Prompt financial recovery plan needed due to Luton Council's £700,000 budget gap
High demand for services is coupled with reduced income due to the pandemic
Chief executive Robin Porter is due to chair a meeting later this week to address a budget gap in Luton Borough Council's finances for 2021/22.
The issue needs prompt attention, according to the local authority's director finance, revenues and benefits Dev Gopal.
The revenue and capital budget monitoring report for quarter two in the current financial year was presented to the executive last night (Monday) by Labour High Town councillor Andy Malcolm.
"The budget position remains very challenging," he warned. "We've a net overspend at this forecast of £0.7m and that's after using all the contingency in the budget.
"It was higher than that at quarter one, but we hadn't released the £3.2m of general contingency cover.
"The underlying reasons for the difficulties in our budget are the continuing high levels of demand for some of our core services, which is outstripping the resources allocated for those areas.
"There are some deliberate delays to the savings programme we've established and some reductions in income streams compared to what we were expecting.
"All of these things are related to and impacted by the pandemic. The government is continuing to provide some level of support into this financial year, but that's all used within the current outturn position.
"That's only for quarter one and we don't know about any support beyond that period at this stage," said councillor Malcolm, who's the finance portfolio holder.
"The £6.7m of general contribution from government is being used to meet delays in delivery of savings and to offset some of the income shortfalls.
"Although the government came up with a scheme to compensate councils for lost income due to trading, we only get £0.7m of grant support.
"We're using £4.2m of the general grant support from the government to cover off some of the income shortfalls not covered by its scheme.
"There are a number of areas of cost pressures which we're continuing to experience, such as homelessness, social care for children and families, waste disposal costs and reduced trading activity. Some of this is offset by savings in borrowing costs."
Labour Limbury councillor Rob Roche referred to "the overspend on the agencies and the employment issues within the council", saying: "As soon as we get those down, get these agencies out and people employed we'll be in a better position.
"Is there anything we're doing now to get people employed into the system rather than use agencies, as it talks here about overwork and overloaded?" he asked.
Councillor Malcolm replied: "We've made some good progress on that in children's social care and a number of other areas over recent years.
"It might be the pandemic has caused extra stress to our ability to deliver that."
Labour Saints councillor Javed Hussain wondered how realistic having a recovery plan by the end of December is given the festive season and holidays.
Mr Gopal explained: "We're working on that. There's a meeting due to be held on Thursday to be chaired by the chief executive.
"We're talking about a plan to deliver the savings and at the same time form a plan to address those shortfalls.
The timescale is tight, but we've got the budget gap and we've to make sure we lose that as soon as possible.
"The executive is aware of what work is being done to turn it around into a balanced budget."
The committee agreed to ask officers to put in place a recovery plan by the end of the month to ensure a balanced budget is achieved for 2021/22.