Caroline Holland, Director Corporate Services, provided an introduction to the item on budget/business planning (round 1).  It was noted that this is the first round of budget scrutiny with a further round happening in the New Year before the Cabinet meeting at which the budget is finalised for approval at Council.  The objective of this first round is to provide an update on the Medium Term Financial Strategy and look at the savings and capital programme.

Highlighted there have been changes to the financial gap; whilst there is no additional funding needed in 18/19, from 19/20 onwards a significant increase is needed.  There is a predicted gap of £5.7m in 19/20 which rises to £21.7m cumulatively in 21/22. 

The budget forecast has been put together inclusive of a number of assumptions.  For example, that there will be an increase in staff salaries based on press reports.  This won’t be clarified until the budget on 22 November 2017. Until this time, a 2% increase over 2 years has been allowed. 

It has been determined that it makes no sense to give additional funding to the Children, Schools and Families and Community and Housing budgets in one year only to expect to take this back as savings in the next year.  For this reason, it has been agreed that the Environment and Regeneration and Corporate Services Departments will the make the necessary savings in the short term.  Also, funding of capital expenditure has been considered.

Further information is currently awaited on the budget.  For example, any change to the council tax base.  It was also noted that the capital programme allocation for Children, Schools and Families is focused on the development of the new Harris Wimbledon Secondary School.

In response to member questions, Caroline Holland and Yvette Stanley, Director, Children, Schools and Families (CSF), clarified as follows:

·         Caroline Holland: the anticipated costs of the new Harris Wimbledon Secondary School are as set out in the capital programme detailed in the agenda pack in addition to costs already incurred during 2016/2017.  It was noted that further information on the costs of the school, and how these might be impacted by various factors, are detailed in the officer report also contained in the agenda pack;

·         Caroline Holland: there is an ongoing process for maintaining knowledge of each Department’s current financial position through monitoring reports and meetings;

·         Yvette Stanley: budget items for which there are significant demand pressures are carefully scrutinised (such as SEN transport, care packages, no recourse to public funds and unaccompanied asylum seeker children).  Noted her gratitude for the pause in any savings requirement falling on the CSF Department due to the significant pressures which are being partially offset by planned growth over 3 years.  There will be a need for some replacement savings for 2018/19.  Proposals will come forward in January 2018 for the Panel’s consideration;

·         Caroline Holland: unallocated SEN funding needs are being addressed by the development of Merton’s own provision through the further expansion of SEN schools such as Cricket Green.  This curtails the costs of placements in the independent sector.  The expansion of Merton’s SEN provision is costed and included in the capital programme; and

·         Caroline Holland: there is no anticipated change to the way schools are funded in 19/20 despite the government currently working on changes to the schools funding model.

RESOLVED: for the Panel to receive more frequent financial information through the Department update report.  This would allow the Panel to understand earlier any significant financial items that are forthcoming based on the on-going budget monitoring.