'Urgent action' needed on £3.3m black hole in Moray's early learning and childcare budget
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Auditors have said urgent action is needed to get to the bottom of a £3.3million shortfall in Moray Council’s early learning and childcare budget.
Moray councillors asked internal auditors to look into the deficit when it came to light earlier this year.
The £3.3million black hole has been caused by a higher than anticipated demand from local families for free nursery places.
This followed the expansion of the flagship Scottish Government policy so three and four-year-olds, as well as some two-year-olds, can get up to 1140 hours of care a year.
The upshot has been a need for more staff and extra lunches.
It has also meant increased costs for additional support needs, plus higher hourly payments for private childcare providers.
The total adds up to £1.9 million.
At the same time, changes to the Scottish Government funding formula for its policy has also seen a £1.4 million drop in the grant for Moray.
In a report going before councillors next week, the auditors call for an urgent budget review of the service so inconsistencies can be picked up quickly.
Another recommendation is financial management training for the early learning and childcare manager and the chief education officer.
They also recommend a review of catering costs, as well as looking at the number of children registered for nursery placements to calculate demand and assess costs.
In addition, a review of staffing and recruitment at council-run nurseries should be carried out, with the findings of an ongoing review into additional support needs used to work out the cost of meeting children’s needs.
Benchmarking the costs of delivering the service against other local authorities should be done to flag up any variances.
In his report Dafydd Lewis, the council's audit and risk manager, called for a 'zero-based budgeting exercise' to be carried out as a "matter of urgency", with officers starting from scratch to verify and justify all spending needed to provide an expanded early learning and childcare service.
He said: "Determination of demand for places should be undertaken based on predicted numbers of children and the number of hours requested.
"With increasing staffing costs, partnership provider payments, additional support needs and meal costs currently indicate a £1.9 million shortfall for 2022-23 separate from any Scottish Government funding reduction.
"These cost areas need to be fully analysed, reviewed, and forecast based on reliable demand indicators.
"However, the Scottish Government has recently indicated a reduction in the grant award.
"If council funding remains the same, this will result in a projected overspend of £3.3 million in 2022-23."
The report will go before members of the audit and scrutiny committee on Wednesday, March 30.
Related article: 'Jaw-dropping' £1.2million overspend on education project in Moray
