Medway's Cabinet will discuss the council's finances on Tuesday, 8 August
Medway Council’s Cabinet, on Tuesday, 8 August, will be discussing a report on the first round of revenue budget monitoring for 2023/24 which projects a potential overspend of £17.267million.
As reported to Medway’s Cabinet in June, in the Capital and Revenue Budget Outturn for 2022/23, the council’s general reserves currently stand at £10.084million. At this point in the financial year, under this current forecast, the council would not be in a position to fund an overspend on the scale of that currently projected.
Both the 2022/23 outturn and 2023/24 forecast expenditure will place an unprecedented burden on the council’s general reserves, which is not affordable in the immediate term or sustainable over the longer term.
Local authorities are required by government to deliver a balanced budget, where anticipated income matches the total planned spend. However, since 2010/11 central government funding to Medway through the Revenue Support Grant has reduced by 91 per cent (£85.1million to £7.3million in 2023/24). Furthermore, Medway Council, along with many other councils across the country, has suffered heavily from the huge impact of the increasing costs of providing critical social care services for the most vulnerable members of our communities, as well as the impacts of soaring inflation, increased construction costs and cost of living pressures. Together these have created a perfect storm resulting in the council’s spending demands increasing at a far faster rate than the funding received from local taxation and central government, and it has had to find savings from spending reductions and income from other sources to balance the books as well as drawing down on reserves.
There was a significant overspend on the budget last year, largely on social care services for older people and children, and there are similar challenges in this current financial year, with a continuation of the increasing demand for and cost of providing services.
However, throughout the year, the council carries out regular rounds of budget forecasting and this is just the first round for this year. Through management action the financial position generally improves from this early first forecast, although the opportunities to reduce spend are fewer and the choices to be made much harder each year.
The council remains completely committed to ensuring that its resources are directed where they are needed the most and urgent steps are now being taken to review all areas of expenditure across the council and bring it back within the budget forecast or within the amount that could be funded from reserves.
Sustainable steps will be taken
Commenting on the current situation, Cllr Vince Maple, Leader of Medway Council, said: “The new administration has inherited a very difficult situation and we are now taking urgent action to address the position this year and plan for the years ahead. Tough decisions will be needed in the coming months if we are to continue to provide our most critical, statutory services. We are not alone and know that many other councils up and down the country are in a very similar precarious position.
"We are committed to taking the steps we need to put the council on a more sustainable footing but longer term as social care costs continue to increase, the viability of many local authority services will increasingly come under threat for local people and we urge the government to enter into a new deal with local government to increase funding for critical care services alongside sufficient funding for other valued services.”