To submit the report of the Head of Finance.
Minutes:
Submitted – the
report of the Cabinet Member for Finance on the Council Budget for 2018/19,
providing an opportunity for the Audit and Governance Committee to scrutinise
the information in terms of its financial propriety prior to the report being
submitted to the Cabinet on 13 February.
The Cabinet
Member for Finance set out the background and context of the report. He
referred to the four budget seminars held during January/February to obtain
members' input, noting that the discussions had been detailed, sensible and
constructive.
The Head of Finance Department
elaborated on the content of the report and noted that the Council would
receive a reduction of approximately £2m from the Welsh Government in its 2019/20
settlement, and was also facing higher employment costs of approximately £6m as
a result of a national agreement by the 2019/20 financial year. There would
also be general inflation costs and increasing demands in care services. These
factors indicated that 2019/20 was going to be challenging. He noted that there
was a genuine need for the Welsh Local Government Association to press on Welsh
Government to improve the grant settlement and reduce the financial pressure on
local government.
He noted that in line with the midterm
three year financial plan, there was a need to ensure that the Council's
arrangements were flexible enough to be able to realise up to £20m savings over three years from 2018/19 -
2020/21. It was recommended that the Cabinet should continue with the current
savings strategy, and the Cabinet should decide on different targets for the
Council departments, the heads of department submitting possible savings to
meet those targets and the scrutiny committees challenging the schemes on
behalf of the people of Gwynedd, before holding a public consultation on
options to be implemented every year.
Attention was drawn to Appendix 1 of
the report submitted to the Cabinet, which detailed the unavoidable bids to
respond to the pressures on services. He referred to the equality impact
assessment, the well-being assessment in terms of the requirements of the
Well-being of Future Generations (Wales) Act 2015 along with an assessment of
the risk estimations.
Members were given an opportunity to ask questions and make
observations. During the discussion, the following main points were
highlighted:-
·
Would central government change its stance as a
result of the financial problems already witnessed in some local councils?
·
Welsh Government provided too much funding to the
Health Service when compared with local councils. The situation was not
sustainable;
·
The financial position was beyond the Council's
control with an agenda to reorganise local government to force councils to
comply;
·
By how much would the Council Tax need to be
increased to ‘stand still’ over the next two years?
·
In terms of risks, accept that interest rates were
likely to increase with inflation, however, when the Bank of England increases
interest rates, this was often not reflected immediately by the banks, it was
likely that there would be a gap. What was meant by budgeting additional costs
for the Council as a result of an increase in inflation by using reserve funds
as required?
·
The impact of the United Kingdom leaving the European
Union was not yet known and it would inevitably have an impact on the Council's
financial position.
The questions and observations were responded to as follows:-
·
It was hoped to persuade Welsh Government in relation
to an increase in the grant settlement for the 2019/20 financial year. The
flexibility within the Welsh Government budget meant that the Government could
be more generous;
·
Without making savings in the next two years the
Council Tax would have to be increased by approximately 25% in the next two
years to find £14m;
·
Reference was made specifically to the reserve
budget in terms of budgeting the additional cost to the Council as a result of
the rise in inflation. Of the £4.7 million for pay inflation, approximately
£4.4 million was to address the inflation, but a reserve of £350k had also been
included for teachers, as their national pay agreement would be implemented
from September. He noted that should the schools ask for additional funding to
accommodate the pay inflation for half a year, they would only consider
providing additional funding if individual school balances were less than 5%.
It was agreed that this was an example of managing risk and using a sensible
approach.
It was noted that the work of the officers of the Finance Department and
the Cabinet Member for Finance was appreciated.
RESOLVED to note and
accept the report and the relevant risks, and to recommend that the Cabinet
should:
(i) recommend that the Council (at its meeting on 1 March 2018):
1. Establish a budget of
£242,862,930 for 2018/19, to be funded by £175,127,330 of Government Grant and
£67,735,600 Council Tax income, with an increase of 4.8%.
2. Establish a capital
programme of £8.389m in 2018/19 to be funded by sources noted in clause 9.4 of
the report.
(ii) note the Medium Term
Financial Plan in Section B, and adopt the strategy
which is in part 32-34 of the Plan.
Supporting documents: