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Agenda item

To submit the report of the Head of Finance.

Minutes:

The report was submitted by the Senior Finance Manager, she set the context and elaborated on the content of the report that had been submitted to Cabinet on 22 January 2019. She highlighted that since 2015 the Council had faced realising savings of approximately £27 million, and this was a challenge to achieve. She noted that the end of November review of the budget showed a mixed picture with acceptable financial control in a number of Council departments. She explained that significant overspend was anticipated by the Education Department, Children and Families Department together with the Highways and Municipal Department and there were specific actions to ensure control of their budgets by 31 March 2019.

 

Attention was drawn to the Cabinet's decision:

 

"To accept the report on the end of November 2018 review of the Revenue Budget and note the latest financial position in respect of the budgets of every department/service.

·           To ask the Cabinet Member for Adults, Health and Well-being, together with the Head of Department, to get to the root of the Provider service overspend and take steps to reduce the overspend, and report to the Cabinet on the response plan.

·           Due to an increase in the overspend on a number of budget headings by the Children and Families Department since the last review, to consider the situation when receiving the Cabinet Member’s performance report (29/01/19 Cabinet) with a view to attempt to reduce the overspend by the end of the financial year.

·           Because of the level of overspend on pupils’ transport by the Education Department, to consider the situation when receiving the Cabinet Member’s report (29/01/19 Cabinet).

·           To allow the Environment Department to allocate (£60k) of the department's underspend to conduct a review by commissioning research by the University and employing extra officers to collect evidence in the Public Transport field following a number of issues over recent years.

·           Harvest (£2,984k) of the net underspend on Corporate budgets,

Ø  with (£700k) associated with the Council Tax premium to be allocated to a specific fund to be considered for the Housing Strategy.

Ø  (£435k) relating to capital costs to be transferred to the capital programme’s financing fund.

Ø  with the remainder namely (£1,849k) to be transferred to the Supporting the Financial Strategy Fund to assist with inevitable one-off pressures on the Council's budgets."

 

During the ensuing discussion, officers and the Finance Cabinet Member responded to members' observations and enquiries as follows:

·        That the overspend on pupil transport had been discussed at the Cabinet meeting on 29 January 2019, in the context of the Education Cabinet Member's performance report. A solution to reduce the overspend would take time. It was intended to change the method of providing transport in order to get a cheaper provision, because it was a long-term solution additional funding was placed in the 2018-19 budget to address the overspend.  The additional funding did not address all the overspend as a solution was expected from the Education Department and the Environment Department.

·        In terms of the income of parks and beaches in the Economy and Community Department, that the report reflected the general departmental income position. Generally, income generated by a department was used for other services within the specific department.

·        There was a tendency to overspend in the Homeless Service as the homeless numbers were increasing. The situation was not unique to Gwynedd and the increase in the number of homeless people was a national issue. 

·        That the Council communicated with the Welsh Government in the context of home owners registering their houses as a business in order not to pay a Council Tax Premium. Increasing pressure was being placed on the Welsh Government to change these arrangements, however, not overly confident that the arrangements would change. The Council Leader was part of the discussions on this matter.

·        There was pressure on the Council to provide services with less money, discussions would take place in the context of home owners registering their houses as a business and the financial impact on councils at the Welsh Local Government Association Rural Forum meetings. The Head of Finance was gathering information on the financial cost of registering houses as a business on councils in the context of Council Tax income loss.  It was hoped that the other eight councils, who were members of the Forum, would agree that arrangements needed to be changed.

·        In terms of the financial impact of houses being registered as a business on the Council, that a reclassification in the context of the tax base would mean that the Council would gain financially in terms of the Welsh Government grant but would lose out financially when a house is registered as a business and is back-dated. The Valuation Office did not have sufficient resources to challenge the applications appropriately.  A specific sum could not be stated in terms of the loss to the Council as a result of houses being registered as a business, but it was likely that there would be approximately £2 million of additional income to the Council as part of the Council Tax Premium Scheme.

·        In favour of the proposal when the Council Tax Premium Scheme was established to charge a premium tax on holiday homes to generate additional income. A portion of the income deriving from the Council Tax Premium Scheme had been earmarked for the Housing Strategy. That there was increasing political pressure to revise the system of registering houses as businesses, with Members of Parliament and Assembly Members part of the campaign. The Council was lobbying the Welsh Government in the context of the need to change the system by presenting a requirement to receive permission via the planning system to change a house into a business.

·        Regarding the Adults, Health and Well-being Department's budget, in the context of the budget's size the variations under the headings were not substantial. Departments have the right to move underspend from one heading to another, however, there was a tendency when there was a substantial overspend not to move money as this was a better measure of the actual situation. There was some movement in terms of providing services, with the underspend and overspend under the headings reflecting the demand. That the work done as part of the Alltwen Scheme was being rolled-out to other areas together with significant funding (£800k) for the staffing costs of Dementia units that was a financial bid as part of the budget recommended for the 2019/20 financial year and a response to the increasing demand.

·        Pleased to receive information from a member in the context of the arrangements of a council in England that was charging for care costs on the councils where the individual had moved. If there was an opportunity then the Council would look into this matter.

·        That research by Bangor University, commissioned by the Environment Department, was part of the review of the Public Transport sector. This did not include the transport of pupils in the Education Department, there was specific work to be completed in this field by the Education Department and the Environment Department.

·        That the overspend in the 2018/19 financial year was more evident as more departments had overspent. There was expenditure on child protection and vulnerable adults areas and inevitable expenditure on the transport of additional learning needs pupils in the Education Department. Overspend on children's services was not unique to Gwynedd as there was overspend in this area in Britain. Services are provided in accordance with Ffordd Gwynedd by placing the people of Gwynedd at the centre of any actions.

 

RESOLVED to note the situation and the relevant risks in the context of the Council’s budgets and those of its departments.

Supporting documents: