Agenda item

 

To receive the information, consider the risks arising from the forecast expenditure against the budget, and scrutinise the decisions to be presented to Cabinet regarding budget management by the Council and its departments.

DECISION:

 

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

2.    To agree with the Cabinet's recommendation (24-01-23) to approve:

·         The transfer of £3.188 million of underspend on Corporate budgets to the Council's Financial Strategy Reserve.

·         When timely, at the end of the financial year, use

a)    School Balances to fund the additional costs of inflation on the salaries of teachers, assistants, administrative staff and electricity which is above the budget level in the schools

b)    the Council Tax Premium Fund to fund the additional pressure in the Homelessness field

c)    the post-Covid recovery arrangements fund established to fund the associated financial challenges that face the Council.

 

a)    Submitted – the report of the Cabinet Member for Finance requesting that the committee scrutinises the position and relevant risks in respect of the Council's budgets and those of its departments, and considers the Cabinet's decisions of 24-01-23.

 

The Cabinet Member set out the context for the report, noting the following:-

·         Although the impact of Covid was not as significant in 2022/23 compared with the previous two years, added costs, income losses and a slippage on savings schemes remained in some fields.

·         Current projections suggested that the Departments of Adults, Health and Well-being, Children and Families, Education, Economy and Community, Highways and Municipal and Housing and Property would overspend by the end of the year.

·         A delay in realising savings was a factor

 

He added that the Finance officers merely reported on the situation, and that the Departments themselves were responsible for their budgets.

 

b)      The Assistant Head of Finance highlighted the following:

·         The Adults, Health and Well-being Department would have an overspend of over £2.2 million this year, this being a combination of factors, including a failure to realise savings worth £930k.

·         The Education Department would have an overspend of £1.6m as a result of the additional cost of inflation on the salaries of teachers, assistants and administrative staff (which was £1,031k above the budget this year); and higher electricity rates. She added that given that the schools had already benefited from almost a million in energy savings stemming from Covid and the associated lockdowns, it would be appropriate to use school balances to fund the additional pressures this year.

·         Byw'n Iach – the repercussions of Covid continued in 2022/23 and impaired the company's ability to generate income. As a result, it was confirmed that the Council had approved necessary financial support to sustain services by extending the assurance period given to the Company until the end of 2022/23, which was around £839k this year. It was noted that higher electricity costs were responsible for the remainder of the Byw’n Iach overspend.

·         Highways and Municipal Department – the yearly trend of overspend in the municipal field continued, with the most prominent problems in the waste collection and recycling field. The department was also facing difficulty realising savings valued at £608k.

·         Housing and Property – the implications of legislative changes relating to Homelessness had led to significant financial pressures. Although an allocation of £1.5m from the Council's post-Covid arrangements fund was provided to assist the situation, a net overspend of £2.7 million was anticipated this year.

·         Corporate – prudent projections when setting the 2022/23 budget and a change to legislation had contributed to additional tax outputs, with houses transferring from non-domestic rates to council tax, together with a reduction in the numbers claiming the council tax discount compared with previous years. The recent increase in interest rates meant that the interest receipt projection was £1.3 million more favourable than budgeted for.

 

The officer reported the intention to use the Council's reserves and School balances to fund the £7.4 million financial deficit projected for 2022/23. As a result, by using specific reserves, general balances were protected and available to help face the challenges of the future.

 

c)    The officer was thanked for the report.

 

In response to a question regarding the post-Covid Recovery Fund, and whether it was a fund outside the Council's balances, it was confirmed that the Fund was an additional one that had been created in response to Covid challenges. He added that with the Government's recovery funding having ended, the Fund had been established in response to that.

 

In response to a comment in the report of 'using school balances to fund the additional pressures this year', if the impact here was 'greater than just this year' and that use of the balances was something annual, it was noted that schools' budgets had been set for 2023/24 and the salaries had been set at the 'increase' level for 22/23.  As the increase had been introduced in October on the inflation level, the actual costs were seen to be higher which therefore created additional costs above the budget level.

 

In response to a question regarding the definition of "homelessness" and whether the additional costs were as a consequence of a real increase in homelessness or because the term "homelessness" had been redefined in response to the new legislation, it was noted that the number of homeless individuals had increased under the definition in the act.  The result of this was the Council having to deal with more cases, and therefore having to find/provide accommodation for them. It was added that the situation was like a snowball effect – a shortage of accommodation which subsequently meant that homeless people were placed in temporary accommodation, which caused increasing effects on the Authorities.

 

In response to a question regarding the Chief Executive's intention to meet with the Head of the Highways and Municipal Department to discuss overspend in the 'waste' field, it was reported that the meeting, to which the Head of Environment Department had been invited, had been held. A report of the outcome of that meeting would be presented to the Cabinet soon. It was added that it was proposed to consult with WRAP to consider the collection route, collection arrangements and possible steps to manage the expenditure which was an annual concern. In response to a supplementary question regarding the report, it was noted that the report would be submitted to the Communities Scrutiny Committee which would give feedback from the comments and the actions.

 

In response to a question with regard to using the premium money from some classes of second homes and long-term empty properties to close the financial deficit in the homelessness field rather than using reserves, given that the aim of the premium was to implement the Council's Action Plan and keep local people in their communities, it was noted that the premium funding would be used as a one-off for homelessness and that this would not impact on implementing the Housing Plan. He added that the premium funding would certainly not be used for any other field and that it would not be for general use.

 

RESOLVED

 

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

2.    To agree with the Cabinet's recommendation (24-01-23) to approve:

·         The transfer of £3.188 million of underspend on Corporate budgets to the Council's Financial Strategy Reserve.

·         When timely, at the end of the financial year, use

a)    School Balances to fund the additional costs of inflation on the salaries of teachers, assistants, administrative staff and electricity that is above the budget level in the schools.

b)    The Council Tax Premium Fund to fund the additional pressure in the Homelessness field

c)    The Post-Covid Recovery Arrangements fund established to fund the associated financial challenges faced by the Council.