Agenda item

To submit the budget which the Cabinet intends to recommend to the Council for scrutiny by the Audit and Governance Committee

·         To accept the report and to note the content

·         To accept the financial propriety of the proposals and the relevant risks

·         To present observations from the discussion on the options for the Cabinet to consider when discussing the 2022/23 Budget at its meeting on 15/2/22

A report was presented by the Cabinet Member for finance, noting that the Council had received a grant increase of 8.8%, equivalent to an £18.1m increase in external funding (9.4% was the average for Wales) for 2022/23, a significant improvement on previous years.  Despite this year's reasonable settlement, it was reported that there were a number of factors that would create additional spending pressures on Council services in 2022/23.  In addition to the highest inflation rates for a number of years, there was an opportunity to deal with wider expenditure pressures, including addressing continued costs stemming from the Covid-19 crisis, and cancelling or delaying savings schemes that were not practicable to realise in 2022/23.

At its meeting on 15/02/22, the Cabinet would be requested to recommend to the Full Council on 3/03/22 to establish a budget of £295.2m for 2022/23, to be funded by £213.2 of Government Grant, and £82m of Council Tax income (with an increase of 2.95%) and to establish a capital programme of £59m in 2022/23.

It was explained that Additional Expenditure Requirements had been considered in the budget (totalling £20.2m), and attention was drawn to four headings of increases.

·         Salary Inflation of £8.5m – the budget set aside an estimated increase of 4% in the 2022/23 pay agreement for the whole workforce and an increase of 1.25% in National Insurance contributions that would become effective in April 2022.

·         Other Inflation of £4m - A sum that included provision for the impact of the 'living wage' on costs and fees payable to private suppliers together with inflationary increases on fuel and energy budgets and prices following re-tendering.

·         Pressure on Services of £6.7m - it was recommended that bids worth £6.7m for additional permanent resources submitted by Council departments to meet inevitable pressures on their services were approved.  In addition to the permanent bids, it was also recommended that 'one-off' bids worth £6.2m should be funded from the Transformation Fund. It was noted that the submitted bids had been thoroughly challenged by the Leadership Team, prior to their recommendation by the Cabinet.

·         Covid-19 pressures of £1.4m.  Since April 2020, the Welsh Government had compensated local authorities for the additional costs and loss of income due to the pandemic from the Hardship Fund (the total assistance from the Government in 2020/21 was approximately £20m, and approximately £14.4m during 2021/22). However, the Welsh Government Finance Minister had stated unequivocally that this support would cease on 31 March 2022 and local authorities would be expected to fund any additional costs or loss of income due to the pandemic thereafter. It was noted, although £1.4m had been provided to establish a corporate fund in order to cope with the situation, the Head of Finance did not anticipate that it would be sufficient in itself to deal with the pressures, although he highlighted that other funds were available to assist.  It was added that a Covid Recovery Fund had been established when the 2020/21 accounts were closed, and the Financial Strategy Reserve could be used if necessary.

In the context of the savings schemes, it was noted that Gwynedd Council had realised £32.8m of savings schemes since 2015/16.  As a result of the flexibility that this year's settlement had offered, it was noted that savings worth £1.8m, originally planned to be realised in 2022/23, would no longer contribute to closing the budgetary gap in 2022/23.  Consequently, savings schemes worth £595,000 remained in the programme to be taken out of the 2022/23 budget rather than £2.4m.

The Head of the Finance Department was invited in his role as statutory finance officer to express his view on the robustness of the estimates that were the basis to the budget, along with the potential risks and mitigation steps. The Head of Finance was of the view that the budget was balanced and placed the Council in a robust situation, and despite the increase in Council Tax (which was lower than the all-Wales average) it would decrease pressures on the departments to make savings and would provide a better foundation to continue to provide services to the residents of Gwynedd.

Thanks were expressed for the report

In response to a question regarding demography and the statement that there was a net reduction in the numbers of primary pupils, and whether this was anticipated to be a long-term pattern, with fewer children and fewer families and fewer workers in the future? It was noted that although the situation fluctuated, there was a trend and concern that this reduction was a long-term reduction. The Head of the Finance Department noted that he would share the relevant data with the Councillor.

RESOLVED:

·         To accept the report and to note the content

·         To accept the financial propriety of the proposals and the relevant risks

·         To present observations from the discussion on the options for the Cabinet to consider when discussing the 2022/23 Budget at its meeting on 15/2/22