Surrey CC is forecasting a £25m in-year overspend and needs to use “an unprecedented level of one-off funding” to balance its budget in 2018-19, its director of finance has warned.
While Surrey is this year set to deliver its highest level of in-year savings (£79m) “this is still short of the original target of £104m”, a budget report has warned.
This has been caused by “intense demand pressures” on children’s and adult social care services, while some savings are “unachievable” this financial year.
On top of this Surrey will need to use £24m from its reserves in 2018-19 which will take it “below the minimum level”, according to its finance director Sheila Little. She said she considered this course of action “appropriate in the context of the risks and uncertainty facing the council”.
Surrey, which is proposing to increase council tax by 5.99% in 2018-19, is planning to make savings of £66m next year.
Total reserves are to be reduced from £66m to £42m next year while the level of general reserves is to be maintained at about £21m, which is about 2.5% of the sum of council tax and settlement funding Surrey receives.
Surrey has drawn £103m from reserves to support the revenue budget since 2013-14, the budget report said.
A Chartered Institute of Public Finance & Accountancy financial resilience review of November 2016 “confirmed the council could not rely on its reserves to balance its budgets through to 2019-20”, said the report.
While a separate report by Ms Little said Surrey “will produce a balanced budget” in 2018-19, it stated that this will require “an unprecedented level of one-off funding” in the form of £24m reserves, £15m capital receipts for transformation projects, and using the estimated £20m uplift in business rates growth from the 100% retention pilot.
While the level of savings required by Surrey is in line with pressures facing other councils, Ms Little said she “is concerned” the task “is becoming even more challenging”. As a result she is ensuring the council’s finances and savings targets are “monitored regularly by leadership of the council throughout the year”.
The council has saved £540m since 2010 and the budget report warned the “risks have remained very serious since setting the 2017-18 budget” and added “the risk of non-delivery of efficiencies and service reductions is increasing”.
This is compounded by the fact Surrey “has insufficient one-off resources to balance the 2019-20 budget”.
A Surrey CC spokesman said: “We’ve agreed a three-year budget despite the severe financial pressure we – and councils across the country – are under due to rising demand for our services and falling government funding.
“We’ve been successfully managing the growing need for adult social care, children’s and other key services partly through making savings of £540m since 2010 and have made sure we keep within our overall budget.”