Agenda item

To scrutinise the information before the Cabinet recommends the 2021/22 budget to the full Council

To accept the information and approve the budget which the Cabinet intends to recommend (16/02/21) to the Full Council

A report was submitted by the Cabinet Member for Finance, noting that the Council this year had received a grant increase that met the rate of inflation and that was a fairer settlement than those seen in recent years. Attention was drawn to the decision sought by the Cabinet at its meeting (16/02/21), for the need for the Committee to scrutinise the information before the Cabinet recommended it to the Full Council in March 2021. It was reiterated that the decisions sought would be ones that would allow the funding of unavoidable increases in the costs of some core services, as well as increasing the Tax by 3.7%. It was emphasised that increasing the tax was necessary in order to protect essential services for the people of Gwynedd, as it would be impractical to implement additional savings schemes this year. It was reported that the majority of the Council's members had attended a series of consultation workshops.

It was noted that by 2021/22, expenditure would need to increase by £10.6m in order to stand still, including £3.6m to meet pressures on the services’ budgets. In order to address the financial deficit, it was explained that £725k could be harvested in 2021/22 from the savings schemes already planned, but Council Tax would have to be increased by 3.7%.

It was added that the Welsh Government’s official figures showed that the Council would receive a grant increase of £6.4m by next year, which was an increase of 3.4%, and that Welsh Government would announce the final grant settlement on 2 March 2021, along with Welsh Government's final budget. The revenue expenditure was highlighted, drawing attention that staff salary inflation was £3.5m, along with the provision of a pay increase for staff on salaries of £24,000 or lower, and a pay increase of 3.1% for Gwynedd school teachers for the period April - August 2021.

It was noted that other inflation was £2.6m, which included provision for the effect of the ‘living wage’, along with an increase in inflation on fuel and energy budgets and an increase in re-tendering prices. It was highlighted that bids had been received from Council departments to the value of £3.6m for additional permanent resources, in order to meet with the inevitable pressures on services.

Attention was drawn to the savings scheme, explaining that a net total of £725k of savings would be used to reduce the budget's funding deficit for 2020/21. This means that there was a residual deficit of £77m, and it was recommended that this deficit was addressed through Council Tax.  Council Tax would need to be increased by 3.7% in order to generate a sufficient income, and set a net budget of £271,751,360. It was reported that the tax levied by the Police Authority (increase of 5.14% in 2021/22) and the community councils (various %) will of course be in addition to this. It was expressed that should Council members wish to see a smaller reduction than 3.7% in the Tax level, then less would have to be spent on services. Members were reminded of the option that had been discussed at the member workshops, where it was expressed not to fund some of the permanent 'Category 2' revenue bibs (as listed in the report). It was accepted that the choice between maintaining services and taxation was always a difficult one, but in comparison, for 2021/22, the average tax increase of the other local authorities across Wales is likely to be around 4.1%, and this proposal to increase the tax by 3.7% is a similar level to the majority of authorities in north Wales.

The Head of the Finance Department reiterated his gratitude to the Members who attended the workshops. Attention was drawn to appendix 10 of the report which detailed the robustness of the estimates that were the basis of the budget, along with the potential risks and mitigation steps. The Head of Finance was of the opinion that the budget was robust, sufficient and achievable.

In response to a question in the context of the risk of low interest and a statement by Arlingclose that there will not be a need to implement 'negative interest', despite a recent suggestion by banks that this will be in place by July, the Head of Finance Department noted that further discussions were to be held with Arlingclose and in accordance with the Council's Investment Strategy, the budget did not depend on too high returns, although that every effort was being made to seek better returns on equity and property funds, which operated better.

In response to a comment regarding category 2 (namely bids subject to a 3.7% increase in income tax), it was confirmed that this was new spending and not a cut to the service. It was reiterated that appendix 2a outlined the bids required by the departments to deliver the service level, but that category 2 bids were unavoidable, despite the need for them to continue with the current service level. It was accepted that the situation was a difficult one but it was suggested by not offering more to the service, it would lead to an element of cuts in the future.

          RESOLVED

·         To accept the information and approve the budget which the Cabinet intends to recommend (16/02/21) to the Full Council