Cornwall Council overspends by £2.5 million a month

Main excess is home-to-school transport

Cornwall Council has overspent by almost £15 million in the first six months of the 2023/24 financial year. The growing financial pressures on the local authority are outlined in a report to the council’s cabinet, which meets next week.

The council performance report for the second quarter of the financial year shows an overspend of £14.9 million – £7m in the first quarter and £7.9 million from July to September. The main areas continue to be in home to school transport (£5m), housing temporary/emergency accommodation (£8m) and housing benefits (£3.9 million). In addition, since the first quarter of the year, children in care services have seen increased costs with an expected overspend of £4.3m alongside council pay inflation of £4.1m due to an anticipated pay award.

The report states: “These pressures are partly offset by a one-off underspend of £7m in capital financing and interest receipts due to slippage in the capital programme and favourable treasury management activities.”

The saving target for 2023/24 is £50 million. It is anticipated £41.5 million (83 per cent) of these savings will be delivered during that time, with £29 million already delivered. The report recommends to full council that its capital programme be uplifted by £6.3 million.

The council announced in September that it will need to cut some services as it faces “difficult decisions” to achieve almost £75 million in savings by 2028.
Its draft budget for 2024/25 sees council tax increasing by 4.99 per cent, which will result in a Band D charge of £1,892.75 for the Cornwall Council element of the charge. This is an increase of £89.96 (£1.73 per week) compared to 2023/24 in the second consecutive year of the maximum allowable rise without requiring a referendum.

A Budget & Savings Review Group has been set up with the objective of reducing the in-year overspend, identifying mitigating actions and “building confidence in the council’s ability to deliver its savings over the medium-term financial plan”. The local authority’s overview and scrutiny committees are also focused on reducing budget overspends.

“It is important to note that the financial forecast for the year ahead continues to carry significant inflationary risks. If these risks materialise and mitigations are not put in place, then the overspend would increase,” adds the report, which has been overseen by chief operating officer Tracie Langley. “For example, the latest pay offer has not been agreed by the unions. Whilst the forecasts currently reflect the budget pressure which will result from the latest offer, should the final agreed increase be higher this will increase the overspend.”

The report states that “demand management strategies” are being developed to tackle the main drivers for this year’s overspend – housing and school transport. “Whilst further work is needed on these strategies, at this stage, recurrent growth of £3m has been built into the 2024/25 draft budget for home to school transport.”

The report also highlights an ongoing funding risk within the Spaceport programme in Newquay, specifically in relation to grant funding “due to subsidy control issues”. It states the matter should be resolved by December.

The council is currently undertaking public consultation in respect of budget proposals for 2024/25, which comes to an end next Sunday and the results of which will be reported to the cabinet in February.