Containers.

Developing a Project Plan

The final item on the agenda was a discussion on the sub-group's work programme. The sub-group had previously agreed to carry out a scrutiny project examining how economic fluctuations affect local authorities' operations, decision-making, service delivery, and overall sustainability. A scoping report setting out the potential issues to be covered during this scrutiny project was to be considered by the sub-group. The report noted that:

With economic challenges facing Local Authorities, Member are keen to understand how these challenges are being dealt with and how risks are being mitigated.

The report suggested a number of Key Lines of Enquiry to help the sub-group to develop a detailed project plan for this scrutiny project. The report stated that:

The Sub-Group is asked to consider the business case andto identify the key issues it wishes investigate further during this project. These will then be worked into a detailed project plan that will be shared with the Sub-Group at its next meeting. This will include detail on agenda items for future meetings and any additional evidence gathering.