East Riding Council Adds New Measures to Tackle Deficit as Savings Measures Fall Short

East Riding Council has initiated an "Emergency Financial Response" as it seeks to tackle a projected £9.1m overspend.

A report has highlighted the Council's continuing struggle to rein in expenditures as demand for key services increases.

Director of Finance, Julian Neilson, says new measures are being taken to help restore financial stability.

The authority is to centralise more of it's financial decision making after it failed to deliver expected savings last year and continues to see increasing demand for key services.

Julian Neilson says the new measures will help to manage recruitment and spending.

A recent report presented to the Overview Management and Scrutiny Committee reveals a projected overspend of £9.1 million for the 2024-25 financial year.

The report highlights the council's struggle to rein in expenditures, particularly within the Adult Social Care & Health department. Despite implementing cost-saving measures in September 2023, including spending controls and recruitment freezes, the department overspent its budget by £14.1 million in the 2023-24 fiscal year. This failure to meet savings targets is largely attributed to an unprecedented surge in demand for social care services, outstripping any cost reductions achieved through efficiency measures.

Councillor Steve Gallant is concerned that having failed to achieve their savings last year, those same key council departments are now being expected to make savings again.

Julian Neilson says the situation is challenging for those departments, which is why other areas of the council are now also being asked to make further savings.

Adding to the financial strain, the council says that the level of funding provided by the government is "simply insufficient to meet the costs of current demand for local government services". In particular, the report points to a significant funding gap in the Dedicated Schools Grant, leaving schools struggling to meet the needs of a growing number of pupils with special educational needs.

In response to the increasingly dire financial outlook, the council has declared a "financial emergency" and initiated a multi-pronged response plan.

One of the key strategies involves centralizing decision-making, particularly regarding expenditures. This includes the implementation of a "spending control panel" to scrutinize all proposed expenditures exceeding a specific threshold. Additionally, the council will further tighten recruitment controls and review the necessity of all vacant positions.

Beyond immediate cost-cutting measures, the council is exploring options to generate income and enhance efficiency in the long term. These include:

• Increased commercialization of services: The council aims to explore opportunities to generate revenue through its public-facing services.
• Improved contract management: The council will review existing contracts to ensure value for money and explore opportunities for cost savings.
• Exploring alternative service delivery models: The possibility of outsourcing some services to external providers will be considered.

However, the report acknowledges that some services, particularly those mandated by law, offer limited scope for cost reduction. The council emphasizes the need to prioritize essential services for vulnerable residents, even in the face of financial constraints.

The council says it is actively lobbying for a fairer funding settlement, arguing that the current level of support is inadequate to meet the needs of its residents.