Cash-strapped Derbyshire council’s efficiency chief says authority is ‘not out of the woods’ after two difficult years

Cash-strapped Derbyshire County Council’s efficiency chief has told how the authority’s final report for the 2024-25 financial year is ‘generally favourable’, but the council is ‘not out of the woods’ after two difficult years, and there is still a lot of work to be done.

The council’s new Reform UK Cabinet formally noted and agreed at a recent Cabinet meeting the council’s plan performance and revenue outturn position for 2024-25 after considering a report of the Performance Monitoring and Budget Monitoring Outturn at the end of the final and fourth quarter of the last financial year ending on March 31.

Derbyshire County Council’s former Conservative administration before the May election had claimed it was on track to achieve over £31m of savings by the end of the current 2024-25 financial year, with cutbacks to manage a previously forecast budget deficit of over £39m for the current 2024-25 financial year, while identifying £18.6m of further necessary budget savings for the 2025-26 financial year to set a balanced budget.

The council’s newly inaugurated Reform Cabinet Member for Council Efficiency, Cllr John Lawson, told the meeting: “This is generally a favourable report, and the previous administration is to be commended for that but they were really one-off windfall ventures that won’t continue in the future, so in terms of that, we are not out of the woods. There is a lot of work to be done.”

Cllr Lawson explained the latest report came before the current Reform council administration was elected, and he explained that generally there has been a positive result on the balance of things, particularly compared to the previous two years with a slightly favourable net actual underspend of £582,000 as of March 31, 2025, against the approved Revenue Budget for 2024-25.

However, he also pointed out that there is £3.319m of expenditure commitments which is to be potentially carried forward that could result in a slight deficit, giving a net overspend for the year of £2.737m.

And despite some significant ‘pluses and minuses’ in terms of the overall result, there will still be a combination of things that can be expected to carry on from previous years with demands on the council from Adult Social Care and Children’s Services.

The Children’s Services and Safeguarding and Education portfolio has incurred a significant overspend of £27.333m, according to the report, with an outturn overspend at the fourth quarter of the year for Adult Social Care of £21.127m, but Cllr Lawson added this has been offset by the corporate budget’s £33m underspend.

Derbyshire County Council’s report stated there remains considerable overspend for youngsters with Special Educational Needs and Disabilities, and further work is needed to meet the significant rising demand.

The report also explained that the council’s departments were able to deliver most of the planned savings for 2024-25 achieving £29.185m, but these were offset by the overspend on Adult and Children’s Social Care services while increasing demand and cost pressures resulted in actual expenditure for these services being significantly more than budget.

It explained that the outturn underspend position of £0.582m does not take into account any requests to carry forward commitments totalling £3.319m, and if these requests are approved, this would give a net overspend position for the year of £2.737m.

The report’s author stated:  "Tight control of the budgets needs to continue in 2025-26 and beyond as there are significant pressures in both Adult Social Care and Health and Children’s Services. The upward trend in the demands for services is continuing in both these areas.”

When the 2024-25 budget was approved in February, 2024, the recommended optimal level of the General Reserve was £25m, and the outturn balance on the General Reserve is £38.831m after approving transfers from Earmarked Reserves and the in-year underspend of £582,000.

In addition to the council’s general fund revenue budget, the council manages the Dedicated Schools Grant, which is a ring-fenced grant from the Government that provides local authorities with funding for schools and services for pupils.

When the in-year deficit is added to the opening DSG deficit from April, 2024, of £16.945m the overall year-end cumulative deficit on the DSG by March 31, 2025, has been calculated £44.737m.

But the DSG income and expenditure does not form part of the council’s general fund Revenue Budget, however any surplus or deficit on the DSG funding held by the council does form part of the council’s reserves.

Temporary regulations require that councils hold these balances separately, but when these regulations expire in 2026, any deficit on the DSG balances will need to be funded by the council, so authorities need to have a DSG management plan identifying strategy, key areas and decisions required to bring spending back in line with funding and to repay the deficit.

The council says it is making progress on drawing up the plan which will set out how the DSG will be brought back into balance, and it will be shared and discussed with the Education and Skills Funding Agency and with the Schools Forum.

The Cabinet formally noted and agreed at a meeting on July 3 its Council Plan Performance and Revenue Outturn Position for 2024-25, a cumulative deficit on the Dedicated Schools Grant at 31 March 2025, the position on General and Earmarked Reserves and approved the proposed carry forward of commitments totalling £3.319m, and that the report will be further considered at the full council meeting on July 9.

It also noted under a separate item on its Operating Model and Options to Improve Efficiency and Effectiveness that a plan is to be brought to Cabinet in the Autumn covering the costs, benefits and timeframe of implementing a financial consultant’s recommendations which have yet to be approved.

The council stated that it has identified significant challenges across its service delivery driven by high costs and increased service demand, particularly with Adult Social Care, as well as the council noting that it employs more people than comparative authorities.

It also noted that for several years, the council’s spend has been in excess of budget, with an unsustainable reliance on reserves with £132.431 million used over the past three years between 2022-23 to 2024-25.

The council contracted finance consultants PricewaterhouseCoopers to undertake a review of the council’s operating model and identify efficiencies with an estimated £45.9m of possible savings per year.

Work is now ongoing, according to the council, to assess the PwC findings against the councils Change Portfolio and to identify a plan to implement the recommendations.

The council has taken steps to address that its Operating Model is more expensive than ‘comparator councils’, with higher costs than income, and a larger than average workforce and it has recognised the need to become more efficient and effective through the centralisation of support functions, digital improvement, a Finance Improvement Programme, and changes to the council’s Charging Policy in Adult Social Care and Health.

It has also introduced a redesign of adult social care with the planned sale of nine of its care homes to reduce direct council provision of residential care for older adults and an increase in direct provision for dementia care with an external analysis to validate the council’s position and to provide further recommendations.

Cllr Lawson said the previous administration recognised the cost of the council’s operating model and they introduced steps to address it including a digital improvement programme and centralising services and greater rationalisation under the One Council Support Function project.

He added that the assessed scale of efficiency that the council could achieve is in the region of £45m of savings per year and some of these savings have already been factored into the council’s budgets at somewhere in the region of £20m.

Cllr Lawson said: “What this demonstrates is that before this change in leadership the council already had a programme of improvement and that programme of improvement is continuing.”

He added the current administration has put its ‘efforts and full force behind it’ and that some savings have already been factored in looking at procurement and the operating model in the context of previous ‘turbulent’ times with a ‘significant increase in expenditure’ and efforts are going into centralisation of services and technological advances and the rationalisation of the council.

Cllr Stephen Reed, Cabinet Member for Business Services, stated no one wants to look at compulsory redundancies but he added that he also does not want to make promises he cannot keep after he was questioned by Opposition Labour Group Leader Cllr Anne Clarke about what ‘mitigations’ are in place to mitigate against staff redundancies.