Agenda item

To submit the report of the Head of Finance.

Submitted – the report of the Cabinet Member for Finance on the Council Budget for 2019/20, 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 19 February.

 

The Cabinet Member for Finance set out the background and context of the report. He explained that all members had an input to this in workshops and that a public consultation had taken place on the Council Tax together with the savings plans. He noted that detailed discussions had led to the recommended budget.

 

The Head of Finance Department gave further details on the content of the report, and noted that there was a financial gap of £13 million, which included inflation costs of £7.5 million and the inevitable demand for services of £4 million. He noted that the grant increase from the Welsh Government to local authorities was insufficient to meet these costs. He made reference to Appendix 2 of the report which detailed the unavoidable financial bids to respond to the pressures on services, total value of £2.5 million. He elaborated that the financial bids had been discussed in workshops in December where members consented that the expenditure was inevitable. He highlighted that the 2019/20 expenditure requirements, before savings, was £253.2 million.

 

He noted that £2.48 million of savings had already been approved, that £2.45 million of proposed savings, £0.5 million of further efficiency savings, which came to a total of £5.4 million savings to reduce the gap. 

 

He drew attention to what was recommended to the Cabinet for approval, namely:

 

"(a)  To recommend to the Council (at its meeting on 7 March 2019) that:  

 

1.       A budget of £247,797,900 should be established for 2019/20, funded by a £176,551,790 Government Grant and £71,246,110 Council Tax income, with an increase of 5.5%.

 

2.       £18,316,130 should be added to the capital programme for spending in 2019/20 in order to establish a capital programme with a value of £34,991,250 by 2019/20 to be funded from the sources noted in Appendix 4 of the report.

 

(b)   To approve proceeding to implement the saving schemes list in Appendix 3, in order to establish the budget recommended to the full Council.

 

(c)  To note the Medium Term Financial Strategy and the projections in Appendix 8, and adopt the plan in section 18-20."

 

He noted that what was being recommended was subject to the Cabinet's decision to approve proceeding to implement the savings schemes listed in Appendix 3, or not to implement some schemes, as suggested in Appendix 12. He explained that if the decision was not to implement the five schemes in Appendix 12, the figures would change to:

·         establish a budget of £247,869,620 for 2019/20,

·         to be funded via a Government Grant of £176,551,790,

·         and £71,317,830 Council Tax income with an increase of 5.6%.

 

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 robustness of the risk estimations. 

 

He highlighted that the Medium Term Financial Strategy had been drafted, notwithstanding considerable uncertainty about the future, mainly due to the Westminster Government 2019 Expenditure Review. He noted that having considered the projections that it was likely that more future savings would be required, therefore it would be necessary to bring pressure to bear on the Welsh Government to fund local authorities appropriately.

 

Members were given an opportunity to ask questions and make observations. During the discussion, the following main points were highlighted:-

·         Concern regarding the impact of the annual Council Tax increase on residents. Would it be possible to raise awareness of the Council Tax Reduction Scheme? Was assistance available for residents to claim a reduction?

·         What was the level of risk in terms of specific grants?

·         Concern regarding the consequences of financial hardship and the impact on residents, bearing in mind that Gwynedd was one of the poorest areas in Western Europe. It would be difficult to keep things on an even keel if financial austerity did not end.

·         The increase in Council Tax was consistently higher in Gwynedd over the last six years and Anglesey and Conwy councils proposed to increase their Council Tax for 2019/20 by 9% to keep up with the increase in Gwynedd. The number who had responded to the public consultation was disappointing. In consideration of the low number of responses how can a decision be made?

·         Council Tax cannot continue to be increased with residents having to make difficult choices on how to spend their money. 

·         That members had been given ample opportunities to contribute to the process and they were grateful for the open discussions. The financial position would be so much worse without the work of the Finance Department over the years, and the Welsh Local Government Association should convey a strong message to the Welsh Government in terms of the need to fund local authorities appropriately. In order to have a balanced budget it was necessary to choose between increasing Council Tax and cutting services.

·         The report referred to £0.5 million of further efficiency savings, would it be possible to note more details and time schedule for achieving these in the report prior to its submission to Full Council? Encourage the Cabinet to listen to the views of members in the workshop and to not act on the five schemes noted in Appendix 12 and consequently increase Council Tax by 5.6%.

 

A response was given to the questions and observations as follows:-

·         That the Council at its meeting on 6 December 2018 had adopted the 2019/20 Council Tax Reduction Scheme. In accordance with Ffordd Gwynedd, staff in the Tax Unit assisted residents with paying or clearing a debt and when appropriate supported them to claim reductions.

·         The majority of grants were Welsh Government grants, there was a risk due to a higher level of provision in the budget and if the grant was terminated. Grants received from the European Union were for specific projects rather than to fund services. Should a grant be terminated, the Council would have to stop the specific provision or face the cost. The Council had to live with the risk.

·         Agree in terms of financial hardship, one of the Cabinet's main considerations when assessing the savings schemes was their impact on the people of Gwynedd. The only option for the Council was to implement the savings schemes and increase Council Tax in order to address the financial gap.

·         That it was a fair point to note the number of responses to the public consultation. The people of Gwynedd were given an opportunity to voice their opinion on two occasions, with a consultation on what was important for the people of Gwynedd as well as the consultation on the savings schemes. In a representative democracy system Council members represented their electors. The majority of members in a workshop noted that some of the savings schemes should be re-visited and these specific schemes would be considered by the Cabinet prior to determining a recommendation to the Full Council.

·         Whilst Council Tax in Gwynedd Council was the sixth highest in Wales, this stemmed mainly from the grant allocation split on reorganisation in 1996 as it did not reflect the expenditure split at the time. Evidence indicates that the increase in Council Tax in Gwynedd Council has been less than in 14 other Councils in Wales over the period and shows that it was not the decisions of Gwynedd Council that meant it was sixth highest, but what had occurred at reorganisation in 1996.

·         That it was legislatively necessary for the Council to have a balanced budget, the only options available to the Council to fund the gap was to implement savings schemes and increase Council Tax. Welsh Government needed to look at how local government is funded as the position of councils was getting more difficult. That what was recommended in terms of the budget was fairly acceptable for 2019/20, however, the 2021/22 financial position was dependent on the Welsh Government.

·         In terms of further efficiency savings, that there were ideas on how to realise further efficiency savings and it was trusted that it was possible to achieve, however, no details could be given as it was a sensitive situation in terms of jobs.

·         It was confirmed that the five savings schemes noted in Appendix 12 would receive consideration in the Cabinet's discussions on 19 February. 

 

An appreciation of the work of the officers in the Finance Department, the Cabinet Member for Finance and the Chief Executive was noted.

 

RESOLVED to note and accept the report and the relevant risks.