Bedford council's predicted overspend rises to £14.3 million

The figures were discussed at the council’s Audit Committee on Wednesday, February 11, following the recent announcement that a statutory Best Value inspection will be taking place.

The borough council is also awaiting a government decision on Exceptional Financial Support (EFS).

The council’s head of internal audit, Surinder Momi, told members that “despite all that good work and efforts” by the council, the financial position has worsened since May last year.

“We started with a £9.4 million deficit overspend,” he said. “And now, as at November… we’re at £14.3 million.”

“Given all the work we’ve done, we’re not in a good financial position.

“My opinion… at the moment is limited… simply because our current forecast overspend exceeds the reserves the council has, and the fact that we have applied for exceptional financial support from central government. I can only give it a limited assurance at this stage,” he said.

Mr Momi said the crisis is being driven overwhelmingly by Children’s Services, which accounts for the vast majority of the overspend, “£11.3 million of that £14.3 million.”

He said the council is being hit by demand pressures it cannot fully control, particularly around placements for looked-after children.

And he added that the regulatory dashboard suggests the council may achieve only £5.8 million of the £10.4 million efficiency savings built into the 2025/26 budget.

Mr Momi said the “spend management panel”, which was introduced to scrutinise expenditure, had reviewed almost £28.8 million of proposed spending by December.

“Thirteen applications were rejected,” he said.

More significantly, he said, 56 applications totalling £4.8 million were sent back for further investigation.

“That is making managers go back to the drawing board.”

Separately, the council’s external auditor, KPMG, said it expects to issue a disclaimer audit opinion for the council’s 2024/25 accounts confirmed.

This means the auditors are still unable to give an overall audit opinion on the accounts.

“A disclaimer audit report is still saying that, in effect, we’re not giving an audit opinion. So it’s still a very serious matter,” Richard Walton from KPMG told the committee.

“There are quite a lot of councils that are still getting disclaimer audit reports.

“But the number of areas that are subject to disclaimer has reduced year on year and we’ve made real progress in terms of the amount of audit work that we’ve been able to get done. So that’s a positive place to be.

“However, the headline message of the disclaimer is still not what you would like, but we have made progress during the period.”

The council has applied for Exceptional Financial Support (EFS), a form of government-approved borrowing used by councils under severe financial pressure.

“In a company, if you are in the position you were in, you would have a very large going concern note,” Mr Walton said.

“You would have an emphasis of matter within your financial statement saying there is a material uncertainty in regards to your going concern.

“That is what would happen if you were a corporate entity because you have a very difficult financial stability position.

“That would be the position if it was a ‘normal set of accounts’.”

The council’s finance director, Julie McCabe told members ministers had indicated the EFS decision would come before the end of February.

Mr Walton said the period ahead would be important as further audit work continues.

“My intention is to kind of keep close to you over the coming months,” he said. “As of today, I’m saying that there is a significant weakness in… financial sustainability,” he said. “There is one in… governance.”