Agenda item

To submit the report of the Senior Finance Manager.

The Cabinet Member noted that the report had been submitted to the Cabinet on 21 May 2019. He thanked Councillor Peredur Jenkins, the former Cabinet Member, for his work and commitment to secure the Council's financial situation at a difficult time.  He emphasised that the Cabinet Members were aware of their responsibilities to keep to the budget. He noted that the overspending on Children's Services and in the school transport field could not continue. 

 

The report was submitted by the Senior Finance Manager, she set the context and elaborated on the content of the report. She noted that there had been effective financial control in general, in light of the requirements to realise savings.

 

Attention was drawn to the Cabinet's decision:

 

1.1   To note the final financial position of the Council’s departments for 2018/19.

 

1.2   To approve the amounts to be carried forward (the “Revised Over/ (Under) Spend” column of the summary in Appendix 1), namely -

 

DEPARTMENT	£’000
Adults, Health and Well-being	15
Children and Families	100
Education	100
Economy and Community	28
Highways and Municipal	100
Environment	(100)
Gwynedd Consultancy	(59)
Corporate Management Team and Legal	(76)
Finance	(59)
Corporate Support	(61)

1.3   To approve the following recommendations and financial transfers (as outlined in Appendix 2) -

·         The Children and Families Department to receive a one-off partial financial assistance of £1,544k to restrict the level of overspend that will be carried over by the department, to support them to move on to face the challenges of 2019/20.

·         The Education Department to receive one-off partial financial assistance of £16k to limit the overspend that will be carried forward by the department to £100k.

·         Compensate the Economy and Community Department £157k, the sum of the overspend due to the slippage of establishing ‘Cwmni Byw’n Iach’ to run the leisure centres, which limits the overspend that will be carried forward by the department to £28k.

·         The Highways and Municipal Department to receive a one-off partial financial assistance of £518k, which limits the overspend that will be carried forward by the Department to £100k, to support them to face the challenges of 2019/20.

·         In accordance with the financial regulations it is recommended that the usual practice is adhered to in order to allow the Environment Department to keep (£100k) of their underspend, and to move (£392k) which is the sum above (£100k), to be used to support the departments that have overspent in 2018/19.

·         On Corporate budgets, transfer:

                   - (£19k) related to the Council Tax Premium to a specific reserve to be considered for the Housing Strategy.

- (£551k) relating to capital costs to a capital programme fund.

- (£738k) on maintenance to a maintenance reserve.

·         Use (£1,843k) of the net underspend on Corporate budgets to assist the departments that have overspent in 2018/19.

·         The remainder of the Corporate underspend (£173k) to the Council’s general balances.

 

1.4   To approve the virements from the specific reserves and provisions as outlined in Appendix 3 following a review of reserves and provisions, namely:

·                     Harvest (£3.931m) from reserves and (£69k) from provisions.

·                     Assign £3m to the transformation fund for the Council Plan.

·                     Transfer £1m to the Council’s General Balances.

·                     Assign for a one-year period, £262k from the Supporting the Financial Strategy Reserve to bridge the funding source relating to liabilities of the Pension Fund."

 

She noted that the Finance Department had produced the 2018/19 statutory financial statements before 31 May and that the accounts were being audited by the External Auditors.  She confirmed that the accounts would be submitted to the Committee on 29 July, following the audit. She elaborated that the whole process of closing the accounts, producing the statement and the external audit would be completed by the end of July, rather than at the end of September as in previous years.

 

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

·         That the overspend of the Children and Supporting Families Department was equivalent to approximately 15% of the Department's budget. The Department was being praised for its work and other departments could also do praiseworthy work if they also overspent. A similar spending situation was anticipated for the Council in 2019/20, although the overspend was being addressed. In relation to Storiel's financial situation, had the situation worsened since the Council had taken control of the café after the private provider ceased management?

·         Was the budget realistic, considering that some fields overspent annually?

·         That there was a need to be firm with the services that were overspending, although the overspending derived from sensitive matters, the situation was unfair on those who provided within budget. Overspending needed to be stopped, if possible. 

·         That circumstances outside the Council's control affected the financial performance of Departments with the situation being a reflection on the community. That it was a difficult situation that would get worse as Welsh Government and the UK Government did not give Local Government more money.

·         That it was important to consider whether the budget was suitable, and assess the Council's position in comparison with other councils in relation to the overspend.

·         That there was a need to look at the reasons for the overspend and consider whether the overspend was necessary and responded to statutory requirements.

·         In the context of out-of-county placements, was the Children and Supporting Families Department considering providing a facility in Gwynedd?

 

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

·         That the shortcoming in the financial situation of Storiel derived after the private provider ceased management of the Café and the Council internalising its management. The shortcoming was as a result of additional staffing costs. 

·         That the financial situation of the Children and Supporting Families Department was not unique to Gwynedd and that the situation was being addressed and the WLGA were placing pressure on the UK Government to fund social care appropriately. The UK Government had not commenced its comprehensive spending review due to the focus on Brexit, and as a result it is expected to be challenging to fund services by 2020/21. The Department's budget had been set for 2019/20 by considering trends, with a substantial increase in child placements, and an increase in severe needs. Attention was given to the financial situation of the Children and Supporting Families Department at the Cabinet meeting on 21 May. It was anticipated that the Department would overspend in 2019/20, and a reserve budget had been provided within the Council's budget for any situations that could arise.

·         It was anticipated that the departments that underspent would continue to underspend in 2019/20 with other departments overspending in response to emergencies. It was difficult to have a balanced budget due to the spending requirements.

·         That the North Wales Councils' Directors of Social Services had a project in the pipeline in terms of placements; however, not much progress had been made.

·         That the budget reflected the demand for services at a point in time, with the reserve budget being available to use during the 2019/20 financial year.

 

RESOLVED to accept the report and note the situation and relevant risks in the context of the budgets of the Council and its departments.