Further recovery measures 'critical' as Luton council's predicted overspend grows to £2.6m

A £2.6m overspend was forecast against Luton Borough Council’s £156.8m revenue budget for 2023/24 at the end of December – a worse position than halfway through the financial year.

The overall position deteriorated from quarter two because of increased overspends of £0.8m in children, families and education, £1.6m in adult social care and a £1.5m rise in supported living costs, with more vulnerable residents requiring extra support, according to a report to the local authority’s executive.

Further recovery measures are therefore essential to support a continuous improvement from the current forecast overspend, towards achieving a balanced outturn position by the end of the year, said the report.

“The increase in the children’s social care demand, the rise in home to school transport and the growing service demand in adult social care require urgent attention.

“A robust deficit recovery plan is needed to keep the associated costs from spiralling out of control. The overspend position is aggravated by the under achievement of income because of an increased number of void commercial properties.

“The council has always relied on the private rented sector for temporary accommodation. But the private sector in Luton has changed significantly during the last 12 months with demand outweighing supply.”

Labour Northwell councillor and finance portfolio holder Rob Roche told the executive: “The latest figures show this challenge is getting even harder as the rising demand for social care and housing isn’t abating.

“The council has put measures in place to control costs, such as a moratorium on recruiting agency staff unless critical to service delivery approved by senior management,” he explained.

“It’s critical that further remedial measures are needed to improve and mitigate the current forecast overspend. The council may have to use reserves for any one-off overspend to achieve a balanced outturn position by the end of the 2023/24 financial year.

“At quarter three, the council is forecasting a £2.6m overspend, after the application of all contingency budgeting against a £156.8m revenue budget. Pressures are particularly evident in children’s and adults’ social care packages, arising from demand and complexities.

“The council is dealing with the impact of rising home to school transport costs because of the high level of provider inflationary pressures, the cost of living crisis and difficulty recruiting in a challenging local and national market.

“Using specific contingency or reserves without a plan to replenish these isn’t sustainable in the medium- to long-term. The final outturn will be reported to the executive in June.

“The multiple challenges we face will be difficult to fully overcome without dedicated efforts to keep soaring costs in check, and striving to achieve the savings and outcomes identified in the deficit recovery plans,” he added.

“At quarter three, the revised capital spend is £97m against a total gross budget of £121m, with slippage of a further £20m from the £101m reported at quarter two, mainly because of the capacity to deliver projects in 2023/24.

“Highways projects have been deferred because of weather and road conditions. Grant funding hasn’t been secured for the Stockwood Park regeneration scheme, which has been put on hold.”