Agenda, decisions and minutes

To receive apologies for absence.

Apologies were received from Councillor Richard Glyn Roberts, Yvonne Thomas (Audit Wales) and Tony Bates (Estyn).

To receive any declaration of personal interest.

None to note

To note any items which are urgent business in the opinion of the Chairman so they may be considered.

None to note

To consider the report and offer comments

DECISION:

• To accept the report
• To welcome feedback from the responses received by the Cabinet (23/01/24) to observations presented by the Committee on the Revenue Budget 2023/24 item.

A report was submitted providing an outline of how the Council's departments had responded to the decisions of the Governance and Audit Committee so that Members could be assured that their decisions were being addressed. It was noted that the report gave Members an opportunity to consider the decisions made with the intention of removing the item / decision when the action had been completed.

The members expressed their gratitude for the report.

The Cabinet Member for Finance was invited to provide feedback on the comments that the Committee had submitted to the Cabinet (23 January 2024) on the item Savings Overview: Progress Report on Realising Savings Schemes; an update was also provided on the work that was being covered in reviews regarding overspending in departments (the item Revenue Budget 2023/24). 

RESOLVED:

·         To accept the report

·         To welcome feedback to the responses received from the Cabinet (23/01/24) to observations presented by the Committee on the item Savings Overview: Progress Report on Realising Savings Schemes and Revenue Budget 2023/24.

To consider the report

DECISION:

• To accept and note that the arrangements and processes were in place to ensure that the improvement proposals were being implemented.

Note:

·         Response to Recommendation 5 'Time for Change - Poverty in Wales' - To provide a number of those the Council had engaged with.

·         To adapt the report's format in the future so that the recommendations are consistently included.

The report was submitted by the Corporate Director. The Members were reminded that they had a responsibility to consider external audit reports (national, and those local to Gwynedd), the recommendations contained in them, the implications to governance, risk management or control, and to ensure that improvement proposals that arose from the audits were implemented.

⁠The Council Business Support Service Manager highlighted that a response form was now completed by the managers as part of the response process, with the progress measured against improvement recommendations. He noted that the work of responding to most of the improvement proposals was continuous work and that the Governance Group chaired by the Corporate Director had been addressing the improvement proposals and the progress of the recommendations. He reiterated that those proposals where the conclusion stated 'completed – continuous work' and 'completed – recommendations have been realised' would not receive further attention from the Committee; an update against those with a conclusion of 'preparatory work' and 'ongoing' would be presented to the Committee in six months' time, and work would be done in future to revise the format of the report so that the content of the recommendations was consistent.

The members expressed their thanks for the report. Each audit was referred to in turn.

In response to a question regarding what kind of background auditing was completed, and also whether the Auditors were satisfied that adequate steps had been taken to address the recommendations, it was noted that Cyngor Gwynedd's expectation was for this information to be included on the response form and that a six-monthly update would be presented to the Committee until the recommendations had been addressed fully. It was added that progress was also expected to be discussed internally in performance challenge and support meetings.

The Audit Wales Official added that recommendations were not tracked, but that many of the matters that arose tended to arise in aspects of different work which then created a picture of the response.

In response to the observations, the Member noted that some level of objectivity and assurance was needed, which would add value when self-assessing. It was asked whether Internal Audit could undertake this work. In response to the question, the Head of Finance stated that in respect of Internal Audit work, it would depend on the type of recommendation made and whether it merited being addressed. He added that this did not come under Internal Audit arrangements, but it could be included as part of the Internal Audit Plan. The Corporate Director added that the performance challenge and support meetings were challenging, and in line with the Auditors' comments, if there was something that had not been addressed adequately, this would become evident through a combination of these things.

In response to  ...  view the full minutes text for item 5.

·         To consider the report and provide observations on the contents of the Estyn report on education services in Cyngor Gwynedd

·         To consider any arrangements to scrutinise the Department's arrangements to respond to the report's recommendations in a timely manner. 

DECISION:

• To accept the contents of the Estyn report on education services in Cyngor Gwynedd
• To accept and note the arrangements to scrutinise the Education Department's arrangements to respond to the report's recommendations in a timely manner. 

Submitted – a report by the Head of Education Department which included the Estyn report of Cyngor Gwynedd education services (June 2023) for the Committee's attention. In accordance with the Committee's responsibilities to review and assess the Council's risk management arrangements, internal control, performance management and corporate governance arrangements, they were expected to consider reports by Estyn. He highlighted that Audit Wales had contributed to the conclusion of the inspection and that the report had already been presented to the Education and Economy Scrutiny Committee in November 2023.

The officer referred to the main points that Estyn had highlighted, together with the recommendations that would improve the service. He also referred to the action plan that had been prepared by the Education Department in response to those recommendations (the action plan had not been submitted to Estyn because these were recommendations relating to local matters, not statutory matters).

The members expressed their gratitude for the report.

Observations arising from the ensuing discussion:

·         The report was very positive.

·         Welcomed the fact that there had been a full discussion on the action plan in the Education and Economy Scrutiny Committee with a recommendation to call it back for a further update in nine months' time.

·         The Youth Service had a definite role to play in providing opportunities to young people.

·         Pupils' attendance – the pattern varied from school to school.

·         Welcomed steps to ensure a stronger link between scrutiny and the improvement priorities in the Council Plan.

In response to a question regarding reporting on the progress of the action plan, it was noted that an update on the progress/lack of progress made on the recommendations would be presented to the Education and Economy Scrutiny Committee in September 2024.

In response to a question querying why only some of Estyn's comments had led to a recommendation, it was noted that three matters stood out and had been adopted as part of the Department's priorities this year. He added that the three recommendations were significant while the others were part of everyday work, e.g. responding to schools that were under-performing. ⁠He accepted, as part of the inspection process, that they needed to secure more information behind the less significant comments.

In response to a question regarding a significant decrease in pupils' attendance since Covid-19 and why this decrease was steeper in Gwynedd than in other Authorities in Wales, it was noted that Gwynedd was no longer lower than Wales by now (Gwynedd was the first of the Authorities to be inspected on attendance post-Covid, therefore the timing of the inspection suggested that Gwynedd's performance was lower), but he accepted that attendance was a matter of concern and was a challenge nationally.

In response to a question regarding the 2021 data – funding for special schools, that Gwynedd was within the lowest quartile in Wales and the possible effect that this could have on special schools and education in Gwynedd, it was noted that work was being undertaken to address the matter. The officer  ...  view the full minutes text for item 6.

To scrutinise the information before the Cabinet considers approving the Savings Plan in its meeting on February 20th.  

DECISION:

·         Reasonable steps, under challenging circumstances, had been taken to draw up the Savings Plan

·         That the savings proposed are reasonable and achievable

·         That the risks and implications of the decision are clear

·         ⁠That the report was adequate to enable the Cabinet to make a decision on the Savings Plan

·         To present observations from the discussion on the report to the Cabinet for their consideration when discussing the 2023/24 Savings at its meeting on 20/2/24

Note:

That a clear communication plan is in place.

Submitted – the report of Councillor Dyfrig Siencyn, Council Leader, asking the Committee to consider the propriety of the process of identifying the savings, and submit observations to the Cabinet to consider before they reach a decision at their meeting on 20-02-24. It was reported that it was not the Committee's role to express an opinion on what the size of the savings should be, or the merits of individual proposals being recommended as savings, but rather to ensure that the Cabinet was clear about the facts that were presented to them, so that the decision taken was based on robust information.

Presenting the background to the work, it was noted that the Council had now been achieving savings continually for 15 years, and the challenge of achieving those savings without harming services to the County's residents was getting more difficult. The Leader reported that the Council was now aware of its level of Revenue Support Grant (RSG) from the Welsh Government for 2024/25 (a 2% increase), and that it would be significantly lower than the inflation level and well below what would be required to maintain the current level of services.           

The Chief Executive added that the Council also faced a situation where departments were overspending, mainly due to a continued increase in the demand for their services; it was now impossible for some services such as homelessness, children care services, adults care services and school transport to be able to operate within their current budget. This would lead to overspend this year of around £8m, and since there had been no time to plan in advance for the deficit, they would have to use reserves to cope with the situation. The consequence of providing an increased budget for the departments that cannot cope with their current budget, and the low Revenue Support Grant amount from the Government, was a funding gap this year of £14.9m.        

To identify savings, 135 proposals were presented by the Council's Departments. Every proposal had been assessed by the Chief Executive or by one of the Corporate Directors and had been placed in four categories to assist Members to prioritise savings schemes for 2024/25, with an awareness of what the level of risk would be from implementing any individual proposal. During the workshops that were held with the Members, the proposals were all categorised so as to prioritise them from the most 'acceptable' to the least 'acceptable' proposals. It was reported that the general consensus amongst all the members who had participated in the workshops (which included Cabinet Members, Scrutiny Chairs and Group Leaders) was that approximately £5.2m of the proposals could be implemented over the next two to three years.

The Leader referred to the two parts of the process – part A included schemes that could be progressed to implementation following the Cabinet's approval, whilst part B reflected schemes that were subject to statutory action or further decisions before they could be confirmed. He reiterated that a legal assessment, equality assessment, efficiency  ...  view the full minutes text for item 7.

To scrutinise the information before the Cabinet recommends the 2024/25 budget to the full Council.

DECISION:

-       To accept the report and note the content.

-       To accept the financial propriety of the proposals and the relevant risks.

-       To present observations from the discussion on the report to the Cabinet for their consideration when discussing the 2023/24 Budget at its meeting on 20/2/24.

Submitted – a report by the Cabinet Member for Finance, noting that the Council had received a Government grant increase of 2.0% (the Wales average was 3.1%) for 2024/25, which equated to a £4.1m increase in external funding. He reported that several factors would create additional spending pressures on the Council's services in 2024/25, with the need to increase spending by £22.4m to meet the pressures on the services' budgets.  ⁠As well as addressing the demand on services and the high level of inflation, there would be a need to consider a combination of Council Tax increase and a new programme of savings and cuts. With a recommendation of a 9.54% increase in Council Tax, an extra £2m of savings would be required to set a balanced budget, with projections suggesting that there would be further pressures in aiming to set a balanced budget for 2025/26.

It was reported that the Committee's role was to scrutinise the information and ensure that the Cabinet and Council were clear on the facts presented to them so that the decision was based on robust information.

The Head of Finance Department was invited in his role as statutory finance officer to present the information, express his view and provide details on the robustness of the estimates that were the basis to the budget, along with the potential risks and mitigation steps.

He highlighted that the Cabinet (meeting on 20/02/24) would recommend to the Full Council (07/03/24) to establish a budget of £330,590,040 for 2024/25 to be funded through a Government Grant of £232,092,110 and £98,497,930 of Council Tax income (which was a 9.54% increase on the tax of individual dwellings) and establish a capital programme of £85,224,800 in 2024/25.

He explained that Additional Expenditure Requirements had been considered in the budget, and those areas were highlighted;

·         Salary Inflation of £15.1m – the budget set aside an estimated increase of 5% in the 2024/25 pay agreement for the whole workforce from April 2024, and for teachers from September 2024.

·         Employer's Contribution towards Teachers' Pensions – a cost of £2.36m – the budget had been set on the presumption that the cost would be fully funded by the Government.

·         Other Inflation of £6.8m – a sum that included provision for a broad range of changes dependent on the rate of inflation in specific areas (Independent Residential Care Homes, Non-residential Care, Energy, Fuel, Other price increases).

·         Levies to relevant bodies will increase by £342k.

·         Electricity Inflation Provision of £3m.

·         Demography – a net reduction in pupil numbers and an increase in looked after children.

·         Pressures on Services – recommend approving bids totalling £5.1m for additional permanent resources submitted by Council departments to meet unavoidable pressures on their services. It was noted that the bids submitted had been thoroughly challenged by the Leadership Team, prior to recommending their approval by the Cabinet.

Reference was made to other considerations where the impact of an  ...  view the full minutes text for item 8.

To receive the information and consider any risks arising from the strategy before it is presented to the full Council for adoption.

DECISION:

·         To accept the report and to note the information and relevant risks.

·         To support the Cabinet Member for Finance's intention to submit the Strategy to the Full Council for approval on 7 March 2024.

The Cabinet Member took the opportunity to thank the Members who had attended the meeting with Arlingclose on 07-02-24 and highlighted that Arlingclose had stated that 'Gwynedd were going in the right direction'.

Submitted – a report by the Investment Manager providing an overview of the Council's Capital and treasury management activity, and as noted above, the Members had received a presentation from the financial advisers, Arlingclose, explaining the detail behind the strategy in a comprehensive and easily understood manner.

The Manager referred to the capital activities and highlighted that the Council intended to make capital spending of £90.2 million in 24/25, with the main schemes listed in the report, along with the funding sources. It was noted that the external resources were mainly from the Welsh Government and our own resources were the funds. The remainder of the funding came from loans that would be repaid over a number of years, normally from revenue resources or from income from the sale of assets, which was consistent with the actions of previous years. This meant that the indicator – the Council's Capital Funding Requirement, would be £190.5 million by the end of the 24/25 financial year, namely the level below which the Council's long-term borrowing should remain.

In the context of the Borrowing Strategy, it had been highlighted recently that there had been no long-term borrowing requirement, only a low-cost, short-term requirement over the end of the financial year; this would continue with no long-term borrowing anticipated for Cyngor Gwynedd activities, and that the Council's debt would remain below the Capital Funding Requirement.

The Manager referred to the Liability Benchmark which was now reported to the Committee on a quarterly basis. The Council expected its borrowing to remain above its liability benchmark up until 2027 since the Council had a high level of reserves.

With regard to the Investment Strategy, it was noted that the Council's policy was to prioritise security and liquidity over yield in order to ensure that money was available to pay for the Council's services. She noted that sums were being held continually to ensure ongoing liquidity – it was considered that maintaining liquidity and security was a priority at present in a period of cuts and inflation.

Reference was made to the risk management and governance, together with details of the Council's long-term liabilities, e.g. to cover the deficit in the Pension Fund, and the impact of the funding costs on cash flow where the percentage appeared low and fairly consistent with previous years. It was also confirmed that officers had the relevant knowledge and skills, and that Arlingclose continued to provide a financial advisory service to the Council.

The members expressed their gratitude for the report

RESOLVED:

·         To accept the report and to note the information and relevant risks

·         To support  ...  view the full minutes text for item 9.

To accept the report and comment on the contents

DECISION

·         To accept the report, for information.

·         To support the increase in the FINANCE risk score of 10 (Medium Risk) to 20 (Very High Risk) to reflect the Council's actual financial situation. 

Following a suggestion by the Committee at its meeting on 12 October 2023, a mid-year report was submitted by the Head of Finance Department, providing an update on the Annual Governance Statement action plan that had been approved in the same meeting.

He explained that the statement was a statutory document, and in accordance with the Accounts and Audit (Wales) Regulations and the CIPFA Code of Practice, all Local Authorities must ensure that they had a statement of internal control in place. The Members were reminded that the Governance Risk Register as part of the Council's Corporate Risk Register had been developed in line with the seven core principles for Good Governance. Risks had been identified in 24 different areas of governance, identifying the controls that the Council had in place to mitigate these risks.

It was reported in October that there were four types of risks and that each risk had departmental ownership; the Governance Arrangements Assessment Group had concluded that there were 0 areas of very high risk, 4 high risk areas, 11 areas of medium risk and 9 low risk areas. However, since approving the Governance Statement in October 2023, it was reported that the Finance Risk had changed, with the score having increased from 10 (Medium risk) to 20 (Very High risk). It was explained that although the Council had effective arrangements for financial planning and management, the result of the settlement, inflation, the need to find savings and the increasing demand on services was challenging, and the financial deficit was increasing every year. Although there were sound financial arrangements in place, a decision had been made to increase the risk rating to accurately reflect the situation - for the first time in 2023/24 it was projected that all the Council's departments would overspend.

The members expressed their gratitude for the report. It was noted that the financial situation posed the greatest risk to the Council, therefore it was sensible to increase the risk rating.

In response to a question as to whether the budget was suitable in the first place and was there a way for departments to forward-plan by using data / profiling, for example, a reduction in primary school numbers would impact on secondary schools – the future impact could be plotted, the officer noted that in situations of overspending within the resources that were available, departments that continued to overspend would be required to report to the Members with an explanation and actions they will take.

RESOLVED:

·         To accept the report, for information

·         To support the increase in the FINANCE risk score from 10 (Medium Risk) to 20 (Very High Risk) to reflect the Council's actual financial position