Crunch talks on West Berkshire Council finances, as high needs education financial black hole could send authority under

West Berkshire Council will tonight (Thursday) peg out how it will avoid going bankrupt.

Councillors have a jittery report to consider how to approach finances after what officers are calling an exceptionally challenging financial position over the past 12 months.

Uncertainty over the end of the accounting treatment of the schools High Needs Block deficit – estimated to be almost £10m is a key focus, and is, until the end of the next financial year, not included within the general fund balance.

If it was to be included, the council will serve an S114 notice as reserve levels are not sufficient to cover this.

It means that no new expenditure is permitted, with the exception of that funding statutory services, including safeguarding vulnerable people, however existing commitments and contracts will continue to be honoured.

Council officers must therefore carry out their duties in line with contractual obligations and to acceptable standards, while being aware of the financial situation. Any spending that is not essential or which can be postponed should not take place and essential spend will be monitored

The revenue budget for 2024-25 includes the highest level of savings in the council’s history and the general fund balance as at the end of the 2023-24 financial year is below the minimum level of reserves.

The 2024-25 does include a contribution of almost £2m to increase the general fund balance but, in the absence of any additional Government funding in the current year, the council continues to need to improve its financial resilience through ensuring a balanced in year budget position and further increases to its reserves.

The council’s executive meets tonight to set out its approach to budgeting for the 2025-26 revenue and capital budgets.

They have a paper which sets out the approaches the council is taking for the year ahead.

In summary, for the revenue budget, an activity based budgeting approach rooted in reducing unit costs and seeking best practice approaches to the council’s service delivery.

In respect of the capital programme, a zero based budgeting approach to all new schemes not currently in the delivery phase and seeking to identify where there are further complementary approaches to capital investment to support the revenue budget through cost reduction, cost avoidance and revenue to the council.

By providing indicative savings schemes, the administration then have a clearer idea of the challenges in delivering those savings in future years rather than just budgeting from one year to the next.

The council’s ability to financial plan effectively is hampered by external and internal factors. Externally, these include there being no spending review by Government beyond 2024-25 nor any indicative finance for local government beyond 2024-25.

There’s also the threat, or opportunity, through a national ‘fair funding’ for the rebalancing of local government expenditure within the sector.

And lack of certainty over pay awards and, recently, a very volatile inflationary position also has an impact.

The council executive meets tonight at 6pm.